How Do I Choose the Best Tangible Assets?

Malcolm Tatum

Tangible assets are any kind of assets that have some sort of physical attributes. Assets of this type can be touched with ease. Some examples of tangible assets include cash, land and property, and different types of equipment. When choosing the best tangible or physical assets, it is important to evaluate the characteristics of each of the assets, determine the value to you in terms of usage or as an investment opportunity, and project the outcome of the purchase in terms of your overall satisfaction.

Man with hands on his hips
Man with hands on his hips

In some cases, tangible assets are purchased for short- or long-term aid in generating revenue. For example, a company may purchase equipment that is necessary to the production process, effectively allowing the business to produce goods or services that can be sold to consumers. In this scenario, the tangible assets acquired are usually for long-term use. The idea is to focus on efficiency of use, the actual purchase price, and how long it will take to recoup the investment made by the purchase. Ideally, the cost can be offset in a reasonable amount of time, and the revenue generated by the equipment will benefit the company in significant ways.

For short-term investment purposes, the idea is to acquire tangible assets that can be enhanced or improved with a minimum of investment and then sold at a profit. One example of this type of activity is known as "flipping" in the real estate industry. Essentially, a buyer will purchase property for the best possible price, make repairs and improvements over a period of a month or so, then sell the property for a considerable amount above the initial purchase price and the cost of the enhancements. In this scenario, the goal is to choose a property that is located in a high-demand area but is somewhat run down, upgrade the buildings and general condition of the land so it is attractive to potential buyers, then sell it and use a portion of the proceeds to settle any debt remaining from the purchase and upgrades.

In some cases, physical or tangible assets may be in the form of various kinds of non-financial assets that tend to increase in value over time, including assets like artwork or jewelry. Here, the goal is to acquire pieces that are likely to remain in demand for a number of years, and consistently appreciate in value. It is not unusual for investors to acquire art collections as investments, hold them for decades, then sell the artwork as a means of realizing cash that can be used to make the retirement years more comfortable.

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Essentially, choosing tangible assets involves knowing what you want to accomplish with the acquisition, how long you plan on holding onto the assets, and the potential of those assets to sell at a significantly higher price once the time arrives to offer them in the marketplace. By accurately assessing the future value of the assets, it is possible to keep the level of risk involved at a minimum and acquire assets that are very likely to help you meet your goals.

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