Physical Assets first or Liquid Assets first?

What kind of assets do we build first? Which one gets a priority?

Physical Assets which are primarily Illiquid

or

Financial Assets which are mostly liquid

Exceptions aside – since there are assets which are physical & liquid (gold) or financial & Illiquid (privately held equity etc.)

Unfortunately, there isn’t a straight jacket answer to this question of, Which one do we build first?

But, the Uncommon Common Sense says…. Liquidity first & so Financial Assets first

Well, isn’t it true that we can create liquidity (cash flows) from the physical illiquid assets….acquiring them first?

Yes…we can

But what does it entail – LEVERAGE/ BORROWING?

Is it wrong to borrow? NO, as long as it’s within the scope of our Ability to Repay

And, how is this ability to repay assessed by the lender? Our Earning Capacity (Liquidity) & or our existing physical or financial asset to pledge

Bottomline…. wherever we go, all roads lead back to one variable called Liquidity.

At the end of the day, we can’t pay our bills, buy a home, lead a comfortable life, pay for health education etc. with illiquid physical assets 😀 We need Cash on Call

To close…..

Build Financial & Physical Assets, but ensure that adequate Liquidity is always maintained

Balanced Diet & Balanced Money management

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