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.
Last updated : 14 Sep 2020
I am 64 yrs old uncle living in HDB heartland who has achieved financial independence @ 56 and finally retired @ 60 from full-time job as employee on 1 Oct 2016.
Single household income since 1995 with three children.
Currently, two sons and one daughter are working.
I have been doing 21 years of long-term investing and short-term trading in Singapore stock market only since Jan 2000 so I am that so-called Panda or Koala in the investment world.
I am currently executing my Three Taps solution model to maintain sustainable retirement income for life till 2041 @ 85 yrs old.
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