Purple Butterfly said: This paper profound importance, I understand from the net assets of. Just imagine, if there is 10000000 of net assets, if only make $3% a year, come down one year to also have 300000 yuan pocket money available, and make 3% difficulty is very low, buy bonds or money funds easily; on the contrary, if a only 100000 of net assets, even if his money making ability is strong, can earn 100% per year, come down one year is only 100000, and make 100% difficulty one can imagine, to buy bonds and goods is not completed, only through the stock or futures higher risk products, while the stock is not so easy to play, who are of deep body will, ha ha.

     Of course, the light there is net assets and have no ability to make money too, have more gold and silver also has the day itself, so in addition to the need to have certain capital net assets (the more the better), but also needs to have the money that force is ROE (the more the better), the conditions of the two groups then, in time, to compound interest, certainly can let the snowball snowball!

 Text / Li Jianliang 

 1, the traditional view of balance sheet 

   Neighbor Mr. Zhang home by September 30, 2010 asset liabilities table is this: he holds a one-year time deposit 150000 yuan, three year bonds of 100000 yuan, 100 square metres of property value of 1000000 yuan, the Jetta a value of 80000 yuan, the total assets of such words, his home is these combined, a total of 1330000 yuan; the 1330000 yuan of assets are bought with what money? He borrowed 600000 yuan, to buy a house. Also from friends and relatives borrowed 100000 yuan to buy a car, their own money to spend 630000 yuan. Liabilities of 700000 yuan plus 630000 yuan money of their own, is 1330000 yuan. So, on both sides of the balance sheet is horizontal. This is our from the traditional perspective of this report.

     Table 1 the home of Mr Cheung off balance sheet for September 30, 2010

   The traditional view of the balance sheet is a problem, because it has a problem, so we need to learn to clean up and adjustment to it.

2, 10 million of assets not free

   I have an open car, live in villas, 10 million of assets accountant friend. His $10000000 in assets is so constituted: a one-year time deposit 200000 yuan; the stock investment of 200000 yuan; a set of 120 square meters of commercial housing in the city of Beijing, worth about 3000000 yuan; there is a 300 square meter villa in the suburbs of Beijing, worth about 6000000 yuan; there is a BMW automobile, valuation is 600000 yuan (6000000 yuan villa living people spent 600000 yuan to buy a car matching). In that case, his total assets is 10000000 yuan. These 1000 yuan are purchased with his own money, no debt. In view of this, he is a really wealthy lord!

   Table 2 a multimillionaire balance sheet

    Let us look at his annual expenditure. In Beijing, there are 10000000 yuan of assets, his family spending is roughly such: the villa property costs 6 yuan per month to 1 square meters, 300 square meters of 12 months is 21600 yuan (villa property costs, not high this is). And heating costs, according to a heating season in the villa about 40 days (not the first place to live, not every day), either with electric heating or wall mounted boiler heating, the cost per day is about 150 yuan, so, the villa heating fee is 6000 yuan per year; the city commercial housing and property costs, in Beijing is about 2.5 yuan per square metre per month (not expensive), 120 square metres of 12 months is 3600 yuan; and heating costs, the house is a heating quarter of 30 yuan per square meter, 120 square meters, the total is 3600 yuan; and car insurance, car 600000 yuan, a year the insurance fee, 600000 yuan, a year of insurance premium is 12000 yuan is not more; then cars have every thousand kilometers one service, as one year maintenance 6 meter, 800 yuan each, that is 4800 yuan. There are some other items of expenditure, such as automobile consumption of fuel costs, parking fees, and home entertainment, family living expenses, parents of maintenance expenses, child support and alimony, medical expenses, as well as shopping expenditure, then the other unforeseen expenditure on one point, these are a typical middle-class family to spending more than. If you buy a house to buy a car, these expenditure items are not run. How much money to spend these expenditure items all things? Nearly 200000 yuan a year. The expenditure level in Beijing is not very high. Then, a year 200000 yuan expenditure, what is the result? My friend if you do not work, his stock does not earn profits, he can spend the money only his savings and stock investment funds (among other liquid), the "rich life" could only maintain little more than two years.We should have such a consciousness: tell us a personal financial freedom, is not he have money to spend. If he does not work, no money, it is not called financial freedom!In my opinion, the standard of at least two: the first is rich; second is the time. If time is money, that is not a rich man!Our side now have a lot of time of the rich, they are trying to earn, no time to accompany a wife, children, no time to enjoy life. In my opinion, they earn money that are not their own, but others. So, I told my friend said: if he is to maintain the existing life, he must receive an annual salary of not less than 200000 yuan of work. He doesn't work without financial freedom! Time is money, he must also be kept constantly on the run, not the real rich men!We should remember: financial management to achieve the purpose is not only to let us the money, also let us have time. 

