Asset Analysis

The Rich buy assets. The poor only have expenses. The middle class buys liabilities they think are assets. The poor & the middle class work for money.
The Rich have their money work for them.
(Robert T Kiyosaki, Author of ‘Rich Dad Poor Dad’)

Asset analysis is the process of identifying and analysing the assets of an individual or family. Assets can be tangible, such as real estate or equipment, or intangible, such as intellectual property. Asset analysis can help an individual identify and assess the risks associated with its assets, and it can help determine which assets are most valuable and should be preserved.

To carry out an effective asset analysis, a clear understanding of your financial goals and objectives is essential. One also needs to have a good understanding of financial resources, strengths & shortcomings. Once this data is prepared, one can begin to identify the assets.

Some of the most common assets to be analysed in asset analysis include

Landed Property: This includes agriculture land, plot, apartments, flats, buildings etc.
Financial Assets: Includes investments in Deposits, EPF, PPF, Mutual Funds, PMS, NPS, Bonds AIF etc.
Cash and Equivalents: Includes money held in short term FD, Overnight Funds, Liquid Funds to meet short term contingencies.
Bullion Assets: Gold, silver, diamonds.
Antique assets.
Current & projected Income – to ascertain the current income & estimate the future income in the short term/long term period.

Advantages of Asset Analysis & Evaluation

Improved decision-making by gaining a better understanding of one’s assets and liabilities.
Having a clear picture of one’s financial health, strengths, weaknesses & biases.
Estimating cash flows from the assets.
Identifying potential risks that may affect the assets.
Assessing the relative value of different assets.
Determining whether to restructure asset/s for simplification & consolidation.
Planning for future financial needs.
Conserving capital by avoiding bias and or overconcentration in a particular asset class.
Ensuring compliance with applicable laws and regulations.
Enhancing self-esteem & morale by promoting a sense of ownership of one’s Financial Plan.
Encouraging donation of assets to charity that benefit the needy in specific & society at large.

Simply put, Asset analysis & evaluation is a key function of Financial Planning.
It needs due diligence, right skill sets and experienced hands, in order to move in the direction of the desired outcome. Renascent Wealth is here, so why worry!