Invest in tangible assets

Definition: What are tangible assets? 

What are tangible assets? Basically, this is answered quickly. A tangible asset is the value of a thing. The German Civil Code (BGB) further defines what a thing is:

Property within the meaning of the law is only physical objects.

A tangible asset is characterised by the fact that it is limited in its available quantity.
A classic car...

  • of a particular brand,
  • of a particular model,
  • of a certain year of construction?

They are often only available a few hundred times . So tangible assets are not infinitely available - and that makes them attractive. 

Investing in tangible assets definition

Investing in tangible assets such as classic cars is worthwhile in these times. 

But what exactly are tangible assets in the field of finance?

Those who want to invest in tangible assets have a wide choice. Some examples of t angible assets are:

  • Invest money in real estate
  • Precious metals/commodities (gold, silver, ...)
  • Shares
  • Collectors' items (cars, paintings, coins, ...)
  • Cryptocurrencies

The tangible assets are contrasted with the monetary assets. Monetary assets include, among others:

  • Savings account
  • Building savings contract
  • Fixed-term deposit
  • Bonds
  • Forward transactions

A good way to differentiate is the following consideration: If inflation suddenly sets in, certain things like savings accounts, time deposits, etc. lose purchasing power in the short term - they retain their absolute euro value. In contrast, tangible assets increase in value during inflation - they become more expensive and increase in their absolute euro value.
Investing in tangible assets is truly worth its weight in gold during inflationary periods. 

So tangible assets are like a plastic duck in a bathtub: if the water level rises, the duck on the surface rises up with it. 

In which tangible assets to invest?
To be able to answer this question, let's first get an overview of tangible asset examples.

Real estate as a tangible asset

Bei der Immobilie als Sachwert muss ein bisschen differenziert werden.
Wenn Sie eine Immobilie zum Eigennutz erwerben, handelt es sich nicht um eine Investition, sondern um einen Kostenapparat.
Wenn Sie Ihre Immobilie allerdings vermieten, nutzen Sie sie als Kapitalanlage, die sich durch die monatlichen Mieteinnahmen selbst finanziert.
Wie funktioniert das Prinzip?

  1. Buy property and pay only the ancillary costs from equity (usually 5-10% of the purchase price).
  2. Rent flat
  3. Use the rent to pay the interest and repayments at the bank month after month. You are building up your assets from day 1, because your tenant is paying off the property for you, so to speak.

For this investment to really pay off, many factors have to be right.

Among other things, the location, the ratio between rent and purchase price and the need for renovation play a major role in achieving an attractive return.

You can find out more about this in our guide to real estate as an investment. You can also use our property calculator to determine the potential return on your property. 

Our clients mostly use the 360° package with property selection, Consultingfinancing and management. Because they don't want to have any work with their capital investment.

Does real estate as an investment suit you?

Shares and ETFs as tangible assets

Shares are also tangible assets, as you put your assets into a real company and thus acquire shares in that company.

But are ETFs real assets? Well, with an ETF you can choose a corresponding portfolio that covers real estate, shares, commodities, etc. Therefore, ETFs also represent tangible assets that track a certain index, such as the DAX or the S&P 500.

Gold as a tangible asset

Investing in gold is probably the first thing that comes to mind for most people when it comes to making a capital investment in tangible assets.

Gold as a tangible asset

Gold as a tangible asset

You can buyphysical gold either at a bank, at a precious metal dealer or on the internet. In all these cases, you should definitely carry out a thorough price comparison of the providers and pay attention to seriousness and reliability. You can store the gold you have purchased either in your own safe or in a bank safe deposit box. (We would not recommend hiding it under your pillow).

It isalso possible toinvest in gold-related securities, which you can do conveniently via your securities account.

However, you must not forget that gold as a tangible asset is subject to the behaviour of speculators and thus possible fluctuations in value. 

Which tangible assets in the event of inflation?

The biggest or most consequential difference between tangible and monetary assets lies in their behaviour during an inflation. During an inflation, your cash loses purchasing power and thus significantly decreases in value:

Imagine that inflation sets in, where the inflation rate is 100% from one day to the next. 1,000 under your pillow is still worth €1,000 a day later - but you can only buy half as much from the €1,000. For example, if a loaf of bread costs €10 instead of €5 the next day.

Those who invest money in real assets have more security here. Tangible assets can protect against currency crises or national bankruptcies. Of course, there are also differences among tangible assets that you should be aware of.

Secure tangible assets

Not all tangible assets are safe. A clear distinction must be made here between speculative and safe tangible assets. Speculative tangible assets include shares, commodities and collectibles. These investments are sometimes subject to very strong price fluctuations and thus represent a high risk for investors.

Real estate, on the other hand, is one of the safe tangible assets, as it normally increases in value and does not decline. Moreover, it is not to be expected that the demand for residential real estate will decline, since, after all, everyone needs a place to live. If you choose your location wisely, you have a very good chance of successfully steering your own old-age provision in a safe direction. 

Green tangibles

The philosopher Heraclitus already said: "Nothing is so constant as change."

And so a change can also be seen within our society. More and more people want to live more consciously and sustainably. This trend also has an impact on financial products. Already in recent years, many investors have been betting on renewable energies in the form of wind or solar plants.

Solar system costs

The cost per watt of solar installations has fallen rapidly over the last 50 years.

Unfortunately, many of them had to realise that these green investments also entail a certain risk and are therefore not safe. Yet environmental awareness and security are not mutually exclusive if you combine your interests wisely.

Anyone who buys a Safe property for rental purposes and make it energy-efficient, you can not only combine security with sustainability, but also have the prospect of various subsidy opportunities.


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What are good tangible assets?

Especially in difficult times, the urgent question arises of good tangible assets in which to invest. Due to the current monetary policy development, our recommendation clearly goes in the direction of income property .

We are also there for you in the current crisis and will be happy to advise you on your real estate investment by telephone or e-mail.

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