When you talk about asset, in a layman’s language, it simply means something valuable to you. It can further be defined as a property or resources own by an individual or a company. These properties posses an economic or monetary value and are also capable of gaining more profit in future. Their value appreciates with time. Any property that has value in exchange Can be taken as an asset. It can be long-term or short –term. For instance, getting a house is considered an asset because it has so much economical and monetary value and is capable of doubling in worth in the nearest future. Other things are viewed as an asset includes cash, money market, treasury bills, land and all the properties attached to it, jewellery and bonds.

Characteristics of an Asset

There are three main characteristics of an asset
  1. Economic value: before you can call anything an asset, it must have commercial value and can be sold or exchanged
  2. Ownership: an asset should be able to generate cash or cash equivalent for the owner.
  3. Resources: an asset on the long -run should be able to generate future economic value.
Classification of Assets 

Asset are classified on three bases depending on the type and nature of the asset
  • Classification based on convertibility
  • Classification based on physical existence
  • Classification based on usage
Convertibility to cash: an asset is classified on how easily they can be converted to money and this is sub-divided into two categories: current and fixed asset. They can also be expressed as short-term or long-term. Current assets are those assets that can be converted to cash within a year. In other words, they have a shorter life span. Current assets are also known as liquid assets. Example of this includes stock, short-term investment, accrued income and marketable securities. Fixed asset are those assets that cannot be readily converted into cash and its equivalent. They require a series of processes and time before they can be converted to cash. Fixed assets are also known as long-term asset or non-current asset. Example of a fixed asset includes land, machinery, trademarks, building.
Physical existence: asset can be classified based on physical presence, and this is divided into two categories: tangible and intangible asset. Tangible assets are those assets we can touch, feel and see. In simple words, they are assets with physical existences. Some examples of current assets can be found in this category. They include land, cash, machinery, equipment. At the same time, intangible assets are those assets that don’t have physical existences. That is, we cannot feel or touch them. Examples include trademark, patent, brand, permits.
Usage:  asset can also be classified according to usage, and we have two categories under this: operating asset and non-operating asset. Operating assets are used in daily transactions. These are assets used to produce goods and services. Some examples include equipment, cash, stock and building. Non-operating assets are not used for day-to-day operations but still generates revenue or essential for the future needs of an individual or business. They include vacant land, short term investment, marketable securities, goodwill, and patent.
Reasons Why You Need to Protect Your Asset
It is imperative to guard your asset against some unforeseen circumstances either in business or on a personal level that can make you lose your asset. These circumstances might be well within your control or out of it. There are many reasons for protecting an asset, but few are listed below:
Business loss:  in a case of business failure or the company going bankrupt, if the risk is not adequately managed, there are personal losses that may occur, for instance, your house. You don’t want a situation where this might happen, so you need to protect your asset from your business asset.
Foreclosure: the bank can seize property if you fall behind your mortgage payment unless necessary steps are taken to contain this risk, there is a big chance of losing your property.
Callable Loan:  in some cases, the lender has the right to demand immediate repayment, and if you are not able to meet up, there is a high risk of losing your properties or going bankrupt.
Vicarious Liability: in cases of joint ownership in a business, your partner can incur losses that may affect you, if your property is not protected.
Auto Accident: you may be held liable to damage caused in an automobile accident and if your car is not insured or is inadequately insured.
Divorce: you stand a chance of losing almost everything if not all in case of a divorce, from child alimony to having shares in your company, being entitled to the book and dividend too.
Risk of incapacity: if you are sick or becomes incapable of monitoring your properties or investment, it can incur losses which could have been avoided when you are capable of taking care of this. So to prevent this, there is a need to plan and put risk management in place to protect your assets.
How to Protect Your Asset

To protect your asset, whether personally or in business, there are steps or strategies to be taken. Here are a few things you can do to protect your assets

  1. Insurance: this is one of the ways to protect yourself and family against sudden financial loss, especially in money matters. It is an easy way to protect valuables such as car and jewellery which can be subjected to damage or theft at any time.
  2. Separating Assets: this is majorly for couples. Couples having a joint account may suffer in case of a divorce because each partner will be awarded half of the property regardless of their contribution, whether large or small.
  3. Family trust: a family trust can be set up to aid family members or protects its asset. A family trust can be used to protect the family home in case of the business failing or going bankrupt. However, a family trust can be costly but will protect your asset in future.
  4. Enduring power of attorney (EPA): we all lose the ability to make decisions at a certain point in our lives, but a power of attorney can protect you from that. EPA gives someone a power of attorney over our properties that is the right to make decisions on our behalf.