Occasionally people ignore their own assets either visible assets or the invisible ones. The total amounts of your assets do not guarantee whether your finance is healthy. Actually, there are two ratios which are frequently showing the financial condition related to the health of your asset. One of those is Liquid Asset to Net worth Ratio.

Liquid asset is a part of your assets which is liquid. It means that this asset is easy to use to fulfill your cash need. the assets include this type is for instance savings, deposit, gold or the other precious metals because those are easy to sell in a short time to get a cash.

When you have less liquid asset, it means that your financial condition is not healthy. It is because when you get any unexpected occasion, the only way to use your money is from your liquid asset.  You will get financial trouble to get instant money for emergency situation. The result is that you have to sell the illiquid assets in rush that makes the price is not worthy. Moreover, if the asset is much expensive, you need much more time to get the buyer that is able to purchase your asset.

It is the best way to make your asset between the liquid and illiquid one to be balance. There is an ideal border in the ratio that has to be kept. The ideal ratio of the liquid asset amount will be relayed to the amount of emergency fund that have to be prepared.

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