Examples of financial assets and liabilities
See now the best examples of financial assets and liabilities and learn how to distinguish one option from the other and have greater financial control!
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Many Brazilians do not know how to make good use of their money and therefore commit to unnecessary expenses, which in many situations end up becoming debts.
Typically, this occurs because the Brazilian population, in general, acquires more liabilities than assets.
And if you have no idea what this is and what the main difference is between financial assets and liabilities, keep reading. We will explain everything about the subject!
What is the main difference between financial assets and liabilities?
Assets are goods and rights that, over time, can be accounted for and generate additional money for their owner.
Their values are derived from a contractual claim they represent.
They are not physical assets, such as real estate and land, for example. Furthermore, they do not have any type of physical representation, other than the online documentation that defines them.
Financial liabilities are everything that generates costs and not profits.
As an example, we can mention expenses such as rent, water and electricity. Obviously, we are talking about essential expenses, as we need these things on a daily basis. However, they do not bring any financial return over time.
To understand which of your expenses are financial assets and liabilities, it is very important to control your financial life.
And to have an organized life, financially speaking, your expenses cannot exceed your income. In other words, you should not spend more than you earn!
Examples of financial assets
Now that you know the difference between financial assets and liabilities, it's time to understand how they work in practice.
To help you, we will give some examples of financial assets. Just look:
1. Actions
Stocks are among the best-known variable income securities in the world.
And a share, in fact, is nothing more than a small quota that represents the percentage of rights over the capital of an organization.
This means that whoever buys a share on the stock exchange, the investor is taking a part of a third-party company and thus, begins to be called a minority shareholder.
Profit from this type of investment occurs in two ways: profitability of quotas e profit distribution obtained by a company, through dividends and interest on equity.
2. Public and private securities
These are securities issued by the Federal Government and by companies, whose main objective is to acquire capital for various types of investments in the country.
The main public securities are the Pre-fixed Treasury, Selic Treasury and Treasury IPCA.
The main private securities are CDB, LCIs, LCAs, debentures, among others.
3. Investment fund shares
A share of an investment fund is a fraction of the equity of that fund.
When an investor invests his money in a fund, he receives a number of shares, which is proportional to the amount invested.
The fund's total assets, invested by shareholders, will be converted into assets, which may be fixed income or variable income.
Examples of financial liabilities
As you already know, there are significant differences between financial assets and liabilities.
Liabilities are assets that generate costs for an individual or legal entity and have contractual obligations to pay a debt, either through an asset or monetarily.
Among the main types, we can mention:
1. Loans
In many situations, loans and financing are necessary.
After all, a loan is a way to make it possible to open or expand your business.
There are some advantages to taking out a loan, such as quick release and lower interest rates than the overdraft limit.
However, it is still an expense. Therefore, if you decide to take out a loan, make sure that you will be able to pay it back within the specified time frame and that it will help you generate some kind of benefit in the future.
2. Property
This subject is extremely controversial, as Brazilians dream of the comfort and security of owning their own home.
However, if you think of a property as an investment, even though it provides comfort and housing for you, it remains a liability. How so?
From a financial point of view, a house's purpose is to provide housing. In addition, through taxes such as property tax and other bills, a house also takes a part of your money.
But did you know that it is possible to transform a property into an asset?
One way to do this is by renting out your property. This way, you will receive an income every month from the house or apartment you have rented out.
Another example of transforming property into an asset occurs when a person buys a house so that in the future, the house can be sold for a higher value than the amount spent on the acquisition.
3. Car
The car you use on a daily basis is considered a liability, as it involves a lot of expenses, such as insurance, gasoline, taxes, maintenance, etc.
But it could be that you bought it to work and thus make some money with it. In this case, the car is considered an asset.
However, in most situations, cars are considered liabilities, as they do not generate income for their owner, but rather, only expenses.
Furthermore, with each passing year, its value depreciates on the market. In other words, you won't be able to sell a car for the same price you bought it for, much less for a higher value.
This doesn’t mean you shouldn’t have a car. After all, this vehicle makes your life easier and brings more comfort to your family.
In cities with poor transportation, the need to have a car becomes even greater.
However, it is necessary to put aside the idea that a car is a financial investment, because it is not.
Conclusion
Although liabilities are very important at various times in life, they can turn into a large debt if you don't control these expenses!
To increase your income and have more financial peace of mind, especially in the long term, it is very important to invest in assets!
