Sunday, February 28, 2021

Avoid this Situation today while investing

Such situation should never come in any ones life.

Mr. Shrinivasan (name changed), in a business of importing products and supplying to government, and has a big order, for which they need large funds.

Thankfully, Mr. Shrinivasan has invested, but in residential flat and plots, where there are NO BUYERS today or if buyer comes, they ask for more than 50% loss to buy price 7 years back (forget today's price).

To service the order, for need of fund, he has to take a loan of Rs. 1 cr. and for that he has to mortgage his current house.

Although he has investments, major part of his investments are in real estate.

Asset rich, Liquidity poor, is a very big challenge and probably one worst condition should eve happen to someone.

Disclaimer: This is representational example, without any direct reference of any individual person, but for  understanding the situation.

As per report, 30% of #wealthy (forget others , who have 90%+ as real estate of their total net worth), are facing liquidity risk at least once in a year, which becomes reason for taking loan, even if they when they are not comfortable doing so.

#FNquote #financialfreedom #financialplanning  #investing #pesonalfinance #assetallocation

1 comment:

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