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What is the Difference Between Productive Assets And Consumptive Assets?

What is the Difference Between Productive Assets And Consumptive Assets?

Consumptive assets and productive assets are an important part of the resources owned by entrepreneurs. In addition, there are several types of assets, such as tangible and intangible fixed assets.

Such as houses, buildings, land, factory machinery and electronic equipment. From the resources owned, the company can measure the return on assets on fixed assets to calculate the profit earned.

Productive assets are assets that continue to create profits or profits. Examples of productive assets that can be found today are in the stock market.

Both consumptive assets and productive assets have their own characteristics. In order not to be confused in differentiating, let's discuss further about the following definitions of productive assets and consumptive assets.

Productive Assets

Productive Assets is an asset value that will continue to grow in the future. Generally, bring in continuous income. Or, it can be a prospective and profitable income. This is because the selling value of productive assets is very high or increased, compared to when you first bought them.

In general, productive assets are assets that continue to create profits or profits. Examples of productive assets that can be found today are in the stock market. Stocks are productive assets because they generate value that adds up over time. In addition, it can increase cash flow.

Agriculture or livestock are also examples of other prospective productive assets. When you buy a paddy field or own a farm, you can continue to cultivate and manage your farm or ranch to harvest its produce for years.

Not only that, if you want, you can also rent out agricultural land such as rice fields to be rented and worked on by other people. Another example of a productive asset is a house. This type of property investment, such as a house, is in great demand. Because apart from being able to be rented out or rented out, you can also resell if you need funds.

Consumptive Assets

What is the Difference Between Productive Assets And Consumptive Assets?

The definition of consumptive assets is that consumptive assets are the value of assets that will continue to decrease over time. So, do not be surprised if consumptive assets are one type of asset that is less prospective and often experiences depreciation. For example depletion or depreciation because the company buys raw materials.

Unlike productive assets that continue to generate profits, consumptive assets are just the opposite. Consumptive assets do not offer income potential. An example of a consumptive asset is a car.

That doesn't mean you shouldn't or shouldn't invest in a car. It's just something to consider, when buying a car you may hope that the car's value will increase in the future and can be resold for a profit.

However, over time the car will never be worth more if you do not take care and develop the features of the car you buy (the term is modified). If so, it can't do anything.

In fact, most used car shops in Indonesia actually cut their selling value as depreciation. There are still costs that need to be incurred to increase future income. But don't worry, if you pay close attention to these assets, they will be useful in the future.

Meanwhile, if you have productive assets such as stocks, you can potentially generate income. In other words, you can buy stock at a price that remains stable as long as you hold it.

And that's why, you need to focus on investing in productive assets as much as possible. Over time, you will earn an income that you can rely on for years. 

Talking about investment, it's the same as taking business profits, where when in the company's operational activities, business people will also find out how much profit they receive.

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