A personal asset is something that an individual owns that is of value. This can be anything from a piece of land to investments. Some more examples of personal assets are real estate, one’s home, bonds and mutual funds, cars, jewelry, art collections, antique collections, etc. It really is a broad term that can cover practically anything that is of some worth.
Personal assets are important when calculating the worth of a person. This calculation is required for many different financial transactions, but one common situation is when a person applies for a loan. When applying for a loan, creditors usually ask for the net worth of the person, and all personal assets are taken into consideration and added up.
How does one determine the worth of a personal asset? There are two methods by which this can be done. The simpler way is to look at the price of the asset if it were to be sold in the market right at the moment. This value is called the market value. The other method is not that straightforward, but it also gives the asset a higher value. This is because this method takes into consideration the potential value of the asset in the future. This method is called the appraisal method.
Some personal assets can be used to generate more income, increasing the value of the asset. For example, real estate and investments can make more money over time, and they should thus be monitored well in order to make the most of them.