Definition of Financial Asset

A financial asset is a concrete fluid resource that derives value because of a contract claim of what it represents. Shares, ties, financial institution deposits and the like are all examples of financial assets. Unlike land, property, products or other concrete actual resources, financial assets do not necessarily have actual worth.

Explanation of Financial Asset

Financial assets such as checking records, savings records and funds market records are easily turned into money for bill paying and covering financial emergency situations, such as car repairs. Maintaining too much money in illiquid investments may result in using a high-interest bank card to cover expenses, increasing debt, and negatively affecting retirement and other investment goals. In the case of stocks, an trader has to sell stock and wait for the settlement date to receive the cash; an trader must have other money available for when emergency situations occur.

Keeping money in more traditional records results in higher maintenance of capital. Profit banking records is typically covered by the Federal Deposit Insurance Corporation and is insured against loss. When enough money is set aside in more fluid records, a trader is better able to purchase more aggressive resources such as property or Forex with higher satisfaction.