Investable assets (also known as liquid assets) are assets that can easily be converted into cash. These include cash in hand, funds in your bank accounts, money held in retirement accounts (In some countries), mutual funds, stocks, bonds, ETF, certificates of deposit, insurance contracts with cash value, money market funds, funds in fintech apps and wallets, cryptocurrencies, etc.
On the other hand, non-investable assets cannot be easily converted into investable assets; they include physical, tangible assets, collectibles like gold, art, real estate properties, automobiles, art, jewelry, devices, etc.
As your track your wealth and net worth, it is essential to keep in mind the percentage of your portfolio is stored as investable assets versus non-investable assets.
Why should you track your investable assets versus non-investable assets?
Imagine having an emergency like losing your job and needing cash. Your investable assets can be easily converted to cash to meet these needs. In addition, your investable assets can be quickly reinvested in other assets without having to wait or months to find a willing buyer.
For example, it would take between twenty-four to forty-eight hours to sell your mutual funds and stocks and have the money in your bank account, while you would likely have to wait for months and handle a lot of paperwork to get a property sold.
What should you do?
The rule of thumb is to balance the percentage of your portfolio as an investable asset versus a non-investable asset. What most savvy investors do is to ensure that they have at least what can cover their Financial advisers often recommend having the equivalent of at least six months’ income in cash and investable assets; this ensures you can cover any unexpected expenses.
In addition to this, having a substantial percentage of your portfolio in investable assets means you can also make fast decisions when you see other investment opportunities without waiting weeks or even months before liquidating non-investable assets.
Be more deliberate about your wealth and net worth. Use Cova to keep track of your portfolio, make smart decisions and ensure your selected family member discovers all your assets and information about the investments in the event of an eventuality.