Money is a ubiquitous part of our daily lives. We pay for electricity, for food, for housing, and for work. Money is necessary for living. That is why monetary assets are so important. Monetary assets are nothing more than our money, which we can use in any way we want. Money is needed to live, which is why monetary assets are so important.
Monetary assets – definition of the concept
The term monetary assets refers to any money that a person or company has at its disposal. Thus, they are intended for immediate use to pay bills, insurance premiums or other expenses. Cash assets can be held in cash or non-cash form.
The cash form of assets is, for example, money in a bank account, and the non-cash form is, for example, bonds or short-term investments. Cash assets are very important for any company or individual, as they are the primary means of financing their current expenses. Therefore, it is worth keeping them under control and regularly monitoring their level and renewing them in a timely manner to avoid a situation in which we run out of funds for our current needs.
Categories of monetary assets
Cash asset categories are the main divisions by which investors can classify their assets. They are usually divided into three main categories: illiquid assets, liquid assets and cash. Illiquid assets are those that cannot be easily sold or converted into cash. Examples include real estate, works of art or material inventories. Investors usually have to wait a longer period to sell them, and their value can fluctuate over time. Liquid assets are those that can be easily and quickly sold or converted into cash.
These are, for example, bonds or shares of listed companies. Investors have easy access to them and can sell them at any time. Their value, on the other hand, is more volatile than that of illiquid assets. Cash assets are those assets that are already cash or can be easily converted into cash. Examples include bank accounts, treasury bonds or certificates of deposit. They are very secure and safe, but their value is relatively low compared to other assets. Investors can classify their assets according to many other criteria, such as, for example, risk, rate of return or duration of investment. It can be helpful here to take expert advice to select the right assets for your needs and goals.
Examples of monetary assets
Monetary assets include means of payment, cash and securities. Cash refers to money in circulation, that is, money in bank accounts and other deposits. Securities include bonds, stocks or certificates of deposit. Cash also includes funds accumulated in futures contracts and in the form of loans and advances. Securities are the most popular monetary assets. They are traded on the stock market and can be bought and sold at any time.
Stocks are securities that entitle the holder to share in the profits or assets of a company. Bonds are securities that denote public or private debt. Other types of securities include treasury bills, investment certificates or bills of exchange. Cash is the second most popular monetary asset. Money in bank accounts can be used at any time to make transactions. Other forms of cash include funds in futures contracts and in the form of loans and advances. Loans and advances are the third popular cash asset. The borrower must give back more than he borrowed, in addition to being required to make regular installment payments. Loans and credits can be granted by banks, financial institutions and private individuals.
