Reflection in Financial Assets

In today's fast-paced economy, where product lifecycles are becoming

increasingly impatient by the day, it is essential to implement strategies and approaches
for effectively managing money so that resources can be set aside for long-term saving
or investment. However, how important is it to know and understand the financial assets
that we can use as future investments?
After watching the video lecture and from my previous learning subject, I have
learned about the different types of financial assets, as well as their advantages and
disadvantages. To begin, I learned that financial assets are investment assets whose
value is derived from a contractual claim of what they represent. These are liquid assets
because the economic resources or ownership can be converted into a valuable asset,
such as cash. They are commonly used to finance real estate and the acquisition of
tangible assets. Moreover, financial asset is classified into different categories based on
the characteristics of the cash flow associated with them such as banks deposits,
bonds, stocks, cash and cash equivalents and derivatives.
Furthermore, I’ve realized that some of these highly liquid assets, can be easily
used to pay bills or cover financial emergencies. On the other hand, there may be one
that must be sold in exchange before it can be settled like stock. Besides that, financial
assets may distribute risk based on the preferences and risk appetite of the parties
involved in the investment of intangible assets. The value of this asset is determined by
the demand and supply of such assets in the market. The value of people's financial
assets can change significantly, especially if they have heavily invested in stocks. Each
financial asset comes with its own set of risks and benefits for the customer. For
example, a car company usually has no idea about the sale of its cars, so the value of
the company's stock may increase or decrease. A bond can default if the issuer fails to
repay the bond's par value. Even cash and savings accounts are risky because inflation
can reduce purchasing power.
There, I conclude that it is always necessary to keep a good record of financial
assets so that they can be used whenever needed, such as in financial emergencies.
It's a good idea to keep an eye on the availability of such assets.
Each financial asset has a different but specific goal for the holder, each has a
different amount of risk associated with it, and thus returns for the purchaser of such
asset are also different based on risk. Because each asset type has some reward and
risk associated with it, it is always important to keep a mix of different asset types in
order to have an optimum capital structure. It contributes to the company's smooth
operation by ensuring that assets are not in short supply.