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Real Asset

Real Asset

This term refers to tangible or physical assets that derive their value from their properties and substance, as opposed to financial assets, whose value is backed by underlying assets, either real or intangible. Some examples of real assets: commodities, precious metals, real estate, and agricultural land and oil. Inflationary periods are the best time for including real assets in one’s diversified portfolio, as they tend to do better than financial assets then. The downside to real assets: carrying and storage costs are higher, as are transaction fees, and liquidity is lower.