I’ve had this query in my head for way back.
Think about a under situation:-
The society on the entire sees you probably have a automobile, home and revenue of 80+okay, you’re already effectively settled. You might be thought-about wealthy or effectively settled. Now that is only a skewed instance however I’m fairly positive most ultimate definition of society’s wealthy Is one thing like this. Even when somebody is settled in overseas say in US paying residence mortgage there , they’re thought-about rich.
The questions I’ve are under?
A. Who’s the actual wealthy ? measure progress ? Ought to we use balancesheet or society requirements to measure progress?
Based mostly on above situation. Are they thought-about wealthy? Are they really wealthy? I’m asking as a result of once I take a look at their balancesheet, their web value is in damaging particularly residence mortgage simply pulls all of them into -ve. Even for individuals dwelling in overseas , all of them have mortgage there so their balancesheet is damaging too.Personally:- I’m not comfy with having sleep on a regular basis fascinated by paying EMI. Do let me know your perspective?
Solely confusion is society has a unique scale the place they don’t see steadiness sheet however fairly a schizoid set of parameters like (have automobile, home , standing and many others) . From a society view an individual is wealthy however from balancesheet view they worse than beggar with web value in -ve. Which one scale ought to we use to measure monetary progress? Balancesheet on the finish of yr or examine if we now have hit society stored customary
The second query is predicated on above .
B. If we now have measuring scale of our monetary progress, the way to transfer ahead? What’s the steering right here ?
i. So if we’re measuring ourselves based mostly on balancesheet? What ought to be our purpose ? It states clearly that we have to much less liabilities to make web value excessive? So yearly, can we purpose to extend revenue era and enhance accumulation of belongings i.e MF, bonds , actual property (with out mortgage)? What ought to be the steering ?
ii. So if balancesheet is just not seen as a measuring inventory, having society’s requirements, I see that getting sure stuff is named making Progress. Okay if that’s the case, take into account like all the essential stuff has been completed absolutely paid automobile, bike, first rate financial institution steadiness, MF funding and absolutely paid home. Ought to one take mortgage once more to purchase actual property or at all times be in debt buying belongings (notice :- exception bussiness). I imply ought to one solely see if we’re capable of repay EMI and have stuff. If sure, how a lot % of revenue ought to be EMI? What’s the steering right here?