Understanding Your Current Financial Status - Part 2 - Net Worth Statement

 Net Worth Statement

A net worth statement tells you, what, is your financial situation at a given point in time. 

                                           

                         Net Worth = Assets – Liabilities 

There are 5 types of Assets, which are

1.      Equity which includes Equity Stocks, Equity MFs and ULIPs
2.      Debt which includes FDs, Debt funds, PFs ,Post office investments, Traditional life insurance policy premiums (money back or endowment, etc).
3.      Liquid which includes Cash, Savings account and Current account balance and Liquid Mutual Funds.
4.      Gold which includes Coins, Bars, Gold Funds, Gold ETFs
5.      Real Estate which includes house, land and commercial space

Liabilities would include all your loans.

We have excluded cars and jewellery out of the assets as we may think they are our assets but we seldom sell these. We have included the house you live in assets as we have taken home loan in liabilities. We hardly sell this asset as well.

Now as we talk today net worth can be positive for someone or even negative.  A negative figure hints that we should make plan to eventually move towards the positive and build our assets so that our financial goals are achieved.