On assets and cash: Difference between revisions

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Latest revision as of 13:22, 14 August 2024

Banking basics
A recap of a few things you’d think financial professionals ought to know
Index: Click to expand:
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You can divide your possessions into two categories: things that are, or represent, what you do have, and things that represent what you do not have.

The first bucket we call “assets”. They include things that you own, things you are entitled to, and things that prove the foregoing. Examples: Things you own: Your car. Things you are entitled to: rights under a contract.Things that prove the foregoing: ownership registries, title deeds, written, signed contracts.

The second bucket we call cash. You had a car, you sold it to your friend Bob, and Bob gave you fifteen hundred bucks. The thing about that fifteen hundred bucks is that, by itself, it is no good to you. You can’t eat it, you can’t pledge it, it won’t earn you any income. You can turn it into an asset. but only by giving it away.

See also