Starting out
Asset
Anything you own that has value and could, in principle, be sold or produce income.
How it works
In investing the word is usually narrower than in everyday speech. It means a financial claim you hold: a share in a company, a loan you have made to a government, a unit in a fund, a bar of gold, cash in a deposit account.
Assets are grouped into asset classes — equities, bonds, cash, property, commodities — because things inside a class tend to move together and things across classes often do not. That grouping is the whole basis of building a portfolio rather than a pile of tickers.
Where it misleads people
A house you live in is an asset on paper and an expense in practice. It produces no income, costs money every year, and cannot be sold in pieces. Counting it in a portfolio alongside things you could sell on Monday overstates how flexible you actually are.
Related terms
- Asset classA group of investments that behave alike and are driven by the same broad forces.
- EquityA share of ownership in a company, giving you a claim on what is left after everyone else is paid.
- LiquidityHow quickly you can turn something into cash at a fair price, without moving the price against yourself.
- DiversificationSpreading money across things that do not move together, so no single failure can decide your outcome.
More in Starting out
Educational reference only. Nothing here is investment advice or a recommendation to buy or sell anything, and tax treatment depends on your own circumstances and the country you are in.