Real Total

Real assets tend to be more stable than financial assets. Inflation, shifts in currency values, and other macroeconomic factors affect real assets less than financial assets.

Real assets are particularly well-suited investments during inflationary times because of their tendency to outperform financial assets during such periods.

In the firm's report on real assets as a diversification mechanism, Brookfield noted that long-lived real assets tend to increase in value as replacement costs and operational efficiency rise over time.

Further, the found that cash-flow from real assets like real estate, energy servicing, and infrastructure projects can provide predictable and steady income streams for investors.

Also, real assets have higher carrying and storage costs than financial assets. For example, physical gold bullion often has to be stored in third-party facilities, which charge monthly rental fees and insurance.

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What Is a Real Asset? Key Takeaways A real asset is a tangible investment that has an intrinsic value due to its substance and physical properties. Commodities, real estate, equipment, and natural resources are all types of real assets.

Real assets provide portfolio diversification, as they often move in opposite directions to financial assets like stocks or bonds.

Real assets tend to be more stable but less liquid than financial assets. Pros Portfolio diversification Inflation hedge Income stream. Cons Illiquidity Storage fees, transport costs.

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Related Terms The Money You Can't See: Financial Assets A financial asset is a non-physical, liquid asset that represents—and derives its value from—a claim of ownership of an entity or contractual rights to future payments.

Stocks, bonds, cash, and bank deposits are examples of financial assets. Nonmonetary Assets Nonmonetary assets are items a company holds for which it is not possible to precisely determine a dollar value.

Intellectual Property Intellectual property is a set of intangibles owned and legally protected by a company from outside use or implementation without consent.

How to Identify and Analyze Long-Term Assets Long-term assets are investments in a company that will benefit the company and remain on its books for many years to come.

Modified Book Value Modified book value is an asset-based method of determining how much a business is worth by adjusting the value of its assets and liabilities according to their fair market value.

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