Understanding assets: What they are and why they matter
What you need to know:
- Having good assets that grow in value helps people build wealth. That’s why adults invest in things like houses, land, and businesses—so their money can grow over time.
By Tracy Rabi
Picture this: You have a treasure box filled with special things, such as your favourite toy, a piggy bank, or a shiny new bike. These are your treasures, your assets – things that belong to you and hold value.
In the grown-up world, assets are valuable things people or businesses own that can help them. Here are a few examples:
Your savings: Imagine pulling coins from your piggy bank to buy something you love. That’s an asset!
A house: It’s not just for living in—it can be rented out or sold later for more money.
A car: If it’s used to earn money, like a taxi, it becomes valuable.
Land: This is a super-powerful asset because it often gets more valuable over time.
However, there is a twist! Not all assets stay the same. Some get better, and some don’t.
How assets change in value
Some assets increase in value over time. This is called appreciation. For example, land and houses usually become more expensive because more people want to buy them. Rare collectibles, like old coins or artwork, can also become worth more as they get older.
Other assets lose value over time. This is called depreciation. A new car, for example, starts losing value as soon as someone drives it because it gets older and used. Some toys you have might become less valuable if they break or if people stop wanting them.
Having good assets that grow in value helps people build wealth. That’s why adults invest in things like houses, land, and businesses—so their money can grow over time.
Now, here’s the big secret: smart people invest in assets that grow over time. Why? Because they want their money to grow! So next time you think about your treasure box, imagine it full of valuable things that can make your future shine even brighter.
And when you grow up, make sure you buy more appreciating assets like land, shares in businesses, gold, or houses.
Tracy Rabi is a children's author and the founder of Kids Finance with Tracy and the Tanzania Youth Entrepreneurship Experience.
