Hello everyone and welcome to this video where we’ll be discussing the key concepts of assets and liabilities in finance. If you’re an aspiring entrepreneur, business owner or an investor, it’s crucial that you have a good understanding of assets and liabilities, as it will help you make informed decisions about your finances. So, without further ado, let’s dive into it.
DEFINITION OF ASSETS
Assets are things of value that a person or company owns. Assets can include physical or non physical items such as real estate, stocks, and bonds, crypto, gold, silver, as well as intangible items like intellectual property, copyrights, and trademarks. Assets can be used to generate income, known as passive income, either through renting out real estate, selling stocks, dividends, or through licensing intellectual property.
DEFINITION OF LIABILITIES
Liabilities are obligations that a person or company owes to others. Liabilities can include things like loans, mortgages, credit card debt, and other forms of debt. Liabilities are important to consider when evaluating the financial health of a company or individual, as they represent obligations that must be paid in the future. Liabilities are anything in which take money out of your pocket, compared to an asset which produces income. Not all debt is a liability! It is extremely important to know how to use debt correctly.
THE IMPORTANCE OF ASSETS AND LIABILITIES
The distinction between assets and liabilities is important because it allows you to understand the financial position of a company or individual. By evaluating the value of assets and liabilities, you can determine the net worth of a company or individual, which is the difference between the value of assets and liabilities. A positive net worth indicates that a company or individual has more assets than liabilities, which is a positive financial position. Being in a positive cash flow is essential. Be sure to look out for other videos explaining ways of how to become net positive, and liability free!
DIFFERENT TYPES OF ASSETS
There are many different types of assets, including:
Cash and cash equivalents, such as savings accounts, money market accounts, and short-term bonds, crypto, and precious metals.
Stocks and bonds, which are securities that can be traded in financial markets.
Real estate, which can in some cases be a residential property, but certainly a commercial property.
Art, jewellery, and other valuable collectibles.
Intellectual property, such as patents and trademarks.
DIFFERENT TYPES OF LIABILITIES
There are also many different types of liabilities, including:
Loans, such as mortgages, car loans, and student loans.
Credit card debt, which is owed to credit card companies.
Accounts payable, which are amounts owed to suppliers and vendors.
Rent, which is owed to landlords.
Taxes, which are owed to the government.
Fines and fees.
THE RELATIONSHIP BETWEEN ASSETS AND LIABILITIES
Assets and liabilities are interrelated, as the value of assets can be used to secure loans and other forms of debt. For example, a mortgage loan can be used to purchase real estate, which can then generate income through rental payments. The value of the real estate acts as collateral for the loan, which helps to secure the loan and reduce the risk of default.
THE IMPORTANCE OF MONITORING ASSETS AND LIABILITIES
It is important to monitor the value of your assets and liabilities regularly, as changes in the value of assets and liabilities can impact your financial position. For example, if the value of real estate decreases, your net worth will decrease, while an increase in the value of stocks or bonds can increase your net worth. Monitoring the value of assets and liabilities can help you to make informed decisions about your finances and plan for your future.

IN CONCLUSION
In conclusion, assets and liabilities are important concepts in finance that every aspiring business owner and investor should understand. By having a solid understanding of assets and liabilities, you can maximise your current situation to plan your next move on the chessboard. Thank you for taking you time and watching this video. We appreciate all feedback, and we hope we covered everything you needed to know! If you have questions or topics you want covered be sure to comment them down below so we can cover all the bases. Be sure to check out the channel for many more videos like this, teaching you the modern day understanding of business and REAL wealth creation!

свернуть