Net worth is the difference between assets and liabilities. Only $2.99/month. What does a negative net worth indicate? Your liabilities exceed your assets.

Taking up loans increases liabilities. A loan to expand a business either by increasing inventory or equipment add to both assets liabilities. A vacation is not an asset. Any debt to purchase a car or a computer increases assets and liabilities since the two are assets.

Answer Expert Verified. There are two of these that could be true. In order to decrease long term liability you have to pay off a debt you owe, and in order to increase your liquid assets you have to acquire more cash or anything that could be easily transferred into cash.

The value of all of the Worthingtons assets Worthingtons have a net worth of $412,700.

Your net worth can tell you many things. If the figure is negative, it means you owe more than you own. If the number is positive, you own more than you owe. Negative net worth does not necessarily indicate that you are financially irresponsible; it just means that—right now—you have more liabilities than assets.

In its simplest form, your balance sheet can be divided into two categories: assets and liabilities. Assets are the items your company owns that can provide future economic benefit. Liabilities are what you owe other parties. In short, assets put money in your pocket, and liabilities take money out!

A liability is something a person or company owes, usually a sum of money. Liabilities are settled over time through the transfer of economic benefits including money, goods, or services. In general, a liability is an obligation between one party and another not yet completed or paid for.

Cash on hand

Land, real estate, or buildings are considered the least liquid assets because it could take weeks or months to sell them. Before investing in any asset, it’s important to keep in mind the asset’s liquidity levels since it could be difficult or take time to convert back into cash.

Hence, liquid funds offer better liquidity at lower penalty charges as compared to fixed deposits. You can invest in a fixed deposit for a tenure ranging from seven days to ten years. Liquid funds have a maturity of up to 91 days.

There are extremely rare cases where liquid funds give negative returns. The typical cause is that the issuer of a security defaults/ goes bankrupt. In such situations, the mutual fund has to write off the value of that security, which reduces the NAV of the liquid scheme and therefore one sees negative returns.

In times of uncertainty, banks are keeping the cash with them instead of taking investment decisions. Mutual funds are facing redemptions. This led to debt funds giving negative returns, because the instruments in the portfolio are marked to market every day for the valuation of net asset values (NAV).

During the recent equity market fall, the debt markets were also becoming volatile and it resulted in negative returns by these very short term debt fund categories. It came as a shock to investors since these funds have not seen such a continuous downfall in the recent past.

Liquid Funds are one of the safest mutual funds. That’s because they lend to good companies for an extremely short duration, and that reduces risk. The risk of losing money is almost zero if you stay invested for some amount of time.

6 Best Liquid Funds India FY 21 – 22

• Aditya Birla Sun Life Liquid Fund. (Erstwhile Aditya Birla Sun Life Cash Plus Fund)
• ICICI Prudential Liquid Fund. (Erstwhile ICICI Prudential Liquid Plan)
• Nippon India Liquid Fund. (Erstwhile Reliance Liquid Fund – Treasury Plan)

Lowest Interest Rate Risk – Given that liquid funds mainly invest in fixed income securities which have a short maturity period, they have one of the lowest interest rate risk as compared to other debt funds. Tax Benefits – Liquid Funds offer valuable tax benefits.

As the name suggests, liquid funds offer a high amount of liquidity, and you can redeem your gains in just one working day. So if you are someone who wishes to invest in funds that comes with a short maturity period, liquid funds might be a good investment option.

Now you may ask “Is there a better a better way to deal with surplus cash?” Of course yes! Invest your short-term funds in ‘Liquid Funds’. have evolved as an ideal haven for short-term investors. These funds are one of the most convenient ways to earn better returns as compared to a savings bank account.

Invest the lump sum in a liquid fund. Then start a Systematic Transfer Plan (STP) from the debt fund to the ELSS. Your corpus will not only earn higher returns than a savings bank account but will also allow for systematic investment.

Debt funds are ideal for achieving short term financial goals: Debt funds can be suitable for meeting short term goals . So if you have an investment horizon of 10 to 12 months or a maximum of 1 to 2 years, you can opt for debt mutual funds.

The table below shows the best-performing debt funds based on the last 5-year returns:

Investing in debt funds carries various types of risk. These risks include Credit risk, Interest rate risk, Inflation risk, reinvestment risk etc.

Long term capital gains upto Rs 1 Lakh is totally tax free. Short term capital gains (if the units are sold before three years) in debt mutual funds are taxed as per applicable tax rate of the investor. Therefore, if your tax rate is 30% then short term capital gains tax on debt fund is 30% + 4% cess.

If you are an investor with a small but regular amount of money available for investment, SIPs can be a more suitable investment option. For investors with a relatively high investment amount and risk tolerance, lump-sum investments may be more beneficial.

Any interest earned on debt funds that are held for more than 3 years is counted under Long-Term Capital Gain. The applicable taxation rate in this case is 20% with indexation plus 3% cess which comes down to 20.90%. For example: Sunil is an employee in the IT sector. He earns a salary of Rs.

Taxation of Capital Gains of Debt Funds Long-term capital gains are realised when you sell units of a debt fund after a holding period of three years. These gains are taxed at a flat rate of 20% after indexation. Also, you are levied with applicable cess and surcharge on tax.