Liquid Net Worth - Growing or Debt Ridden

[hender]

Net worth represents the overall financial health of an individual or entity by subtracting total liabilities from total assets. Liquid net worth focuses specifically on readily convertible assets (like cash and easily sold investments) minus those same liabilities. In essence, net worth provides a broad view of financial standing, while liquid net worth reveals the immediate financial flexibility available.

Net Worth:

• Definition: Total assets minus total liabilities.
  
  
• Assets: Include everything owned, such as cash, investments, real estate, and personal property.
  
  
• Liabilities: Include all debts, such as mortgages, loans, and credit card balances.
  
  
• Purpose: Provides a comprehensive picture of financial position, indicating whether assets exceed liabilities (positive net worth) or vice versa (negative net worth).

Liquid Net Worth:

Definition:
Total liquid assets minus total liabilities.

Liquid Assets:
Assets that can be quickly converted to cash without significant loss in value, like cash in checking/savings accounts, readily marketable securities.

Purpose:
Indicates the amount of readily available funds to cover immediate obligations or seize opportunities, crucial for financial emergencies.

Key Differences:

Scope of Assets:
Net worth includes both liquid and illiquid assets, while liquid net worth focuses solely on assets that can be quickly converted to cash.

Focus:
Net worth offers a broad financial picture, while liquid net worth highlights immediate financial flexibility.

Importance in Emergencies:
Liquid net worth is particularly important in assessing the ability to respond to unexpected financial needs or opportunities.

In essence, while net worth provides a comprehensive view of financial health, liquid net worth offers a more detailed perspective on the immediate financial resources available.

What's your Present status as of now !!!

 

[hender]

Present Setup

Liability Side = 0

CC Due = 0
Home loan= No
Personal Loan = No
Gold Loan =No
Any other Loan/EMI = No
Any Premium Due = No

Liquidity Side

Cash in Hand = 2 Months Expenses
Saving account= 1 Month Expenses
Bank FD = 1 Year of Expenses:
(3 Small FD = 2X3 Months of Expenses
1 Big FD = 6 Months of Expenses)

 

[Virtual King]

Present Setup

Liability Side = 0

CC Due = 0
Home loan= No
Personal Loan = No
Gold Loan =No
Any other Loan/EMI = No
Any Premium Due = No

Liquidity Side

Cash in Hand = 2 Months Expenses
Saving account= 1 Month Expenses
Bank FD = 1 Year of Expenses:
(3 Small FD = 2X3 Months of Expenses
1 Big FD = 6 Months of Expenses)

Excellent...! Kudos to your financial planning...!

Best wishes for your future financial journey...! 👍

 

[hender]

Excellent...! Kudos to your financial planning...!

Best wishes for your future financial journey...! 👍

Little bit learnt from one of my Mentor..
They are real maestro 🏆 🙌

"Money is a Tool to Live LIFE, not the OBJECT..to be chased"

"99 Formula in simple terms"

 

[tachniki]

Are liquid or debt fund considered liquid asset?

 

[hender]

Are liquid or debt fund considered liquid asset?

Yes Sir. Post F.T. India saga in 2020, it's more regulated..

Liquid Assets:
Assets that can be quickly converted to cash without significant loss in value, like cash in checking/savings accounts, readily marketable securities.

Purpose:
Indicates the amount of readily available funds to cover immediate obligations or seize opportunities, crucial for financial emergencies.

Key Differences:

Scope of Assets:
Net worth includes both liquid and illiquid assets, while liquid net worth focuses solely on assets that can be quickly converted to cash.

Focus:
Net worth offers a broad financial picture, while liquid net worth highlights immediate financial flexibility.

Importance in Emergencies:
Liquid net worth is particularly important in assessing the ability to respond to unexpected financial needs or opportunities.

In essence, while net worth provides a comprehensive view of financial health, liquid net worth offers a more detailed perspective on the immediate financial resources available.

What's your Present status as of now !!!

 

[tachniki]

I have been keeping way more cash in my saving account. Anywhere between 3 to 10 months of expense. Main reason to buy MFs / equity on dips. My FDs are 3 year of expenses. Mainly for diversification in investment. Debt MF of around 2 years of expenses.

I need to learn to employ cash in liquid fund. Another thing I need to learn is bonds to create some regular cashflow.

 

[hender]

I have been keeping way more cash in my saving account. Anywhere between 3 to 10 months of expense. Main reason to buy MFs / equity on dips. My FDs are 3 year of expenses. Mainly for diversification in investment. Debt MF of around 2 years of expenses.

I need to learn to employ cash in liquid fund. Another thing I need to learn is bonds to create some regular cashflow.

That's fantastic 😍👍, Covering upto 5-6 years in Liquid Form...

That's the objective of this thread to invite like minded - exchange the thought and ideas...

