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Real Assets Definition, Examples and Quiz

Not as well researched as financial assets, but the world depends on assets you can see, feel and touch.
  1. Define - Define Real Assets in Finance.
  2. Examples - Review characteristics of Real Assets with examples.
  3. Context - Use it in a sentence.
  4. Quiz - Test yourself.
face pic by Paul Alan Davis, CFA
Updated: February 18, 2021
Technological advances have reduced the dependence on real assets for economic growth. Learn more below.

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A Look at Real Assets with Examples


Real Assets refer to land, buildings, gold, homes, computer systems and code, inventories, equipment, patents and the human knowledge used to create products and services. It is Real Assets and their income-producing nature that Financial Assets (stocks, bonds) derive their value from.

Real Assets may be things you can see, feel and touch, that have an easily-determined market value. Their value may also be difficult to quantify, like intangible assets and customer goodwill for companies. These are often accounted for in the long-term assets section of a company's balance sheet. The intellectual capital of organizations and individuals are also considered Real Assets.

Synonym: real investments

For context, it's clear that in the 21st Century, software applications delivered over the web, and particularly those with mobile apps, have been able to efficiently deliver value with less reliance on Real Assets.

As an example, Amazon has disrupted many industries by wringing inefficiencies out of the product purchase process. Additionally, their AWS Cloud service offers companies the ability to subscribe to a service instead of build a data center. This is an example of outsourcing Real Assets.

At the same time, real assets are everywhere and someone needs to produce them. Access to raw materials, supply chain and production capabilities are intricate innerworkings of the capability to produce Real Assets.

Examples of Real Assets

Real Assets are often introduced and discussed along with Financial Assets. The following points make the distinction between the two clear.

An Example Using Two Individuals

In the examples below we review a personal balance sheet for two individuals, Ms. Early and Mr. Late. Their stage in life (early and late) and risk tolerance often determines the components, value and weight (allocation) of their personal assets and liabilities.

Personal Balance Sheet Assets
Personal Assets for Two Individuals
  Ms. Early Mr. Late
Item Value % Value %
Real Assets
Art, Furnishings and Clothing 10,000 10% 1,000,000 10%
Car(s) 10,000 10% 100,000 1%
Career 60,000 60% 3,000,000 30%
House 0 0% 1,000,000 10%
Financial Assets
Bank Accounts 10,000 10% 900,000 9%
Mutual Funds 5,000 5% 2,000,000 20%
Stocks 5,000 5% 2,000,000 20%
Total Assets 100,000 100% 10,000,000 100%

Note how Real Assets tend to be longer-term and income-producing in nature. Also note how over time the ratio of Real Assets to Financial Assets often changes, as does the liquidity of those assets.

Personal Balance Sheet Liabilities

It is also important to consider the Liability side of the Personal Balance Sheet. Often loans are made towards Real Assets rather than Financial Assets. An example of a liability associated with a Financial Asset is the margin balance on a brokerage account.

Personal Liabilities for Two Individuals
  Ms. Early Mr. Late
Item Value % Value %
Credit Card 10,000 20% 0 0%
Student Loans 40,000 80% 0 0%
Mortgage 0 0% 500,000 100%
Total Liabilities 50,000 100% 500,000 100%

Again, note that liabilities that appear higher in the table represent shorter-term obligations. This is important to consider not only for personal balance sheets but for corporate balance sheets as well.

In a Sentence

Doc:  Can you think of an individual whose extreme allocation to Real Assets demonstrates his underconfidence in the financial system?
Lia:  An off-the-grid survivalist?


Many terms have 4-5 minute videos showing a derivation and explanation. If this term had one, it would appear here.

Videos can also be accessed from our YouTube Channel.

Video Script

If this term had a video, the script would be here.


Click box for answer.

A social media post you make on LinkedIn is a Real Asset? | True or False?

True. It may produce a long-term career benefit (doubtful).

Your name is on the title of a piece of land with 10,000 coffee plants. Which do you have? | Financial Asset or Real Asset?

Real Asset. You own land. Income producing land.

Questions or Comments?

Still unclear on Real Assets? Try out the course Quant 101.

Related Terms

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