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Generally, investors can invest in two types of assets - physical and financial assets. Physical assets are those that are tangible which include house, property, collectibles, physically items that may been seen, felt, held, or collected. Physical assets such as house can serve both as an investment and a place to stay. Physical assets, unlike financial assets, also provide their owners with an emotional return, for example, the pride of home or car ownership. Financial assets are an indirect or less tangible form of investments which includes securities such as stocks or bonds normally issued by companies for raising capital for businesses. Other financial assets that are common and readily available to the public are unit trusts, savings accounts, fixed deposits, etc. Unlike tangible assets such as property, financial assets do not require cash outlay during the period in which they are the owner. A property owner for example would be required to put in money for maintenance, repairs, etc. Financial assets often generate cash flow or income in the form of dividends or interest payments. Investors in physical assets generally do not receive a regular income stream (except for property) and instead may incur additional costs for storage or insurance. Unit costs for such investments are usually very high - you cannot easily acquire multiple art masterpieces. Whilst with financial assets you can accumulate small quantities at a time such as buying one or two shares at a time or putting in RM5,000 in fixed deposit each time. Perhaps one of the major differences between financial assets and physical assets is the liquidity factor. What is liquidity? Liquidity is defined as the capacity of an investment to be retired for cash in a short period with a minimum capital loss. In simple words, it measures how readily an asset can be turned to cash. It is generally more difficult to sell a piece of land, house or even a car. During bad times, it is highly possible that the disposal would be at a considerable discount to cost. This is in contrast to financial assets such as stocks which are more easily bought or sold in the market. Such securities can generally be sold within a matter of minutes at a price reasonably close to the last traded value. This is because in the market place, huge values of financial assets are transacted daily.