   So where is the problem? My friend the accountant's case, the problem in two aspects: the first is not the point. We say that the accountant friends 10 million of assets, from the perspective of traditional balance sheet, the inspection is to present this time his home these years down the total financial results. We mentioned earlier, such a view point is a problem. Second is the asset allocation is not appropriate, he did not know should configure which assets, asset structure of his family problems.

    More specific, my friend net worth of millions but not the problem here: first, from the asset allocation perspective, earning assets too little, too much money assets. Listed in Table 2 of those assets, what is earning assets? Earning assets of only two, the first is the deposit, second stock. The money of the total assets of only 400000 yuan. Money, assets have two: house and car, the two together accounted for 9600000 yuan. The assets of 10000000 yuan money inside, assets of only 400000 yuan, expensive assets of 9600000 yuan, this is an obvious question. Second, from the point of view, concern now, the stock of assets too much, focus on the future, dynamic balance of payments too little. We say that he is a multimillionaire, what do we see? He has millions of assets now, this is the stock. But we did not examine the dynamic balance of his future. Dynamic balance of payments situation his future is: if he doesn't work, he is still a pauper, this neglected by us! So we people have a word was right, when we find a son-in-law, must have a look this son-in-law have promising future, rather than how much money he home right now. Home no matter how much money to spend, very quickly, the rich but three generations. See this son have a promising future, we are focused on the dynamic balance of his future instead of the current stock of assets. We buy stocks also is such, want to buy growth stocks, which now net assets is not the most important!

     So, how to solve the problem?

3, clean your balance sheet

   In my opinion, the basic path to solve the problem is the traditional view of balance sheet clean-up. This process has three basic steps: the first step is to define the assets, liabilities and study a family of time; the second step is to restore a real household balance sheet from the value perspective; the third step is adjusted in accordance with the adjustment of household asset allocation perspective. For instance, in the example above, the house car, stock and deposit structure adjust, put some project amount increase a little bit, after some down, adjustment, the balance of payments situation will be fundamentally improved.

     We first discuss the first step: how to define the assets, liabilities and inspection point. Firstly, to define the time. As we all know, wealth does not bring, died away, so we examine the wealth to see is two points: first is any point in the future. That is to say, from the future in any point of view, the financial revenue and expenditure of a family of Is it right? Balance. The best state is not earning a lot of money, but the excess of income over spending, a slight surplus, surplus too much meaningless to us. When we want to reach the state that we want to spend money to spend, and then when we leave this world, money was well spent (without considering the legacy), this is not very good? But the biggest trouble is when we want to spend no money can be spent, and when we die and leave a lot of money, what meaning?! So the first point defined concept is the future of any one time point for money spent money to spend, that is the future of any point of the branch received more than; point defined second concepts is that when we leave this world in the future, from that point of view, our cash payments are balanced, the money was just well, that is not "living not bring, died away"?We should have such a concept: the money brought into the grave is a sin!So you see a lot of people, like Bill Gates and Buffett West, they in the past few years to earn most of the money is donated. Now we do not have that ability to donate so much money, so in order to make our life more happy, less earn a bit perhaps, finally to spend money and for spending money just to match is not very good?

     The time defined, then to make a re definition of assets and liabilities. How to define the assets and liabilities? When I mentioned earlier, we leave this world that point to define.You remember this sentence: only generate future cash flows of assets (or property) is a family of real property! Do not bring the future cash inflows, even we spend the money to maintain asset (or property) is actually a debt!According to the new definition, those assets above the friend I give home is actually a debt. For example, his house is occupied, he is not to earn money, and every year to pay property costs, heating costs, this is a real liability! In real life, many of us think impassability this problem, for example, have some pocket money not young people, would rather spend their parents money, also want to buy a house of our own lives. From this perspective, if you can not afford to buy, rent a house is one of the most wise choice. You buy a house, have to spend money to maintain, it is not worthwhile, so we must change the concept. So, what is the real assets bring cash flows? Stock and deposit is bring future cash flows (if not lose money), in general, it can be defined as assets. While the front case about the value of 9000000 yuan of two houses, unless it is sold or used for rental, or they are the current consumer goods. We see examples, suburban villa or commercial housing, the city better, my friends are all live in their own, so they are consumer goods. The consumer isn't it assets, but liabilities. Look at 600000 yuan a BMW car, it every month to burn oil, from time to time to maintenance, also need to buy insurance, not only can not produce cash flow, but also continue to spend the money to maintain, so it is in debt. In addition,There is a real asset we easily forget: our mental and physical health and this is our greatest asset! We use this property to good use?

