Regardless of your financial status, we all practice asset management. When you put away some money into an emergency fund, or invest in a stock, you’re practicing asset management. These assets can help us in times of need—like if we end up in the hospital or our car breaks down—but they can also secure a more comfortable retirement.
However, good asset management relies on acquiring both liquid and fixed assets. But what exactly are the differences between the two? Read on to learn more.
Liquid Assets
Liquid assets are anything that can be quickly converted to cash with few consequences attached. The most common types of liquid assets that we use everyday are checking and savings accounts. With both accounts, we can withdraw cash immediately and easily whether it be for a trip to the grocery store or an emergency.
However, those are not the only two types of liquid assets. Life insurance policies with a cash surrender value, stocks and bonds, and money market accounts are also common liquid assets. The only thing that matters is that you can easily access your cash without many consequences.
Fixed Assets
Fixed assets are for long-term investments. That’s because they are not as easily accessible as liquid assets. It takes a lot of time and effort to sell fixed assets. As such, you don’t want to use these for emergencies, but you can use them to build up your retirement fund.
Common examples of fixed assets include:
- Retirement savings
- Real estate
- Office or manufacturing equipment
- Furniture
- Vehicles
- Annuities
First State Investment Advisors can help you monitor your investments and improve your asset management. Contact us today to receive a free financial consultation.