Differences Between Tangible and Intangible Assets

If you want to be able to support yourself through retirement or keep your company afloat during an economic crisis, it’s important to have access to valuable assets. There are two different types to familiarize yourself with.

Tangible and intangible assets. Intangible assets don’t go into your bank account, but they’re not less valuable than tangible ones.

Both types have their merits when it comes to supporting yourself, but they work in different ways. Are you ready to start the investing process? Check out this guide to learn the difference between the two types of assets and find out how they work.

What Are Tangible Assets?

Tangible assets are also known as hard or real assets. They are anything physical. You can hold onto them and see them when they’re in front of you. 

Some examples include gold, your house, your vacation home, a rental property, and a vehicle. 

Gold

First up is gold. It’s been around for centuries with no signs of going anywhere. It’s seen as reliable because it’s pulled society through times of economic crisis such as the recession. 

It’s easy for anyone to invest in precious metals like this because you most likely have them laying around your home. You probably have plenty of gold in your jewelry box. 

If you don’t have any, you can buy bars and coins. You can click here to learn more about investing in gold and silver. For now, let’s move on to land and real estate. 

Your Primary Residence 

Your house is one of the best physical assets that you can invest in. For one, it builds equity over time. In case of an emergency, you can dip into this equity to handle any economic crisis that you might be under. 

Of course, you’ll have to put back the money that you borrow, but it does help in a pinch. Houses tend to keep up with inflation as well. 

When it comes time for you to move to another area, you can sell your house and make more than what you bought it for, depending on how you go about things. 

Vacation Home 

If there’s a place where you and your family love to go to relax, and you can afford the extra expense, consider purchasing a vacation home. For one, having somewhere to go when you’re on vacation will prevent you from having to rush to book a hotel during the busy season. 

For two, when you’re not using your vacation home, you can rent it out to someone else. This will allow you to bring in a continuous flow of income if the house is in a bustling tourist spot. 

Land

Land is a unique asset in that there isn’t an infinite amount of it. There will come a time when it runs out, and we can’t exactly make more of it. 

As we grow as a species, our need for land will increase. So, if you have some, you may be able to sell it for quite a bit of money someday. 

Rental Property 

Investing in rental properties involves buying a house with a loan and renting it out to tenants. There are two advantages of doing this. The money that the occupants are paying you to stay in the home will provide you with a continuous flow of income. 

You can use this income to fix problems that arise with the rental property and pay back the loan. The other benefit is that the house will build up value over time. 

When the tenants move out one day, you’ll be able to sell the house for a good chunk of change. Like most houses, rental places move alongside inflation. 

Car

The car sitting in your front yard that you drive to work every day is an asset, but it’s not a good one. As the years go on, it will depreciate in value. Classic vehicles are another story. 

Many of them are worth quite a bit if they’re in good condition. Keep in mind that not every classic car is a valuable asset. It all depends on the brand, the rarity of the vehicle, and the desirability. 

What Are Intangible Assets? 

If tangible assets are the ones that you can touch, the intangible ones are the investments that you can’t hold on to. You can’t see them, but they do exist. 

Intellectual Property 

Intellectual property is anything that you create with your mind. That amazing invention idea that you have can’t be seen or touched by another person, but it’s as easy to steal as your car.

To protect this asset, you’ll need to get a patent on the idea. Other examples of intellectual property are a brand name or literary work. 

Goodwill 

Goodwill is your image. It’s every compliment that your business gets from a customer. It’s your reputation and business strategies. 

It’s not stocks and bonds, but it’s still valuable. The only problem with goodwill is that you can’t separate it from your company. You can’t rent or sell it, but as long as your company makes money, you make money. 

Knowing the Difference Between Tangible and Intangible Assets 

Tangible and intangible assets work differently. One of them you can see and touch, the other one you can’t. The one thing they do have in common, though, is the power to keep you afloat when times get tough. 

Protect yourself and your image by investing today, and for more financial advice that will help you through life, visit our blog.  

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