Driven by a hoarding attitude, most of us believe that something that is set aside and not used is valuable and emerge as people who hold on to assets. We fail to see them as things we should use for our own comfort. Asset liquidation is not an easy decision to make, especially since it triggers regret rather than a sense of achievement. But if you find yourself in a financial situation wherein you need to renew, rework, and rebuild, unlocking the value of your assets might be your best bet. Don’t let your assets lie idle while you bleed. Consider these five points.
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Your assets must work for you
Are you able to see that what you have is a dynamic pool of assets that must earn a decent level of return? Is your asset pool subject to objective norms of performance? Do you actually consider how their value has behaved over time? That flat you bought years ago might be a dead investment now, but you continue to believe that real estate will earn returns eventually. Your assets must work for you. Don’t give them concessions because you made an emotional decision.
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The long term won't make a dud a star
Do you respect the market value of your asset and act if the asset can be liquidated at that price? Many of us have in our portfolio equity shares that were bought without much thought. Or we bought them lured by the possibility of great appreciation in price. These may be much hyped IPOs, momentum stocks, new ideas or just names that floated around. The prices went up and then steeply down and we still hold them. We can liquidate, release the money, and make it work in another quality stock we can buy with better due diligence.
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Missing the woods for the trees
Do you consider the costs and hassles of a transaction and give up the effort as you think it might not be worth it? For example, someone looking to sell her vintage jewellery might decide against it, after a much detailed process of evaluation with the jeweller because he may steeply discount the pieces or calculate a hefty damage. What she fails to realize is that the value of the jewels that she never wore or used exceeds those elements of cost.
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Recycle, realize and rebuild
Are you confident that you can build your assets back? Under trying times, don't just let your accumulated jewellery, real estate etc. sit away. Let yourself realise the true value inherent in these assets because they will generate any income anyway. Income is the flow to generate, nurture and protect. With income, assets can be built again.
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Your social life doesn't trump your financial one
Do you think your social worth is decided by the assets you own? Many cannot make decisions about large assets for the fear of social ridicule. They associate moving from a large house to a smaller one with a status downgrade and find the tag of someone who had to desperately sell assets unbearable. It is indeed a sorry state of affairs if you are known only by the wealth you kept. There are innumerable valuable qualities that generate social equity and it would be a pity if one earned none of it. You have to do what it takes to bring your finances in order— social circles will appear as you lead your new life and infact, stand by you in your hour of need.
