In economics, an asset is anything of value that can be converted into cash. You're likely familiar with physical assets, like a house or a car. But much of the economy runs on financial assets—claims on the future income of the issuer. Think of stocks, bonds, and, of course, money itself.

The key difference between these assets is their liquidity, which is a fancy way of saying how easily they can be converted into cash without losing value. Cash in your hand is perfectly liquid. A government bond is very liquid. Your house? Not so much. It takes time and effort to sell.