Importance of Financial Assets

If financial assets are characterized by something, it is by becoming the support or tool to allocate it to the investment and by which its holders can generate a return in any period of time (short, medium or long), but with the difference with respect to tangible assets in that the former do not provide physical value, as happens with properties real estate. This is one of the aspects to take into account when planning an investment and contemplating what functions each of these two assets fulfills. For a better understanding, a financial asset is represented by the investment in warrants; while the tangible for the acquisition of a garage.

Financial assets can also be the bonds issued by the public debt of a country or the purchase and sale of shares in the variable income markets, among some of the most demanded by the investors. However, it is very important to emphasize that this class of assets always has two figures that are part of the buying or selling process. On the one hand, the buyer who is the subject or entity that acquires some titles with the purpose of revaluing them. In this case, for example, it would be the person who acquires shares in a company listed on the stock markets (Coca-Cola, Repsol, Inditex, Vodafone...).

While on the other hand, there would also be the seller who is the one who sells these assets for whatever reason. Although generally looking for a tip of liquidity in their personal or business accounts. It could be the same person we mentioned earlier, precisely when he decides to unwind his positions in the stock.

Types of financial assets

Financial assets do not come from a single investment or savings model, but rather, on the contrary, come from financial products of diverse nature and structure. But which are the most representative of all? One of them is crystallized by the purchase and sale of shares, which is one of the most representative and of the variable income and which is characterized by the fact that the holder becomes a participant in the company by buying some titles of the same. In order to make your operation profitable at its expiration or when the positions are closed by investors.

Within fixed income, the product that meets this purpose is the term bank deposit. It is fundamentally distinguished by generating a savings pool without assuming risks and offering a very low return. With an interest rate at the moment that barely exceeds the level of 0.40%, as a consequence of the very low levels in the price of money. It has the advantage that it allows you to subscribe this financial product for various terms, 1, 3, 6, 12 or even more months.

Another model that cannot be absent from this classification is the one represented by public debt (bonds, obligations and state letters). Where its first function is to finance the debt of a country and that can be bought by private investors to improve their income statement. Its terms are aimed at the short and medium term (1 month, 1, 2 or 3 years, approximately).

Although many people are unaware of it, cash (coins or bills) is also a highly relevant financial asset. Because it is used for the acquisition of goods, such as real estate, food or financing a vacation trip. There is no doubt that it is the financial asset that offers greater liquidity. That is, having full capacity to buy or sell tangible and financial assets in any financial or other market. characteristics. In the same way that it is a position that is characterized by being risk-free. In exchange, it does not generate any profitability since it will always have the same value (overvalued or undervalued due to the effects of inflation).

Neither can be missing from this list, both bank and corporate promissory notes and that it is a document legal in which the issuer agrees to pay a certain amount of money within the agreed term and with an agreed interest. In any case, it will be offered depending on its valuation and the level at which the price of money is located.

Nature of these assets

While, on the other hand, it should be noted that financial assets can come from fixed and variable income. In the first with a total guarantee on the amount of the operation and that entails a guaranteed return at maturity. On the contrary, in equities there is no guarantee of its profitability. Not even with the security of recovering the amount of the investment. Even so, they are more likely to develop better returns at the cost of assuming more risks in the operation.

Another way to differentiate a financial asset is by the term to which it is directed. They can be short-term (between a few months and a year approximately) and they report less risk in their hiring. Even though its performance is always lower. In contrast to the longer terms (medium and long) which are riskier to underwrite. But to neutralize this effect, it progressively increases its profitability. Their subscription periods range from a single year to 5 or 10 depending on the products chosen by the customer.