What are financial assets, and what are the benefits of investing in them?

4 min read
31 January 2022

After the year that was 2021, many small business owners, guided by their accounting teams, may be undertaking a business financial health check. With entire cities placed into lengthy lockdowns, ongoing supply chain issues and staff shortages as people isolate, small businesses are still struggling to manage cash flow issues.

The good news is, it has highlighted the important place financial assets play in any successful business.

But what are financial assets and what are the benefits of investing in them?

What are financial assets? 

Assets are anything that is of value, with most asset classes as either real, intangible or financial. 

Real assets are physical, tangible assets such as real estate, land, precious metals and tangible commodities such as iron ore, livestock and oil. 

Intangible assets are non-physical assets such as trademarks, patents and intellectual property.

Financial assets are generally non-tangible, with their value being a contractual claim or other claim to ownership. Financial assets include cash, bank deposits, stocks and bonds. With the most common being money in the bank and investment portfolios. The financial assets of a business also include accounts and notes receivable.

While the assets themselves are intangible, they do shift into the physical as their value is noted on bank notes, on your bank statement or on documents of ownership, such as with stocks and bonds. This provides you with your claim of ownership to the asset. With it’s value coming from a contractual claim to an underlying asset which itself may be real (such as real estate) or intangible (ETF’s).  

It’s worth noting that most of your personal wealth consists of financial assets. 

What are some common financial assets

Cash (and cash counterparts) 

Whether it’s cash in your pocket (if you’re still using actual real cash) or money in the bank, cash is arguably the most common type of financial asset. When you open up a bank account, you sign an agreement with that financial institution. You deposit money and they send you a monthly statement showing the value of your account. 

And the good news is, in Australia, the government guarantees your deposits up to $250,000. According to the Australian Prudential Regulation Authority (APRA) website:

‘The Financial Claims Scheme (FCS) is an Australian Government scheme that provides protection to deposit-holders with Australian incorporated banks, building societies and credit unions (known as authorised deposit-taking institutions or ADIs), and general insurance policyholders and claimants, in the unlikely event that one of these financial institutions fails.

The FCS is a government-backed safety net for deposits of up to $250,000 per account holder per ADI. It also covers most general insurance policies for claims up to $5,000, with claims above $5,000 eligible if they fulfil certain criteria.

Once activated by the Australian Government, the FCS is administered by the Australian Prudential Regulation Authority (APRA).’

With FCS in place, this means you have peace of mind knowing you have financial protection over your deposits up to $250,000 in the rare event that a bank, credit union, building society or general insurer fails. The scheme was introduced in 2008 during the GFC and is designed to provide stability to the financial system in Australia.

Stocks and Bonds

Yes, they’re both very different but for the purposes of this article, we’re popping them in together with a quick overview of each. Stocks and shares are investments into a company. You effectively own a piece of the company. Alternatively, bonds are a fixed investment where you loan the bond issuer a certain amount of money for an agreed time. 

If you’re keen, you can read more about investment portfolios.

Accounts and notes receivable 

Money owed to your business is a financial asset. Most of the time this would be in the form of invoices or signed promissory notes that you have issued but you have not received the cash for yet.

What are the benefits of investing in financial assets?

All assets add value to a business. However, not all assets are easily and readily accessible, should you require cash fast. Such as during a global pandemic when your business has been deemed non-essential and the government has mandated you close your doors. 


It can reasonably be assumed one of the most valuable aspects of financial assets is their liquidity. 

Financial assets are liquid assets and Moneysmart defines liquidity in the following way:

‘How easily an investment or financial product can be converted to cash. Shares in large publicly listed companies that are regularly traded on the ASX (Australian Securities Exchange) are considered liquid assets, while direct property investments are less liquid, due to difficulties and time delays that may be experienced when buying and selling. Liquid markets have enough trading activity to allow both buyers and sellers to easily transact as they wish.’

Assets you can easily and quickly convert into cash can help avert short-term business disaster, such as unexpected bills or late paying debtors. Or perhaps even a four month long lockdown.

Higher returns

If you do have an investment portfolio and a high risk tolerance, you can invest more aggressively and as a result, earn bigger returns on your investments. You can also opt to play it safe and risk less. But your returns will reflect this lower tolerance to risk and will be lower.

Security and peace of mind

While the returns may not be as great as investing in more tangible assets such as property and real estate, there’s a certain amount of peace of mind knowing you can access cold, hard cash quickly. Sure, large amounts may take a few days to organise but that’s a small price to pay.

Ask the experts

Whether you’re having issues dealing with long or short term cash flow management, you want to step into 2022 with some new investment strategies or you’d just like some guidance in the world of financial assets, the Kelly+Partners team are here to help. 


This offer for Private Wealth Services is not available to clients of BMF as at 31 December 2016.


Kelly Partners Private Wealth (Wholesale) Pty Ltd is a corporate authorised representative of Kelly Partners Private Wealth Pty ltd (AFSL: 516704, ABN 14 629 559 860). Any general advice provided has been prepared without taking into account your objectives, financial situation or needs. Before acting on the advice, you should consider the appropriateness of the advice with regard to your objectives, financial situation and needs.

Kelly Partners Private Wealth Sydney Pty Ltd is a corporate authorised representative of Madison Financial Group Pty Ltd (AFSL: 246679, ABN: 36 002 459 001)