Financial Illiquidity: Why High Net Worth Doesn't Guarantee Emergency Readiness for Many Indians
With Rs 1 cr networth, stressed over Rs 50,000 repair. CA warns why Indians still struggle during emergencies
Image: The Economic Times
Despite appearing financially successful with a net worth of ₹1 crore, many Indians face stress during emergencies due to a lack of accessible cash. Chartered accountant Nitin Kaushik highlights that high investments in illiquid assets can leave individuals financially vulnerable.
- 01Many professionals have a net worth of ₹1 crore but struggle with emergency expenses like ₹50,000 repairs.
- 02Chartered accountant Nitin Kaushik emphasizes that individuals are becoming 'dangerously illiquid' despite impressive balance sheets.
- 03A significant portion of wealth is often tied up in long-term assets, making it hard to access cash quickly during crises.
- 04Kaushik suggests that true financial strength is measured by liquidity and the ability to access cash without loans.
- 05The trend of being 'asset rich but cash poor' is becoming a common financial dilemma among salaried professionals.
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Many professionals in India present a façade of financial success, boasting a net worth of ₹1 crore through property, retirement funds, and ESOPs. However, when faced with unexpected expenses like a ₹50,000 car repair, they often experience panic due to insufficient liquidity. Chartered accountant Nitin Kaushik points out that this issue stems from a growing trend of individuals becoming 'dangerously illiquid.' He explains that while people may have impressive assets, they often invest in long-term or locked-in options that cannot be accessed quickly during emergencies. This lack of accessible cash forces many to rely on high-interest loans or credit cards to cover immediate expenses. Kaushik argues that financial strength should be assessed not just through balance sheets but through the ability to deploy cash quickly in emergencies. His insights reflect a broader concern in financial planning, warning against the risks of being asset-rich but cash-poor.
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The article highlights the financial struggles faced by many professionals in India, emphasizing the importance of maintaining liquidity.
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