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Assets

Definition

Assets are tangible or intangible resources owned by individuals, businesses, or governments that have value and can be used to generate income.

Analogy

Think of assets like different tools in your toolbox. Each tool represents a different asset (e.g., hammer for real estate, screwdriver for stocks). You can use these tools (assets) effectively to build wealth.

Related terms

Liabilities: Liabilities are debts or obligations that individuals, businesses, or governments owe. They represent claims against assets.

Net Worth: Net worth is calculated by subtracting liabilities from assets. It represents the value of an individual's or entity's total assets minus its total liabilities.

Liquid Assets: Liquid assets are those that can be quickly converted into cash without significant loss of value. Examples include cash, savings accounts, and certain investments like stocks.