Assets

What It Means

In personal finance, assets are what you own that's worth money: cash in the bank, investments, retirement accounts, a home or other real estate, a car and other valuable property. On a net worth statementPersonal balance sheetA one-page list of everything you own and everything you owe on a given date, with your net worth as the difference between the two. See more they go on one side and your liabilitiesLiabilitiesDebts and other money you owe, such as a mortgage, a car loan or a credit card balance. Your assets minus your liabilities is your net worth. See more, the debts you owe, go on the other. Subtract total liabilities from total assets and you have your net worthNet worthWhat you own minus what you owe: the value of your savings, investments, home and other assets, less your mortgage, loans and card balances. See more. A home or car is usually listed at about what it would sell for today, since that's the cash it could become.

How It Sounds at Home

• "Most of our assets are tied up in the house."
• "Is a car really an asset if it loses value every year?"
• "List your assets on one side and your debts on the other."

The Breakdown

Worked example. A couple lists what they own:

What the result means. Total assets on their own say how much you own, and nothing yet about how you're doing. This couple also owes $279,500 on a mortgageMortgageA loan used to buy or refinance a home, secured by the home itself and repaid in monthly installments over a set term. See more, a car loan, a student loan and a credit card, so their net worth is $380,500 minus $279,500, or $101,000.

The mix matters too. Only the $6,500 in checking and savings is cash they could spend this week. Fidelity counts stocks and funds among the more liquid holdings, though the price on the day you sell can be lower than you'd like. The home takes time to sell, and pulling money from the retirement accounts before 59½ usually costs extra tax. That's why an emergency fundEmergency fundMoney set aside only for unplanned costs, like a car repair, a medical bill or a lost paycheck, kept where you can reach it quickly. See more belongs in a savings accountSavings accountA bank or credit union account for money you're setting aside for later, which earns interest and is insured up to federal limits at insured institutions. See more, even for a household with plenty of assets on paper.

How to value each one. Use the balance on the latest statement for accounts. For a home or car, use a realistic sale price today, and update it when you redo the list.

Good to Know

Fidelity's net worth guide lists investments, savings, personal property and real estate as assets, and Investor.gov, the U.S. Securities and Exchange Commission's site for investors, suggests setting what you own beside what you owe to see where you stand. Count a retirement account at its full balance, but know what it costs to reach early: according to the IRS, distributions from 401(k) plans and IRAs before age 59½ generally owe a 10% additional tax on the taxable part, on top of regular income tax, unless an exception applies.

Related Terms and Categories

• Liabilities

  Debts and other money you owe, such as a mortgage, a car loan or a credit card balance. Your assets minus your liabilities is your net worth.

• Net worth

  What you own minus what you owe: the value of your savings, investments, home and other assets, less your mortgage, loans and card balances.

• Illiquid assets

  Things you own that can't be turned into cash quickly without a wait, a cost or a lower price, such as a home, other real estate or collectibles.

• Personal balance sheet

  A one-page list of everything you own and everything you owe on a given date, with your net worth as the difference between the two.

• Home equity

  The part of your home you own outright: its current value minus everything you still owe on loans secured by it.

Household money and budgeting