What is a liquid net fortune?
Liquid Net Worth is a financial term used to describe the number of funds to which the investor is easy to access. While the most common form of liquid asset is the currency, the definition would also apply to all investments that could be quickly converted into cash. Shares, bonds, mutual funds and precious metals would be some of the examples that fall into liquid net assets. Items such as real estate, expensive cars and corporations would not. Liquid net assets are usually actively measured to determine the overall flexibility of investors, which would enable them to quickly take advantage of any useful opportunity that is present. When a wealthy individual mainly holds liquid assets, he often gains interest in two -digit digits while remaining almost immediately available. This means that if the situation occurred where capital was required, it can be obtained very quickly, so investors provide peace in the mind that their finances are under their control. Investment in fixed actsIn they require the willing buyer to take inventory to become liquidation, and it is often difficult to do in a short time.
For example, if two investors had a relative net cost of $ 10,000,000 (USD) on paper, their wealth would be identical. If the first investor had most of his assets on shares, while the second individual owned only high -valuable properties, the comparison would become much more unbalanced. The first investor could freely move his money to and out of the stock market, while the second investor may try to repay his monthly expenses, so there is a really small comparison with who would be in a stronger position. It can take the year for a second individual who has its net fortune in liquid form, and during this period the real estate market could either rise or drop while he was helpless to do something about it.
because the first investor in the aboveThe example had liquid net fortune, the market market rate could whenever commodities have changed for better or worse. This is the exclusive advantage that it has liquid net assets, and therefore experts propose the transport of a diversified portfolio with more than 50% fixed assets. Although it is not always possible, it grants much more freedom with very few negative disadvantages.