 

[Thanos]

Present Setup

Liability Side = 0

CC Due = 0
Home loan= No
Personal Loan = No
Gold Loan =No
Any other Loan/EMI = No
Any Premium Due = No

Liquidity Side

Cash in Hand = 2 Months Expenses
Saving account= 1 Month Expenses
Bank FD = 1 Year of Expenses:
(3 Small FD = 2X3 Months of Expenses
1 Big FD = 6 Months of Expenses)

You have more than 2 years of expenses covered. Why not park the money in a liquid debt fund instead of a 1 Year Bank FD ? Going forward it will make sense to avoid FD due to the recent interest rate cuts.

 

[hender]

You have more than 2 years of expenses covered. Why not park the money in a liquid debt fund instead of a 1 Year Bank FD ? Going forward it will make sense to avoid FD due to the recent interest rate cuts.

Liquid Coverage Varies Min 15 Month to 18 Month, extreme/different time 12-24.

Post Franklin Templeton issue in 2020, lost Thrust(not trust) keeping significant Debt with AMC, old school 🎒 🏫 - PSU bank 🏦 are good 👍 to go anyday.

Liquidity can't be compromised for little extra return...

 

[tachniki]

That's fantastic 😍👍, Covering upto 5-6 years in Liquid Form...

That's the objective of this thread to invite like minded - exchange the thought and ideas...

I will need to take retirement in 3 to 5 years (if I am not laid off before that) depending on how market behaves in these years. So, thinking about liquid assets and retirement planning makes me jittery.

 

[real_name_hidden]

I've nearly 4 months of expenses in savings account, 6.5 months in debt fund.

I think I'm having way too much cash in savings account but I just keep it there due to sheer laziness. Also I invest extra into market during dips using this.

As for my investments, around 75% is in liquid form, illiquid ones being epf and PPF.

 

[hender]

I will need to take retirement in 3 to 5 years (if I am not laid off before that) depending on how market behaves in these years. So, thinking about liquid assets and retirement planning makes me jittery.

I have F I R E write ✍️ up ready...

 

[hender]

I've nearly 4 months of expenses in savings account, 6.5 months in debt fund.

I think I'm having way too much cash in savings account but I just keep it there due to sheer laziness. Also I invest extra into market during dips using this.

As for my investments, around 75% is in liquid form, illiquid ones being epf and PPF.

Means - Real Name NOT hidden 😉
Fantastic 😍 Lovely 75% is 🙌👍👏

 

[tachniki]

I have F I R E write ✍️ up ready...

I keep my current assets tracking in spreadsheet and have target number set there as 6 cr. But, I am still worried what if that number is not good enough. No one knows future.

Also, post retirement, my plan is to keep liqiuid asset for 10 years and rest all in equity MF instead of usual 40-60 mix (or any such ratio). Plan to balance every year to maintain that.

 

[hender]

I will need to take retirement in 3 to 5 years (if I am not laid off before that) depending on how market behaves in these years. So, thinking about liquid assets and retirement planning makes me jittery.

I keep my current assets tracking in spreadsheet and have target number set there as 6 cr. But, I am still worried what if that number is not good enough. No one knows future.

Also, post retirement, my plan is to keep liqiuid asset for 10 years and rest all in equity MF instead of usual 40-60 mix (or any such ratio). Plan to balance every year to maintain that.

Post, Basic Planning, few things, you'll get to know once you start Living it 📯

For that part Execution is the planning at that time, not NOW.

(HOW CAN UNCERTAINTY BE PLANNED)

 

[real_name_hidden]

I have F I R E write ✍️ up ready...

I'm planning to achieve FI in next 10 years. If not at least close to 75% of there. No target corpus as of now, all i know is I need to save minimum 50% of take home to realise FI target.

Will see how it goes as expenses are also gonna increase going forward.

I track my assets and expenses in Google sheets.

 

[hender]

I keep my current assets tracking in spreadsheet and have target number set there as 6 cr. But, I am still worried what if that number is not good enough. No one knows future.

Also, post retirement, my plan is to keep liqiuid asset for 10 years and rest all in equity MF instead of usual 40-60 mix (or any such ratio). Plan to balance every year to maintain that.

My Friend having his 90% allocation of net worth in MF/Equity ONLY, 10 is Debt.

 

[tachniki]

(HOW CAN UNCERTAINTY BE PLANNED

With more buffer. But not sure how much.

Kind of funny, but my biggest fear is divorce. If that happens near or post retirement, I have no idea how badly my finances will get hit. Luckily my spouse has better wealth than me but I don't know how court behaves in divorce cases.

What big tickets I have considered in my planning till now are kid education (1.5 cr at today's rate) and once in a lifetime disease (60 lakh).

 

[hender]

With more buffer. But not sure how much.

Kind of funny, but my biggest fear is divorce. If that happens near or post retirement, I have no idea how badly my finances will get hit. Luckily my spouse has better wealth than me but I don't know how court behaves in divorce cases.

What big tickets I have considered in my planning till now are kid education (1.5 cr at today's rate) and once in a lifetime disease (60 lakh).

You already Explained ... uncertainty 👍