How to Increase Your Assets
- Purchasing assets are important when building your net worth and improving your long-term financial health.
- Assets are items that you own and can help increase your net worth in the long term. Therefore, holding valuable assets can benefit your current status and financial future.
- Your total assets can provide many benefits, including access to wealth-building tools and retirement planning.
Assets are valuable tangible and non-tangible items that you own. Assets can range from cash in a checking or savings account to a digital asset such as an NFT. All assets have monetary value, and sometimes their value will increase over time.
When an asset’s value increases over time, it is called appreciation. On the other hand, when an asset’s value decreases over time, it is called depreciation.
You can profit off your assets through ownership of assets while holding them or by selling them. One example of this is money in your bank accounts. You can keep your money in a bank account and watch it grow. In this case, you are profiting off the bank by receiving interest by letting them keep your money with them.
Assets can help you build wealth. Purchasing assets such as rental property or stocks in the stock market can give you financial security. These assets tend to appreciate over time. Through the process of building assets, you are able to build wealth.
Types of Assets
As mentioned above, many types of assets exist in the 21st century. Some assets are tangible, such as your paid-off home or primary residence. On the other hand, some assets are non-tangible, such as an NFT valued at over a million dollars or stock options given to you at work by your employer.
Traditionally, owning a property and stocks through retirement contributions was the simple way to have assets. However, today, more and more people are choosing to own assets such as cryptocurrency and non-fungible tokens.
Assets are anything that can be sold or converted to cash. Some examples of assets include:
- Money in a savings account or Certificate of Deposit (CD).
- Money saved in your retirement account or other investment accounts.
- Home equity (the portion of your home that you own; your home value - your mortgage).
- Other valuable items that you can sell.
Though there are plenty of asset types to choose from, it is important to research which assets will benefit your personal financial situation.
The Benefits of Having Assets
Assets, such as money in a savings or retirement account, are extremely valuable when an emergency occurs. If money is urgently needed, those assets can be liquidated or exchanged for cash to cover the costs associated with the emergency expense.
Live Off of Them Now
If your assets, such as stocks, are allowing you to earn passive income, you may be able to live off of that money. In this case, you are receiving dividends simply from holding multiple shares of a company that issues dividends.
Live Off of Them Later
If you don’t have enough assets to live off of them now, you can continue to build sufficient assets. Once you have enough assets, you can choose to profit from them and use the money to sustain your living situation.
Pass Them Down
Many people pass their assets down to their children, grandchildren, or other loved ones. By passing assets down to future generations, you provide the recipients with access to wealth.
Most Important Assets to Increase Your Net Worth
Increasing your net worth will allow you to live your life without worrying about finances. An individual with a higher net worth typically has the financial freedom to make big decisions, such as early retirement.
The most important assets to increase your net worth are the ones that will retain their value and appreciate over time. Unfortunately, assets such as vehicles or technology gadgets will typically lose value over time, which will not help you boost your net worth in the long run.
If your job offers a retirement account, then you should start setting money aside for your future. Some employers will match your retirement contribution up to a certain percentage. For example, if your job matches 100% at 5%, then if you contribute 5% of your income to the workplace retirement account, your job will match your 5% contribution. You will have 10% deposited into your account.
A match is free money that you don’t want to miss out on. If you cannot contribute to the full match, then you want to start with what you can afford and set a goal to get the full match. If your workplace does not offer a retirement account, you can open your own and start saving using an IRA.
Enjoy Your Assets
Having assets is a great way to build wealth over time. It is important to note that you can still build assets while you are paying off credit card debt, or student loans. Therefore, anyone can build assets, at any stage of their financial journey.
Assets also allow you to enjoy your life and use more of your money towards the things that you enjoy. Taking a vacation is much easier when you have a fully-stocked emergency fund and low levels of debt.
Recommended Watch: 5 Ways Assets Help You
The bottom line is that assets are necessary for every individual’s wealth-building journey.