Tangible Assets as Alternative Investment

When an investor has doubts about the economic uncertainty, he/she prefer to buy tangible assets or also called hard assets for investment purposes. It is more like a hedge against economic uncertainty. If you are not fully aware of a tangible asset then it is an asset which has a physical form or more precisely, physical assets. It is not like tangible assets are completely new for investors. On the contrary, we already have invested in physical assets in some way – bought a car, gold or silver jewelry. The tangible assets don’t exist inside the account balance, exchange market or financial market.

It is considered as an alternative investment which could reduce the exposure to overall market risk. There are a lot of benefits of investing in tangible assets plus these assets likely to have a positive correlation with the stock market and bond market. But, before discussing the benefits of tangible assets let’s find out if there are any types of it.

Types of Tangible Assets

Well, there are two types of tangible assets include:

• Current Assets – These types of tangible assets can be converted to cash in a short period of time and typically used within a year or less such as inventories, the marketable securities, precious metals, cash equivalents, and some precious metals.
• Fixed Assets – These are noncurrent assets which generally used in company’s operations for more than a year. Such assets are real estate, tools, equipment, trucks, airplanes, oils, minerals, electronic hardware, and machinery etc.

Benefits

As we discussed above, the tangible assets are not like intangible ones and have a little exposure to the market risk. But, that’s not all. There are other certain benefits of investing in tangible assets such as

Safety from Inflation

Promotors of tangible assets like bullion coins typically sell inflation protection. And it is true. From historical times, the gold (bullion) has been valuable for thousands of years. It was traded from ancient times and even now, it is used for making jewelry.

Gold as a tangible asset always carriers an economic value.

Peace of Mind

Since the tangible assets are not exposed to market risks like intangible assets, it gives a peace of mind to the investors who hold some tangible asset to himself/herself. For example, a real-estate property or your house is a long-term tangible asset which not only gives you the personal enjoyment of holding an asset for future benefits but also serves as an important function to you and your family.

Final Thoughts: -

Getting protection from safety, peace of mind and diversification benefits is very rare to see in intangible assets. Also, unlike intangible assets, tangibles have the potential for the future benefits. However, the tangibles do not exist in the exchange market or balance sheet. But, holds a very important value which is historically proven.

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