You need proper guidance to calculate investable assets. We all know that you must manage these assets to make the best financial decision. So, investable assets mean the resources that you can easily turn into cash. So, first, you must know about these assets so that you can be prepared for future opportunities. Calculating these assets is also important as you need to be ready for emergencies with planning.

Want to learn more? Here in this blog, I will share a step-by-step guideline for calculating investable assets. You will also learn about the common mistakes that you should avoid. Even I will discuss some important tools to calculate your assets that are investable. So, let’s begin the discussion by the understanding of investable assets. 

Understanding Investable Assets

Investable assets are resources or funds that you can quickly convert into cash or investments without much difficulty. These include various types of accounts and financial instruments, such as the money in your bank accounts, stocks, bonds, mutual funds, and retirement savings.

So, investable assets mean some assets can be accessed easily and some of them can be sold easily. There are also some types of other assets such as houses, cars or collectibles that can not be sold easily and these are investable assets. So, you must know about your investable assets to make informed decisions. Having a clear understanding of these assets will also help you if you decide to work with a financial advisor.

Read: Financial advice and strategies to consider for your family budget in 2024

Excluding Non-Investable Assets

So, you will find another type of asset that is known as investable assets. Non-investable assets are resources that can’t be turned into cash or investments. Understanding the difference between investable and non-investable assets is important because it helps you manage your finances better. So, first, learn about non-investable assets. Well, the items are your home, cars, and collectibles, which take longer to sell.

So, you must concentrate on your investable assets. This will help you understand how much cash you can access quickly. What you need to know is: 

• Quick Cash Access: Quick access to cash is very important so that you can use it during emergencies. So, these assets often take weeks to months to sell so it means when you need cash you won’t get it from these assets. 
• Flexibility for Investments: More investable assets provide the freedom to act swiftly on new investment opportunities. 

So, the examples of non-investable assets include:

• Your home
• Cars
• Art, jewelry, and collectibles

Steps to Calculate Your Investable Assets

Calculating your investable assets helps you understand what funds you can easily access for investments. So, let’s learn the steps to calculate your investable assets. 

List All Liquid Assets

So, begin this calculation by listing your liquid assets. These funds are readily available for investment, so make sure to include them at the start.

Include Semi-Liquid Assets

Next, consider semi-liquid assets. Check your investment statements to find their current values. Adding these assets gives you a fuller picture of your investable wealth.

Subtract Any Liabilities Tied to Investable Assets

When you are done with listing your assets, then you must focus on any related liabilities. Here, liabilities means the debt that you owe. It can be loans, credit balances, etc. 

If you have debts, they will merge with investable assets. So, it means your debt amount will be subtracted from your total. This step will clarify the true value of your investable assets.

As an example, suppose your stock’s worth is around $12000. However, you owe $5000 on a loan for those stocks. So, overall your effective investable asset value is $7000.  

Review and Exclude Personal Use Assets

Lastly, review your personal use assets. You can add here your home, cars, and personal belongings. These items are expensive but you cannot easily convert them ito cash for investments. Exclude them from your calculations, as they do not contribute to your investable wealth.

Common Mistakes When Calculating Investable Assets

You may face common mistakes when calculating investable assets. Learning about these mistakes helps you to handle these mistakes. So, the mistakes are:

Not Knowing What Counts

Investable assets are things you can quickly turn into cash, like money in your bank, stocks, and bonds. However, items like your house or car aren’t considered investable because they take longer to sell.

Lacking Clear Goals

Many people forget to set clear financial goals. It is important to know what you want, whether it’s saving for retirement or buying a home. Having specific goals helps you make better decisions about your investments.

Forgetting Diversification

In investments, it usually happens that some investors put too much money into a few investments. But remember, it can be very risky and not a wise move. 

So, to avoid this mistake, you can follow a strategy in which you invest your money across different investments. It means when one platform doesn’t work well, then others will.

When Emotions Take Over

Sometimes feelings like fear and greed create an impact on decision making. So, don’t let emotion take over your decision. For example, some might sell their investment during market drops at a loss rate. So, in this situation, one needs to stay calm and shouldn’t get depressed. Stay committed to your investment plan when the market is not stable. 

Trading Too Frequently

Trading is good but too much trading is not. So, when you make too much trading, you will lose your profit. As we all know each trade incurs costs, so this can add up quickly. So, you must have patience here and with a proper approach you can achieve better results. 

5 Tools & Resources to Help You Calculate Investable Assets

You need tools and resources to calculate investable assets. Experts suggest that when you calculator investable assets such as cash, stocks, bonds, and mutual funds manually, you end up making mistakes. That is why you need good tools for accurate calculations. 

So, let’s find out the top 5 tools here: 

1. Personal Capital

Personal Capital helps you to connect to your bank and investment accounts. This is a free tool and easy to access. You can see your net worth and also track your investments easily in real-time. It works as a platform where you can find all your assets together in one place and also you can see their performance. 

2. Mint

Mint is a simple tool for tracking both your spending and your investments. It automatically updates your account balances once linked. It shows you your total investable assets, making it easy to keep an eye on your finances.

3. Quicken

Quicken is another popular tool for managing your money. It lets you track investments, assets, and expenses. Quicken gives you detailed reports and shows your total investable assets, helping you stay organized.

4. Morningstar

Morningstar provides in-depth reports on stocks, bonds, and mutual funds. You can track your investments and calculate your investable assets with their tools. It also offers insights into how well your investments are doing.

5. Yahoo Finance

Yahoo Finance is a basic tool that helps you to track stocks and funds. Here you can set up a portfolio tracker which helps you to see the value of your investable assets. It is great for keeping up with market changes and your asset values.

Conclusion

In the end, now you know the way to calculate investable assets as it is essential for managing your finances. Follow the given steps that I have shared here for better investment choices and to plan for future needs. Remember that you must review your assets regularly and avoid common mistakes. Keep your goals in mind, stay patient, and don’t let emotions drive your decisions.