What Is a Non-Financial Asset?

Malcolm Tatum

A non-financial asset is a type of real asset that is physical in nature and has value based on the current demand of investors for the asset. This is in contrast to financial assets that are also considered of value but do not necessarily have any type of physical form other than documentation to asset their existence. One of the more common examples of a non-financial asset is a real estate holding, since this type of asset can actually be touched and is located in a specific physical location.

Businessman with a briefcase
Businessman with a briefcase

Typically, assets are classified as either financial or non-financial. Financial assets include holdings such as stocks or bonds. While valuable and capable of generating returns for investors, these types of assets do not have any real physical form. Instead, they are financial arrangements that are represented by the documents prepared by issuers to confirm that they exist and are held by the investor. In contrast, a non-financial asset will have a physical form, have some type of cash or resale value, and be in some demand by buyers and investors.

Land and property are easily some of the most recognizable examples of assets that are classified as non-financial. It is possible to visit the physical site where the real estate is located, enter the buildings located on the property, and arrive at a current market value of those assets based on their general condition, the location of the property, and the demand in the marketplace for that particular type of real estate holding. Like any type of investment, the value of this type of non-financial asset will fluctuate based on demand, which in turn is often influenced by the state of the general economy relevant to the area in which the property is located.

Other assets are also considered to be non-financial in nature, in that they do have some sort of market value and also possess some type of physical form. Various types of artwork would be included in this classification of assets, as well as highly coveted pieces of jewelry or even a vintage automobile that is considered very valuable and desirable in the marketplace. Coin and stamp collections are also examples of physical assets that retain monetary value and can often be sold at prices above and beyond the costs of the original acquisitions. Essentially, any asset that has a physical form and can be traded in the marketplace, hopefully at a profit, can be considered a non-financial asset.

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