We all know that the asset is a very valuable and humans are the most valuable asset because it is the grace of God the Creator. If sorted, then there are various kinds of assets in the face of this earth, but that is discussed here is limited to assets related to its main financial planning financial assets only.
Speaking about the addition of assets, it would be wise if we perform an evaluation of wealth (assets) net we have. Assets or net worth is the difference of the total wealth or property that you have reduced by all the existing debts.
Mathematically can be written as follows:
T (Treasure) – D (Debt) = NW (Net Worth)
Then what is meant by wealth, aka treasure?, Is anything material you have and have a sale value (economically), for example:
Balance at Bank (savings, current accounts & deposits);
The market value of investment assets (bonds, mutual funds & stocks);
The market value of pure gold jewelry (precious metal);
Cash value life insurance;
The market value of your property (the calculation is realized price for sales of property class and the nearest object + tax sale value divided by 2);
The market value of vehicles (cars, motorcycles);
The market value of household appliances (kitchen appliances, electronics, etc.);
The market value of home furnishings (furniture), the value of personal items, etc..
Then what is meant by debt?, Is the entire remainder of the loan (principal and interest) that you have (remember the loan rather than equity investment from another party to you), for example:
Short-term debt (up to 1 year);
Medium-term over 1 year to 5 years;
Long-term debt over 5 years.
The next question is how to improve these assets?, Do the investment, here are the steps:
1. Invest with a minimal amount of 10% of your income;
2. Determine target such investments, eg for children’s education fund during preparation for university entrance or buy a new home or perhaps for a vacation with the family?, Etc..;
3. Determine the time available, based on points 2 get the time available, eg for education funds available 10 years (for parents who have children by age 8 years), funds to buy a house is planned 5 years from now and to fund needed vacation time (eg ) 9 months from now;
4. Determine your investment instruments based on the time available, form your personal investment portfolio, eg as follows:
a. The time available is less than 1 year, Money Market Mutual Fund (MMMF) in combination with the deposit;
b.The time available between 1-3 years, Mutual Funds Fixed Income (MFFI) combined with the Balanced Fund (RDC);
c. The time available between 3-5 years, Balanced Fund (BF) with a combination of mutual fund shares (MFS) and if possible (depending of your cash assets) can be coupled with a little combination on the purchase and sale of shares (trading) on the stock exchange;
d. Above 5 years, Equity Fund (EF) in large part, by a combination of investments in stock trading (small portion);
e. Additional records for points ‘c’ and ‘d’ is recommended only for those who already have cash assets are illiquid in the form of emergency funding that has reached 6 to 12 times the average expenditure per month;
5. Do the protection of your financial assets by purchasing life insurance through traditional product with the type of YRT (Yearly Renewable Term) which is a product that only gives the insurance money without any investment or savings element. Why this type?, Because it has a large sum assured with a minimal premium, while insurance combined with investment (unit-linked) proved in the first 5 years the cost is very expensive.
6. Perform monitoring of point 4 above, see the development of investment funds versus a minimum target to be achieved.
After the step to increase assets through investments made, then the next step is to re-evaluate periodically against your net worth, here is the formulation of Ideal ratio Net Worth (at least, mathematically:
A (Age) X AI (Annual Income) / 10> = 3.5 AI (Annual Income)
So after you make an investment please evaluation (annual periodical), whether:
NW (Net Worth) you have to be> = 3.5 AI or
NW (Net Worth) you have to be <3.5 AI
If you want to become financially rich are the first message is ” investing now then you become rich”, do not think backwards ” investing when you has rich!’. Please try this simple message as far as we know the world’s richest people doing the first message, good luck.
