Tangible assets are physical assets that have a tangible value and can be used in a business or investment. These assets include things like real estate, equipment, and inventory. In this article, we will explore the different types of tangible assets and their role in business and investment.
What Does Tangible Mean?
Tangible is an adjective used to describe something that can be touched or felt physically. Tangibles are items that are able to be identified and measured. This can include things such as furniture, jewelry, money, real estate, and physical items. Tangible items can be seen, felt, and weighed. Intangible items, on the other hand, are not physical, but instead are concepts such as ideas, emotions, and intellectual property.
What Are Tangible Assets?
Tangible assets are physical assets that have monetary value and can be owned or controlled by an individual or a company. These assets include things like real estate, equipment, inventory, and cash. They are often used as collateral for loans, and can be bought and sold on the open market.
Types Of Tangible Assets
There are several different types of tangible assets, each with its own unique characteristics and uses. Some of the most common types include:
- Real estate: Real estate is one of the most common types of tangible asset. It includes things like commercial buildings, residential properties, and land. Real estate can be used for a variety of purposes, including as a source of rental income or as a long-term investment.
- Equipment: Equipment refers to any kind of machinery or tools that are used in a business or investment. This can include things like vehicles, machinery, and office equipment. Equipment can be used to generate revenue or to improve efficiency in a business.
- Inventory: Inventory refers to the goods that a business has on hand to sell. This can include raw materials, finished goods, and work in progress. Inventory is important for businesses because it can be sold to generate revenue.
- Natural Resources: Natural resources such as minerals, oil and gas, and timber can also be considered as tangible assets. These resources can be used to generate revenue or they can be used as a long-term investment.
Role Of Tangible Assets In Business And Investment
Tangible assets play an important role in both business and investment. In a business, a tangible asset can be used to generate revenue or to improve efficiency. For example, equipment can be used to improve production or real estate can be used to generate rental income.
In investment, a tangible asset can be used as a long-term investment. Real estate, for example, can appreciate in value over time and can provide a steady source of rental income. Furthermore, a tangible asset can also be used as collateral for loans or they can be used to generate revenue.
What Are Some Examples Of Tangible Assets?
- Real estate: Buildings, land, and other types of property are considered tangible assets.
- Equipment: This includes things like machinery, vehicles, and tools that are used in a business or industrial setting.
- Inventory: Raw materials, finished goods, and work-in-progress are all considered tangible assets.
- Cash: Currency, coins, and other forms of cash are considered a tangible asset.
- Other examples of tangibles include art, collectibles, and precious metals.
Check out this A-Z of 50+ financial terms to know
What Are The Differences Between Tangible Assets And Intangible Assets?
A tangible asset is a physical asset that can be seen and touched, whereas an intangible asset is a non-physical asset that have value but cannot be seen or touched. Examples of assets that can be classed as intangibles include patents, trademarks, copyrights, and goodwill.
What Are The Advantages Of Owning Tangible Assets?
- These types of assets can be used as collateral for loans, making it easier to secure financing.
- They can generate income, such as through rent or lease payments.
- They can increase in value over time, which can lead to capital appreciation.
- They can be sold to generate cash, which can be used to invest in other assets or to pay down debt.
What Are The Disadvantages Of Owning Tangible Assets?
- They can be expensive to purchase and maintain.
- They can depreciate over time, which can lead to a decrease in value.
- Can be subject to theft or damage, which can lead to a loss of value.
View these 5 common investment mistakes to avoid in 2023
Conclusion
Tangible assets are physical assets that have a tangible value and can be used in a business or investment. Examples include real estate, equipment, inventory, and cash.
The main difference between tangible assets and intangible assets is that tangible assets are physical and can be seen and touched, while intangible assets are non-physical and cannot be seen or touched.
Understanding the different types of tangible assets and their role in business and investment is important for anyone looking to start or grow a business or make an investment.
Please view our blog for more financial articles and join our newsletter to keep up to date with all our latest content. You might find the following blog post useful exploring these 21 types of investment assets to grow your wealth.