     Look at the second step, from the value perspective, or from the final or we leave this world that point to the household balance sheet reduction. Accountant the friend or I above home example. If do not consider the interest (interest) and tax, assuming that he lived 70 years old, the age is 40 years old, he retired at the age of 60, and the two sets of house he owns all live in his home, don't transfer; suppose the price level, also is the influence of us inflation out of his assets liabilities are the same; suppose to sustain the current standard of living does not decline, and do not consider the consumption of high-grade cars and the villa to bring extra satisfaction, we put some numbers to adjust inside 2: bank deposits of the project does not change, but the amount to change, in front of the table 2 the number is 200000 yuan, and from that point of view in the future, we simplify it a little bit processing, this amount should be how much? If the 3% interest rate calculation, excluding interest, it should be 200000 yuan plus 200000 yuan by 3%, then multiplied by 30 years, the total is 380000 Yuan; calculate stock amount and for the same reason, 200000 Yuan stocks, but also 30 years plus 200000 Yuan stocks after the benefits. If by the year 10% profit rate calculation, excluding interest, the total is 800000 yuan; and this friend of mine body of this asset, but also to calculate a value. According to his work to earn money, if make $200000 in a year, 30 years is 6000000 yuan; there is a pension, according to 2000 yuan a month, took 10 years, a total of 240000 yuan. This calculation, the total assets of my friend's not 10000000 yuan, but 7420000 yuan. So, what is the balance sheet? The front from the traditional perspective, no liabilities in table 2. For example, he occupied villa, table 2 not accrued liabilities, and in fact is the debt, but the report did not reflect the out. He occupied villa property costs, heating costs, maintenance costs are down debt, 30 years is about 830000 yuan; city commercial housing have property costs, heating costs, a total of 30 years down are 220000 yuan; similarly, according to 30 estimates, car insurance, maintenance, fuel, parking fees Total 480000 yuan; and support for the elderly and child rearing expenses, which is also the debt, the debt in Table 2 there is no display, about 840000 yuan; in addition, medical and other family expenses need 2940000 yuan. So together debt actually up to 5300000 yuan. The results, the net assets of my friend, also is the final reduction in view of a report, what is his last net fiscal balances? Only 2116000 yuan! See Table 3:

     Table 3 from the value angle reduction table 2 the balance sheet

   What is this concept? The numbers tell everyone: 1, the 10 million assets friends even to work for 30 years, every year to earn enough 200000 yuan, but the stock investment can maintain a 10% annual return, the old medical spending does not increase, this situation is merely a middle. (it is the net assets of 2116000 yuan, see this figure who will say that the net assets of not important)! 2, if he does not work, in the other conditions remain unchanged, he died in 2116000 yuan balance will also be deducted 6000000 yuan wage income, the net balance (net assets) for the -388.4 million, he the millionaire is actually negative weng! 3, if he doesn't want to be negative, but also to maintain their current standard of living, so he must be 129500 yuan to the salary standard of work for 30 consecutive years, the balance of payments can be dying, net assets of 0 above all, my friend from the traditional perspective net worth of millions and no debt, but from the value perspective analysis, his liabilities as high as 5304000 yuan, he still had to work hard to make ends meet, his financial freedom is far from achieving.

     So, how to improve the situation? This is what I want to say that the third step, according to the new angle of view to re adjust the family asset allocation. There are several principles to adjust the asset allocation:

     Table 4 categories of assets in the family financial management in the configuration

   First, to bring sustained high future cash flows of assets (property)

   Second, with the leading to higher spreads, buying and selling the price may be higher or against inflation, according to those assets at the time of transfer (property)

   Third, with low or clean out not to bring future cash flow even need to spend money to maintain assets (property)

   Fourth, cherish your health, strengthen ourselves in the investment, then busy with the body to maintain, as long as the maintenance of good, everyone is at least the millionaire.

   Fifth, the reasonable mobility of good assets (time is to be realised relatively easy to do) and the relationship between profitability and security of it.

   So, according to the five principles, to my friend the accountant's assets redeploy: bank deposits from 200000 yuan to 100000 yuan; the stock investment increased from 200000 yuan to 600000 yuan; the valuation of 6000000 yuan villa front to sell, to investment 6000000 yuan rental housing. In Beijing, about 6000000 yuan can buy two or three sets of 80 square meters house; private property 3000000 the unchanged; in front of own car is 600000 yuan, we put it down to 300000 yuan. Is he a BMW, now replaced by a Toyota Camry or Buick Regal car like that.

