What are hard assets?

Hi friends,

I am learning about Commercial Real Estate. I am sharing what I have learnt with you guys. I have compiled it for an easy understanding. I hope you will like it.

Disclaimer: Before you start reading, you should keep in mind that this post is in no way a suggestion for which assets you should buy. This thing has been written with the intention of sharing value and lessons on this subject. I again repeat, I am not suggesting you for which assets or stocks you should buy.

The lesson begins:

What Are Hard Assets?

A hard asset is a physical, tangible asset that has intrinsic value. This means it is something you can see, touch, and use, and it holds value regardless of the economy or stock market performance.

Examples of Hard Assets:

✅ Real Estate → Land, commercial buildings, houses, and rental properties.

Land- the part of the earth's surface that is not covered by water.

Commercial buildings- A commercial building is a property designed and built for business activities and profit generation, encompassing various types like office buildings, retail spaces, warehouses, and more.

Houses- Houses are properties owned and occupied by its owners. (House=Owned)

 Rental properties- A rental property is a real estate asset owned by an individual or entity that is leased or rented out to tenants, generating income for owners. These properties can be residential (like apartments or houses) or commercial (like office spaces or retail shops). (Rental properties=rented)

✅ Precious Metals → Gold, silver, platinum.

 platinum-

Gold- a yellow precious metal, the chemical element of atomic number 79, used especially in jewellery and decoration and to guarantee the value of currencies.

Silver-Silver is a precious metal which has applications in the making of jewellery and tableware to modern technologies like electronics, solar panels, and ability to reflect light. It has economic value too.

✅ Commodities → Oil, natural gas, farmland, and raw materials.

Oil-Oil, both crude and refined, has a wide array of uses, serving as a primary fuel source, a feedback for plastics and chemicals and a component in numerous everyday product, from transportation to household items. Oil is a viscous liquid derived from petroleum, especially for use as a fuel or lubricant.

Natural gas- Natural gas is a versatile fuel used for heating, cooking, electricity generation, and as a feedstock for various heating, industries, including the production of fertilizers and plastics. Natural gas is a naturally occurring compound of gaseous hydrocarbons, primarily methane, small amounts of higher alkanes, and traces of carbon dioxide and nitrogen, hydrogen sulfide and helium.

Farmland- lands that are used for farming

Raw materials- Raw materials are the basic substances, often in their natural state, that are transformed or processed to create finished products. 

✅ Equipment & Machinery → Construction equipment, factory machines, and industrial tools.

Hard Assets vs. Soft Assets

If you are interested to know what ‘soft assets’ are then click the link below. This will take to the soft assets newsletter. This link 👇:

Why Are Hard Assets Important?

1️⃣ Inflation Protection – Hard assets increase in value when money loses purchasing power.

How?

Real life Example:
📌 Example: Real Estate Prices Rising During Inflation

• Suppose you bought a house for $200,000 five years ago.

• Due to inflation, construction costs, and demand, the price of homes increases over time.

• Today, the same house might be worth $300,000 or more, meaning you gained value while the dollar lost purchasing power.

• Meanwhile, if you had kept that $200,000 in cash, it would have lost value because of rising prices.

💡 Lesson: Real estate protects you from inflation because its value tends to rise over time.

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2️⃣ Less Volatile Than Stocks – They don’t swing up and down like the stock market.

How?

Real life Example:
📌 Example: 2008 Financial Crisis – Stocks Crashed, but Gold Held Its Value

• During the 2008 stock market crash, major stock indexes like the S&P 500 lost 50% of their value in a year.

• Many investors lost millions overnight as stocks became worthless.

• Meanwhile, gold prices surged, as people rushed to buy a safe, physical asset.

• From 2007 to 2011, gold’s price jumped from around $600 per ounce to over $1,900 per ounce.

💡 Lesson: Hard assets like gold don’t experience huge daily price swings like stocks, making them a safer long-term investment.

3️⃣ Store of Value – Even if the economy crashes, land, buildings, and gold still have real worth.

How?

Real Life example:

📌 Example: Venezuelan Hyperinflation – Land and Gold Saved Wealth

• In Venezuela, the government printed too much money, causing the currency to collapse.

• The Venezuelan Bolívar lost almost all its value, and people’s life savings became worthless.

• However, those who owned land, real estate, or gold could still trade them for valuable goods like food, medicine, or even foreign currency.

• People who kept money in banks lost almost everything, while those with hard assets survived.

💡 Lesson: Hard assets hold real, tangible value even when paper money becomes worthless.

🔹 Example: During a financial crisis, stock prices may drop, but real estate and gold still have value because people always need land and housing.

Final Takeaway

Hard assets like real estate, gold, and land offer:
✔ Protection against inflation (rising prices make them more valuable).
✔ Stability compared to stocks (they don’t crash overnight).
✔ Real worth in a crisis (you can trade them even if the economy collapses).

If you enjoyed reading it, then consider reading the other ones that I have written. You can access them with the links given below:

Why a house is a liability-

The Five laws of Gold that you should know:

How you can save yourself from getting taxed-

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