Sunday, 9 June 2013

Liquid Assets VS Fixed Assets

Fixed Assets or Cash ?

Haven't you heard :Liquid or cash is King somebody said some time ago.
Is that true ?
Let's look at what are Fixed Assets and Cash ?

Fixed Assets:                                      
Your Home
Real Estate
Raw Land                                                                       

Money in the Bank Savings Account                     
CD's or Fixed Deposits
Stocks and Shares
Mutual Funds

It is good to have cash and better to have a mix of both assets and cash.You would certainly need an amount of cash for short term expenses and emergencies.
The question how much cash is enough and how much assets should one accumulate at a time?
There is such a process called asset balancing.
To do an asset re-balancing ,you need to take inventory of your all your assets,liability and calculate your net-worth.Put in pespective percentages of all these figures.Next look at what is your cash ratio by determining the cash position.As a general rule if you are below 30% of cash equivalent your assets are inbalance.You need to liquidate some assets or increase your cash allocation.Its simple but if it need be you should engage some professional help.
Good Luck !

Article by :
Rodzman bin Abdul Rahim,ChFC,SRFP,RFP
MD Green i Financial Technology Sdn Bhd

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