You don’t have to make a seven-figure salary to be considered a millionaire. Your net worth just needs to be worth at least a million dollars. But, what about your liquid net worth?
The net worth definition is the difference between a person’s assets and debt. Hence, calculating net worth is taking the total assets minus their debt.
Assets are anything that can convert into cash, such as stocks and real estate.
On the other hand, debt is usually student loans, car payments, credit card balances, or any other credit card debt.
Checking accounts, savings accounts, money market accounts, and cold hard cash are the purest forms of liquid assets. These assets are not tied to any market and will not fluctuate in value.
Real Estate - investment properties cannot quickly convert into cash. It could take weeks to sell and close on a property, no matter how good a real estate agent is.
Cars
Cars are depreciating assets that lose value over time, especially within the first five years.
Anyone planning to purchase a used-car never expects to buy the vehicle at its original price.