According to a 2024 report, approximately 8% of American adults fit the definition of a “millionaire.” When you hear this term, you probably think of huge boats, flashy cars and seemingly endless vacations in a tropical paradise.

However, most millionaires don’t live lavish, over-the-top lifestyles – most Americans in this category have a healthy amount of liquid assets and may own one or more physical properties. 

How do these everyday people become millionaires? The answer is proactive asset management.

To achieve financial health and stability, you should begin actively managing your assets and planning for the future. In time, you can grow your assets and build your cumulative wealth.

What Are Assets?
The term “assets” refers to anything that has worth. An asset can be a physical, tangible item like a car, boat or house (also known as “real” property.) It can also be intangible, such as a bond, stock or cash. These intangible assets are often referred to as “financial assets.”

Any type of asset contributes to your net worth, which is the combined value of all your assets minus any debts. Loans and credit card debts are examples of obligations that detract from your net worth. For instance, let’s say you’re a homeowner but you are still paying your mortgage. Your home is worth $500,000, and you owe a balance of $300,000 on your loan. The equity in your home would be $200,000, meaning it contributes $200,000 to your net worth. This same concept can be applied to any property you’ve purchased but still pay for, such as a boat or car. 

When classifying your assets, you can group them by type (i.e., tangible or intangible) or classify them based on liquidity. 

Liquid Assets vs. Illiquid Assets 
Liquid assets are resources you can easily access when needed. By contrast, illiquid assets hold value that is difficult to tap into. Generally, it would be best if you had a healthy balance of both liquid and illiquid assets. 

Real property is a prime example of an illiquid asset. In the scenario mentioned above, your home has $200,000 of equity, which you could access by selling the property, but it would take weeks (or even months) to sell and cash in on your equity. On the other hand, the money in your checking or savings account represents liquid assets — you can access these funds in seconds should you need to make a purchase.

Not all financial assets are completely liquid. For example, you could access the value of stocks or bonds relatively quickly, but you would first have to sell these assets. 

What Is Return on Assets?
Return on assets is a well-known financial metric that reveals your assets' profitability. You can calculate ROA for each asset or look at your cumulative ROA to determine how skilled you are at asset management. The higher your ROA, the better you are at using your existing assets to make more money.

To help understand the return on assets, let’s say you decide to put $10,000 away under your mattress. Since your money is sitting untouched, your ROA is zero. Conversely, if you invested that same $10,000 in a certificate with a 3% return, your ROA would be 3%. That translates to $1,592.74 over the course of five years. SDCCU offers an array of certificate accounts. Learn more about these certificates here.

Speaking of certificates, they’re an underutilized but effective asset-building product. According to recent data, only 7.7% of Americans invest in certificates. Comparatively, over half of U.S. adults have retirement accounts, and 15.2% have stocks and similar investments.

Why You Need to Get Serious About Asset Management

Getting serious about asset management can allow you to do many things, including the following:

Achieve Financial Independence
True financial independence means you can cover the cost of all of your daily living expenses without working. Unfortunately, many people have to continue working long after they initially planned to because they didn’t engage in proactive asset management. 

If you hope to retire on your terms, you must be savvy about managing and growing your assets. 

Build Wealth
Asset management is about far more than just protecting what you have. It’s also about growing your assets and building wealth. The wealthier you become, the more financial independence you’ll have. 

Building wealth isn’t a speedy process, it’s a lifelong endeavor. Don’t be discouraged if you’re progressing more slowly toward your financial goals than you think you should be. Persistence and determination are key to building wealth and achieving financial freedom.

Increase Your Resilience
Asset management will increase your financial resilience by making you better prepared to cover unexpected life expenses, such as home or auto repairs and healthcare costs. Building a strong, diverse portfolio will also help you withstand economic downturns, such as recession or high inflation. 

How SDCCU Can Help with Asset Management

San Diego County Credit Union offers several excellent financial products you can use to invest and build your liquid assets. From basic checking and savings accounts to certificates and individual retirement accounts (IRAs), we have something for everyone. Additionally, SDCCU offers Estate Planning with Legal Karma, allowing members to gain access to affordable Will and Trust templates that can help protect any assets members may have. Available template packages include Wills, Single Revocable Living Trusts and Joint Revocable Living Trusts. To learn more about Estate Planning, visit

Only members can access our financial products. The good news is that joining SDCCU is easy and only takes a few minutes. If you’d like to apply to become a member, visit your local SDCCU branch and let us help you open an account today. 

Visit our Financial Knowledge Blog to learn more tips on setting up a solid financial future or join us for Financial Wellness Wednesdays.