What is a financial asset?
Assets are assets or rights that a company or person owns and that can generate income. An asset is financial when it exists only as an economic right and its value is derived from a contractual right.
An example of a financial asset is money, as it represents a value in the possession of an agent who can exchange it for other goods that he wishes to buy or deposit with a bank.
Financial assets are intangible, which means that they do not exist physically, such as land or a house, for example. They only receive a value that comes from the supply and demand of the market in which they participate or the degree of risk they have.
However, the income generated by financial assets happens through real or tangible assets. A company’s shares, for example, are financial assets in which income is generated by the profits of the company to which this asset belongs.
Another way to generate income from financial assets is through government income, when government bonds are issued.
What often happens in the economy is that whoever has savings or surplus, lends to another agent who invests in real assets. This investment generates income in which part is transferred to the borrower.
Examples of financial assets
Shares : part of the capital of a company that can be acquired and generate income through its dividends or through its sale.
Money : it carries an exchange value. When exchanged with other countries it can generate income through exchange, through the Forex market, for example.
Government bonds : they are issued by the government as a way of raising capital for public investments. Your income comes with the interest that is paid.
Investment funds : financial application that gathers the money of several participants and is managed in the capital market with the objective of generating income.
Bank Deposit Certificate : an CDB is a deposit made at a bank that returns interest as a return.
Classification of financial assets
Among financial assets, there is a classification as to the remuneration they can generate, which may be fixed income or variable income.
Fixed income assets
Financial assets are fixed income when the money invested yields a fixed rate of return. In this case, the remuneration rules are defined at the time of application.
This investment can be made in pre-fixed or post-fixed types. In the first, the yield rate is known at the moment of application, while in the second, only the variable rate that will be part of the investment is known.
A traditional fixed income financial asset is savings, where the money invested yields part of the Selic rate and the income can be withdrawn after a period of time.
Examples of fixed income assets:
- CDB – Bank Deposit Certificate;
- LCI and LCA – Letters of Credit for Real Estate and Agribusiness;
- LC – Bill of Exchange;
- Direct Treasury;
- Fixed income funds.
Variable income assets
Financial assets are of variable income when it is not possible to predict with certainty whether there will be an income or how much it may be, different from fixed income.
When purchasing shares in a company, for example, it is possible for the price to fall or rise on the stock market while they are in the buyer’s possession. In addition, it is not possible to predict whether the company will make profits and distribute in dividends.
In addition to stocks, other examples of equity investments are equity funds, multimarket funds, real estate funds and derivatives.
Main characteristics of financial assets
When intending to invest or invest a financial asset, some characteristics that they have must be taken into account.
More particularly, financial assets can have different characteristics. One of them is liquidity, which indicates the ease with which the asset can be converted into cash.
Some financial assets have high liquidity, while in others the liquidity is less. When it is very low, it means that withdrawing the money applied in an emergency may not be possible.
The period in which it must be applied is also another factor to consider. The terms of a financial investment vary between short, medium and long term.
In Tesouro Direto, for example, bonds are traded with the maturity year and the investor can know how long he should leave the money invested.
Risk is also characteristic of a financial asset when applied. Typically, the more risks in a financial asset, the more profitability will be required by the owner.