Creating your organised inventory of assets

In business or retirement planning, creating an inventory of your assets is very critical. It helps you determine the resource gap that has to be filled before you make the decision to venture into more business or retire.

This week, we take a look at how to create an organised inventory of your assets and liabilities. Rest be assured, I won’t be asking you to do the type of detailed whole-house inventory that you might do in connection with your financial obligations that might satisfy your banker when asking for an investment loan.

Neither are we, in making inventory entries, really interested in the serial number on that black-and-white TV monitor, or the K60 000 (US$150) that you still owe your father-in-law in Chitipa in lobola!

Your financial planning asset inventory will list the major assets that you have, their value, and what income (if any) they generate. While personal effects such as clothes, electrical appliances and furniture will be listed—or at least lumped together and reflected under a “personal effects” entry—the emphasis of such a list is on your investments, that is, assets that you hold with a view to their likely appreciation in value (such as real estate) and/or generation of income (such as shares, treasury bills, or rental real estate).

Listing your assets. Because you will use the information derived from your asset inventory to analyse and possibly realign your investment strategies, you will want the entries for your investments to be fairly detailed. You will generally want to include an entry recording when each investment was made, its purchase price, its estimated current market value, and the amount of yearly income that it earns (if any).

If you are married, you should also note whether each asset is owned by you alone or jointly with your spouse (in other ways, in whose name is the asset?). If you like, you can also list assets owned solely by your spouse to get a more complete picture of your family’s financial situation.

My advice would be to record the asset into the inventory sheet as soon as you have it in your possession. Waiting for a later time may prove cumbersome as determination of the asset’s true market value may not easily be determined sometimes.

Listing your liabilities. Your list of liabilities could also be tabulated and should include a brief description of each liability, including:

•Whom you owe the debt to

•When you incurred the debt

•The interest rate you must pay on the debt

•The amount of the unpaid balance of the debt

•The amount you repay each month (or whatever repayment period)

•If the debt is secured, list the security (such as your house or your car)

•The date when you expect to have paid off the whole debt

Have a blessed weekend as you live peacefully knowing how much assets you have as a family. It can only make your business and retirement plans far much easier!