The art of accumulation assets is a very vital yet very confusing to many who desire to be financially astute in the future.
You must have had stories of people who once were fabulously loaded with all the luxuries money can buy, but ended up being poor than a church mouse.
This is because, no matter how much money your bank accounts are worth of, this is not enough measure of your financial position at any given time, as it would otherwise be if you owned fixed assets as well.
Most people own assets that could be divided in to three categories for the key reasons of determining their financial positions.
It is very imperative that you take charge of knowing which ones are yours among the three and what implications this has on their daily lives.
The three categories are:
Cash and cash equivalent
This category consists of any money held in form of cash or any asset that can be converted quickly into cash without loss of value.
This in other words is the money you have secured in the banks or in the money markets accounts. It is very crucial as well to ensure that you maintain some money in this group to cater for unpredictable emergencies.
Generally, it is recommended that one should have adequate cash to reimburse from his or her living expenditure for period between three to six months.
The income sources one has, the better they would be placed if an emergency strikes. They may not need a separate account as emergency fund source.
Conversely, if one does not have regular and dependable income, they should keep more cash to cater for unpredictable. These may include the job loss, car maintenance, deaths and sicknesses and so on.
No matter how well one may plan their financial lives, contingencies will always arise and should they catch you off guard, then you will be in for distress.
This might then push you to borrowing from every person you know over and over again which is humiliating as well.
Moreover, the distressing occurrence might push one to sell his assets at a throw away price, obviously way below the way it should be.
Invested assets
This is the next category of assets that people invest on and happens to be the most important as far as your financial security is concerned.
Included in this category are the stocks, unit trust funds, cooperative society shares, your retirement scheme balance, the surrender value of any life insurance policies including the educational ones, undeveloped land bought for investment purposes, rental properties, any business interests you may have and so on.
This group of assets is important because it is here that you can get money to buy your house, educate your children and most prominently, money to cater for your retirement.
Without investment, you will find it difficult to achieve these important goals. Furthermore, the day your job comes to and end is the one you descend in to hard life.
It is imperative for you to keep investing on fixed assets and stock market instruments during your youthful years when you are still strong.
With the liberalization of financial sector in several parts of the world, there are fresh opportunities emerging for application of actuarial skills by the actuarial practitioners and trainees.
There are many ways in which actuaries can help enhance financial and risk management for businesses and organizations.
