Financial health is equally important as your physical health. We do regular medical check up to know our physical health. Different types of Blood tests, sonography, B.P. reading machine, weight checking machine are different tools used to know our health status. Likewise, in Financial planning too Financial Planners use different parameters to know the clients Financial Health. One of the parameter is NET WORTH
Let us first understand what is net worth? In simple terms Net worth is your Worth. It is calculated as Assets you own – Liabilities you have.
So net worth is the report of your Financial Health. If net worth is in positive and high you are placed better and if it is in negative or low it means you are in bad shape and need to work hard to get out of this trouble.
While calculating Net worth we consider all your different assets such as
Liquid assets which are your
Equity : Direct Equity, Equity MF holdings,
Debt: Bonds, PPF, EPF, FDs RDs, NPS, CDs, Debt MF Funds holding, Govt bonds
Cash and cash equivalent : Cash in hand, Saving account balance
Fixed Assets : Land , plot, residential flats, commercial properties, agriculture land etc
Gold : Cost of physical gold, ETF, Gold Bonds
Then in Liabilities
Personal loan
Education loan
Home loan
Credit card loan
Commercial properties loan
So Net worth is a residual of sum of all assets a person or family own minus sum of all liabilities they need to pay.
Networth Statement looks like :
Keep in mind
Cars you own can not be considered as your asset as it is a depreciating asset. Your residential property is also not considered in net worth too as it is mainly for residential purpose, and we are not gaining any income out of it.
As far as I am concerned I run a Financial Consultancy Firm. I used my savings to build a growth oriented assets. My Net worth Statement includes:
I have built a reasonable amount of Equity and debt portfolio.
I regularly invest in Equity Mutual fund for long term goals.
I have my PPF account running.
I also contribute in NPS as I don’t have EPF facility.
I have FDs and Investment in liquid funds for emergency.
For short term goals I have RD s and SIP in overnight funds.
For medium term goals I invest in index funds and short term debt funds.
I keep on buying 1 to 5 gm Gold through ETF each month.
I jointly own one house with my hubby in Mumbai and one plot in Dapoli(Konkon). These are my assets
As far as my liabilities concerned I never take any kind of loan apart from Home loan jointly with hubby. Apart from paying regular EMI s we also set up a prepayment schedule for home loan.
So in all I have a very positive Net Worth till date and with Grace of God I will be able to increase it year-on-year.
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