To answer your questions:
1) Your networth should be the sum total of all your assets. (Personally, I don't consider my house as my asset as in a crunch time I cannot liquidate it. But anything I can sell and convert to cash is as asset.)
2) The number of crores (or lakhs or hundreds of crores) is not important. I think, you should have enough to live the way you were living when you were working. That is true financial freedom. For example, if you spend 25K monthly (just an example), then you need 3 lakhs per year. To generate 3 lakhs per year on a conservatove debt portfolio you would need about 50 lakhs of capital. Also, inflation will eat into the yield so you should have some money in stocks. So, for me, if I had a monthly expense of Rs 25000, I would be comfortable with anything a capital of about 70+ lakhs. Again, this would not include my primary dwelling.
Originally posted by tejas.k
Interesting thread guys. I have a couple questions on the same lines
1) While calculating one's net worth, can PF and Gratuity accumulated also be added?.
2)What is a decent amount needed for financial security?. (For today.) I know this depends on the person and several other things. But on an average what do you think is the right amount? Is it 1 crore 2 crore 3 crore or much more than that?. By financial security i mean one can live without the regular job. Not necsessarily retire forever but can explore some other options. In my opinion 2 crore is enough. Put 1 crore in debt like FD etc that can generate regular income. In the remaining, use a part of it to put in MF or quality stocks. And keep the remaining as liquid (or FD)
What do you guys feel?
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