Many of us will know how to compute our net worth i.e. Assets and Liabilities.
Net Worth = Assets Value - Liabilities
But, are you aware of Wealth Formula?
Wealth = Assets Value + Cash Flow
In Uncle8888's Net Worth Balance Sheet, he included another column to capture the cash flow and cash flow yield per annum for each and every asset that is listed in his net worth balance sheet e.g. investment portfolio, CPF OA, SA, RA, FDs, cash, and etc
We will have to manage our future cash flow well to avoid having to sell our assets during market low to meet future liquidity needs.
Once we have locked in negative return through these realized losses; it will become harder for us to break even and recover with a lesser portfolio. Simple Maths!
On Cash Flow
Since every asset in the Balance sheet is tracked for its forecast or estimated cash flow, he will be able to conservatively forecast or estimate his total cash flow over the next 2 to 3 years.
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