How To Improve Your Asset Management

The biggest key to improving your asset management is to always keep the value of your assets greater than the value of your debt.   If you ever use debt to purchase an asset, it should always be to purchase an asset that holds its value during bad economic times, and has a tendency to increase in value with the passage of time.  This usually means the purchase of a home as your primary residence.

Once you purchase your home, most of you have as much of your net worth invested in real estate as you need.  Interest on the loan is tax deductible, so the government is, in the government's viewpoint, "subsidizing" your loan, giving you "free money".  Your attention should then turn to saving for retirement.  Stocks, bonds, and mutual funds are usually what 80% of the American public needs to think about when planning for their retirement and the government subsidizes various types of retirement vehicles to help with this.  Employers often provide opportunities to participate in 401(k) plans, which are employer sponsored plans in which employees may save for retirement with pre-tax dollars, and have it matched to a certain extent by your employer. Human resource managers often, though not always, know enough to help employees with this process.

If you're self employed, and don't have access to an employer sponsored 401(k) plan, it's best to open an Individual IRA, or Individual Retirement Account.   You give up getting your contributions matched by an employer in exchange for the freedom of not having a boss.  You can open one of these up at a bank, many insurance agency, or a wire house broker dealer. Taxes on earnings are deferred to the future, and contributions are tax deductible.

Asset management is a very simple process, best explained by the phrase, "Always keep your assets ahead of your liabilities".  Many headaches can be avoided by keeping your asset arrangements as simple as possible, and also by keeping good records of statements received about the value and type of assets you have from the institution you use to keep track of your assets. Generally speaking, the more complex the assets, and the higher the rate of return promised on your money by an asset, the greater the risk that in bad financial and economic times the asset may lose a great deal of its value.  Never borrow money to buy a high-risk asset.