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What Are Long Term Assets?

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  • Written By: Haven Esme
  • Edited By: Bronwyn Harris
  • Last Modified Date: 15 November 2016
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Any asset that a company or individual holds that will generate revenue for more than one year is considered a long term asset. These assets are the assets that a company holds of value that are expected to last in spite of any depreciation. These assets are defined as the value of a company's equipment, property and any other assets that they have placed on a balance sheet.

According to many experts the three best assets that someone can invest in are stocks, bonds, and cash. Real estate is also considered a great long term asset. These assets can accumulate vast amounts of interest, and in the case of real estate, the asset builds equity. The goal of any individual or company is to preserve their assets over time and long term assets gives them this stability.

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People who generally want to invest in stocks as a long term asset should expect to keep their money invested for a minimum of five years. When investing in stocks, it is essential that the person or company have a higher risk tolerance because of potential volatility in the stock market. Bonds are also considered a top investment for those interested in preserving their assets. Bonds have little fluctuation in value over time and are a great choice for those who need an income stream from the long term investments that they have made. Cash is one of the best long term investments for people who don't mind having a low return on their money, and is an excellent choice for those who may need better access to their money in the near future.

The more conservative a person is the more likely they are to invest their assets in bonds. The more aggressive person will place all long term investments in the stock market. People normally invest in these assets based on their current and future financial goals. When a long term asset is placed on a balance sheet, it visually remains at the same rate as it was when it was first acquired. For this reason, many businesses and individuals with these assets actually have much more wealth than what is recorded.

A long term asset can either be tangible or intangible. Tangible assets are something that can be physically touched. Some examples of tangible assets include buildings, land, equipment, tools, and anything else that has a physical stance.

The intangible assets are what is presented on paper. The value of these assets are based on current market conditions in most cases. Some examples of intangible assets are stocks, bonds, trademarks, patents or any intellectual property that holds value.

One benefit to having long term assets is that they are a patient way for individuals and companies to achieve their financial goals due to compound interest and a gradual appreciation in the market. Even entire countries base their economic growth on their ability to secure these assets. For example, in May 2009, the United States Federal Reserve considered how it could boost the global economy by investing in these assets. As the economy shifts, rises, and falls individuals and companies rethink where they allocate their assets. In spite of global economic trends, long term assets will continue to be a safe haven for many investors.

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