Have you ever thought 'How much am I really worth?'

What to say... I just love reading article by Lee Mun Wai, it is written in simple term, makes the financial world understandable easily plus it have a quirky cartoon :)

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Monday October 15, 2012

Have you ever thought 'How much am I really worth?'


“Batmobile-lah! Batcave-lah! Batcomputer-lah! Surely you’d know the day would come when all the loans you took would slash your net worth to zero!”“Batmobile-lah! Batcave-lah! Batcomputer-lah! Surely you’d know the day would come when all the loans you took would slash your net worth to zero!”
Is this defined by the size of my paycheck? Or is it defined by the car I drive? Or is it defined by the house I live in?
Can some people who live in big houses and drive flashy cars be actually broke? How is this possible?
How much you are worth is not defined by what you wear, where you live or the car you drive. It is defined by your NET WORTH, which is the amount by which your assets exceed liabilities.
Lee Mun Wai writes ...
People might appear wealthy, but if you look at their net worth, a different picture might emerge.
In acquiring assets today, people take out the maximum loan to buy their house, a car loan to buy their car, have study loans to settle, perhaps an overdraft to start a business/investment or they might have max-ed out their credit card(s) to finance their lifestyle, dining out in style and dressed in the latest designer clothes.
Lee Mun WaiLee Mun Wai
What many people fail to comprehend is that even if you have RM1bil in assets but are RM1bil in debt, you have NOTHING!
Net worth is the only real indicator of your financial position.
However, this is only half the picture. You must also consider whether your net worth is increasing or decreasing yearly!
If your net worth has been and is growing yearly, then congratulations, you are on the right track.
If not, it would be prudent to immediately find out why not. Failing to do so will mean, sooner or later, you will be broke!
The real reason why net worth is paramount is that it's the only way to create financial security during retirement, when you may no longer have active income.
Retiring with a negative net worth is not a good position to be in, because when you are living with limited income, debt repayment can only come out from curtailing your lifestyle.
Start seeking advice from people who can help you increase the value of your assets and/or reduce your liabilities. Start by knowing how much you are worth.

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