      Comparison of 5 before and after the adjustment of asset allocation asset

   The adjustment of such a simple, you will find a dramatic effect happened; if do not need to consider the wages, if he wasn't at work, do not consider the adjustment of tax, how much is his annual income, annual 250000 yuan, 250000 yuan is so calculated: put money in the bank, 2.5% interest rate, 200000 yuan bank deposit interest is 5000 yuan; if the stock investment each year to earn 10%, for us ordinary people, earn per year 10% is very good. We generally do stocks, lose the probability is 90%, the probability of making money may be less than 10%, money is the Mongolian, loss is inevitable. So, assume that year earned 10%, not low, not compound interest, 200000 yuan annual return on investment is 20000 yuan, 5000 yuan per annum plus deposits, the total is 25000 yuan. To adjust the asset allocation, his annual income is greatly different; deposits of 100000 yuan or 2.5%, annual 2500 yuan; the stock investment increased to 600000 yuan per year, assuming or earn 10%, annual returns increased to 60000 yuan; sold the house to live, into 3 sets of 80 square metre rental housing investment, the monthly rent is 3000 yuan a set of 3 suites, 12 months rent is 108000 yuan. These income together, what is the total income? 170500 yuan! We compare: he does not work, adjust the asset allocation of his annual income is 25000 yuan, after adjustment to 170500 yuan. Adjusted annual income is 6.82 times the pre adjustment! Miracles happen: there is no need to add any new investment, simple to adjust the stock asset allocation, his whole income situation is completely different.

    Not only that. His expenditure also changed. Now we come to have a look to adjust the asset allocation, how much is his annual take money? According to previous estimates, he needs to pay the property management fee, heating fee, insurance fee, car maintenance fee, fuel costs, parking fees, family living expenses, maintenance fees, medical expenses are added up, nearly 200000 dollars a year. After adjustment? A fall in total expenditure is 161000 yuan a year. 

   Table comparison before and after spending 6 asset allocation adjustment

Note: the family living expenses calculation error, but does not affect the conclusion, because can adjust the other expenses.

   The decline in spending and increased income is compared, the result? Asset allocation adjustment, my friend the accountant does not work is also available to 170500 yuan annual income, expenditure for 161000 yuan, two subtraction, balance is 9500 yuan. This shows that any future balances from a point of view, he didn't have to work to achieve financial freedom! If the terminal point of view, time for him to leave this world, his total assets is 6070000 yuan, indebted amount is 4758000 yuan, the balance of payments surplus (net assets) is 1312000 yuan, also implements the balance, a slight surplus, financial and free.

   Table 7 adjusted value from the perspective of the balance sheet

    This Is it right? Like playing games, magic? Is such a person, or the original 10000000 of the stock of assets, now simple adjustments, he could not work!Don't work, you don't need to see the boss's face, do not need to beg, people is freedom, dignity and will have a. So everyone of us should have this consciousness. With this in mind, we have confidence in our financial situation will. Many of us, is due to the lack of the consciousness, keep their hands a large amount of wealth, but still be kept constantly on the run to life. We have a look now the younger generation, they are the vast majority of people are in be kept constantly on the run. To change this kind of condition, must start from changing ideas. I take my example, I in the school when you give lectures to the students said, my physical and mental freedom is not afraid to offend people, this class can speak good. Who could not listen to me, I don't do it, because I do not rely on this job. I from the first day until now, nearly 20 years, basically no nine to five, according to the point of work I do not dry, rather than to teach less earn a little, put their asset allocation is good enough. So I will take the most basic reason, is my experience to tell you here, suggest that you always look at his own home property status, pay close attention to the external investment opportunities. You seize the opportunity, and look at your property status, assets and liabilities condition, some simple theory then according to some basic common sense and here you have to configure your assets, money becomes easier, the finance will be free.

     Here, we will have a question: "the teacher, you the accountant friend he had lived but villa ah, now you put his house down, his satisfaction is not. Financial freedom, can enjoy the benefits of the villa is not, so the financial you speak of freedom is in a low level, not worth recommending." But we think, from meet degree angle, is not the ultimate goal to buy this villa living? It is very simple, do not buy, I have spare money, just no matter from any future point or from the value perspective, asset allocation adjustment, my friend is the balance of a sum of money, he can use the money to rent a villa in order to solve the satisfaction problem. If the terminal point of view, the next 20 years, just as shown in Table 7 balance of 1310000 yuan, such a huge surplus, if in 30 years, every year can be used for rental villa suburbs probably how many money? 43600 yuan. Every year 43600 yuan to be used, how much time he has to live in this house? A month 3000 multivariate money, live two or three places nearly enough? So this is not a problem! I have a house in the suburbs, I figured, I probably valid residence time of a month - just a few, if not to spend their own money to buy it, to buy for rent, but that is not living in this several times? The results, we need to enjoy a did not reduce, but the balance of more money, more free time. Well! We must remember that I mentioned earlier, the important thing is that you need to spend time to spend the money, that's enough. Why to be kept constantly on the run all day, every day to socialize, oneself originally used to keep the body, for sleeping time and squeezed out to make money, finally put the money in the world? A man without money, still, not cost-effective ah!