Personal assets are items of value that belong to an individual. There are many examples of such tangible personal assets. Among these are houses, real estate, cars, and jewelry. Personal assets can also be any other thing with cash value.
When individuals go to a bank or other institution to apply for loans, such personal assets and their values are often considered. These assets are also the bedrock of the formula for net worth for consumers. The value of people’s personal assets can be higher than they expect and surprise them as so many different items can be included under this label.
There are many personal assets that are material and easy to measure. These include such financial assets as savings accounts, checking accounts, and retirement accounts. Assets that have a value that can not be easily accessed are also included in the personal assets category. This includes life insurance policies and annuities that have cash values. Other items of value which would be included in a list of personal assets cover such items as antiques, art collections, electronics, personally owned businesses, and other valuable items.
Personal assets can do more than simply help people get loans and count towards net worth. They are also sometimes able to create income for their owners. Bank accounts and savings accounts accrue interest. Holders of real estate are able to lease or rent it out. This brings in rent or lease fees. Individuals who have personal assets should educate themselves in the best practices for managing them so that they are able to increase their total wealth by generating the highest income possible from them.
It is important to keep a careful track of rent or other income obtained from personal assets as the money will be taxable. Income that is not properly reported to the government on the correct tax forms can incur penalties from the Internal Revenue Service.
It is also important to know the value of an individual’s personal assets. There are two different methods of learning this. In the first method, individuals examine the item’s market value. This is the value for which the asset would sell if a person were to put it straight on the market. Another way to determine the value of these assets is to have a personal asset appraised.
Appraised values can be substantially greater than market values. This is because an appraisal value relies on the possible future price of the item in question. This difference matter significantly, particularly when having an item insured. Individuals generally have to obtain appraised value insurance coverage. This means that they will likely have to pay for a greater amount of insurance.
When properly managed, personal assets can greatly contribute to an individual’s personal financial situation. It is also true that these assets can prove to be a liability if they are not well taken care of or managed. Part of managing assets well involves asset allocation.
Financial experts warn against placing all or the majority of personal assets into a single asset type or location. This type of practice causes people to take on additional risk than is prudent. Instead, it is better to spread around an individual’s wealth into a variety of different assets so that if one suffers or decreases in value, some of the other assets may offset this by outperforming or increasing in value.
Taking care of personal assets is also an important part of maintaining their value. Individuals can break expensive electronics if they are not careful. Not engaging in proper maintenance for works of art can also lead to their value declining over time.