Asset
An asset is anything with economic value that can be owned or traded, such as a share, a currency, gold or a cryptocurrency.
An asset is anything you own that has value and can be bought or sold, such as shares, bonds, cash, a currency or a commodity. In trading, the asset is the thing whose price you are betting on or holding.
- Category
- Trading Basics
- Reading time
- 3 min
- Also called
- Investment asset, Asset class, Holding
- Updated
Asset in plain words
Investors usually spread their money across several kinds of assets — shares, bonds and cash are the classic three.1
Most people hold these assets through a brokerage account, which lets them buy and sell many kinds of investments.2
Accountants are more precise: under IAS 32, a financial instrument is either a financial asset, a financial liability or an equity instrument.3
How to think about an asset before trading
Name the asset
Write down exactly what you would own: a share, bond, currency or contract.
Find its class
Group it with similar assets, such as stocks, bonds and cash.1
Check how to access it
Confirm your account can buy and sell that type of investment.2
Learn what moves it
List the main drivers of its price.
Check liquidity
See how easily it trades at a fair price.
Fit it in the portfolio
Allocating among different kinds of assets is one way to diversify.1
Worked examples
Example 1 — A share
Holding an assetA hypothetical investor buys 10 shares of a company at 20 each.
| Shares | 10 |
| Value | 200 |
The shares are one of the assets, alongside bonds and cash, that people divide investments among.1
Example 2 — Mixed assets
DiversifiedA hypothetical portfolio holds 60% stocks, 30% bonds and 10% cash.
| Stocks | 60% |
| Bonds | 30% |
| Cash | 10% |
Spreading money among different kinds of assets is one way to diversify.1
Example 3 — Drift
Rebalance neededAfter a hypothetical rally, stocks grow to 70% of the same portfolio.
| Target stocks | 60% |
| Actual stocks | 70% |
After a big move, the mix drifts from your target, and rebalancing brings it back.1
Asset vs liability
| Aspect | Asset | Liability |
|---|---|---|
| Meaning | Something you own | Something you owe |
| Effect on wealth | Adds | Subtracts |
| Example | Shares, cash | A loan |
| In trading | What you buy | Borrowed money, such as margin |
Where the idea is used
Allocation
Planning Portfolio Allocation.
Diversification
Spreading risk through Diversification.
Rebalancing
Bringing weights back with Rebalancing.
Exposure
Measuring Exposure to each asset.
Advantages and disadvantages
Advantages
- Gives a clear name to what you hold.
- Helps compare risk across holdings.
- Makes allocation and rebalancing possible.
Disadvantages
- Asset values can fall to zero.
- Some assets are hard to sell quickly.
- Labels like 'safe asset' can mislead.
- Different rules define assets differently.
Going deeper
Read as far as you need. Each level builds on the one before it.
Asset classes
Beginner
Investor.gov lists stocks, bonds and cash as different assets to divide investments among.1
Allocation
Intermediate
When holdings drift, you may need to rebalance to get back to the original asset allocation.1
Financial assets
Advanced
IAS 32 sorts every financial instrument into one of three groups: financial assets, financial liabilities or equity.3 Accounting and legal definitions differ by country and by standard.
Common mistakes
Owning one asset only
Spread across asset types.
Ignoring liquidity
Check you can sell it.
Confusing price with value
Price can move away from value.
Forgetting cash is an asset
Cash also has a role.
Check your understanding
Test yourself before moving on. Each answer comes with an explanation.
Key points to remember
- An asset is something of value you own.
- Stocks, bonds and cash are common assets.
- Brokerage accounts let you buy and sell them.
- Mixing assets helps diversify.
- Weights drift and may need rebalancing.
Frequently asked questions
Is cash an asset?
Is a crypto coin an asset?
What is an asset class?
Further learning
- Portfolio Allocation
Allocation.
- Diversification
Spreading risk.
- Liquidity
Selling easily.
- Rebalancing
Staying on target.
Sources
This article is written in our own words. The sources below support the specific facts, rules and figures marked with a number in the text. Links open the original publisher’s page.
- Investor.gov (SEC). Asset Allocation and Diversification (opens in a new tab) Checked .
- FINRA. Brokerage Accounts (opens in a new tab) Checked .
- IFRS Foundation. IAS 32 Financial Instruments: Presentation (opens in a new tab) Checked .
Educational content, not financial advice. Examples use hypothetical prices and simplified costs; actual fees, margin rules and regulations vary by broker, market and country. We are not affiliated with any publisher linked above. Last reviewed . Report an error or request a source credit.