Investable Assets: What Are They? - Clo Bare Money Coach (2024)

Have you heard of investable assets? Are you wondering what they are and how to determine if you have any? In this article, we are going to break down investable assets, from what they are to how you can manage and grow them. Because if we all know one thing, it’s that diversification is key when it comes to your financial portfolio.

So whether you’re just getting started on your journey to financial freedom and wealth or you’re a seasoned finance guru – here’s everything you need to know about investable assets.

What is an investable asset?

Investable assets are any assets that are liquid or near-liquid, meaning what you have before selling any properties or possessions. So your condo, Honda Accord, and family heirlooms (jewelry or art) would not be included on your list of investable assets. Simply because there is no fixed price on what an item or property is worth until it is sold – the value of any physical asset can fluctuate substantially from year to year according to market value at the time.

Now that you know what you can’t include in your list of investable assets, let’s get into what does fall into the category.

Investable assets would include:

• Cash, checking and savings accounts (yes, even your travel savings)
• CDs and money market accounts
• Stocks, bonds and mutual funds
• Retirement accounts and trusts

While non-liquid (physical) assets are valuable and help comprise your overall net worth, investable assets are a good indicator for lenders as to your ability to pay your debts even during difficult financial times. There is some fluctuation with investable assets depending on market conditions, but overall it doesn’t fluctuate as much as a physical asset would.

How do you Calculate Investable Assets?

Wondering how much you have in investable assets now? Good! Get out your smartphone or laptop and start logging into your bank accounts, retirement accounts, and investment platforms. The math is simple, add every dollar that you have in all of your accounts (checking, savings, retirement, and investment). Then subtract any credit card debt and student loan debt that you owe and there it is. Simple right??

How to Acquire Investable Assets

Now that you know what qualifies as an investable asset and you’ve calculated how much you currently have, let’s get into how you can acquire some or increase what you already have.

1 – Set your financial goals

First things first, set your goals! You need to have goals in place so that you can start working towards them. So start by defining your financial objectives, such as saving for retirement, funding education, or achieving a specific level of wealth. Clear goals will help you determine the type and quantity of investable assets required for you to achieve your goals.

If you want some free resources on goal setting, budgeting, and more, I have a free guide here. Plus, it will sign you up for my email list where I provide tons of investing advice every single week.

2 – Build an emergency fund

Before getting into the exciting stuff, like investing, you need to set the foundation for your financial wealth and health. That means establishing an emergency fund to cover any unexpected expenses (aka, sprained ankle or your pet swallowed some rocks!). Your emergency fund should be enough to cover about three to six months of living expenses. Having this fund will give you peace of mind and allow you the freedom to invest confidently.

3 – Save for retirement

So now you have some clear goals and an emergency fund – we’re cooking with fire! Start by looking into any employer-sponsored retirement plans, like a 401(k) or 403(b). Make sure you’re taking advantage of any employer matching contributions by contributing at least the amount required to get the match. We’re talking about FREE money that you can easily get by contributing to your own retirement account, so at the very minimum make sure you’re doing this.

If your employer doesn’t offer a retirement plan or you’ve maxed out your 401(k) contribution – you might consider investing in an Individual Retirement Account or IRA. There are two types of IRA’s: a Traditional IRA and a Roth IRA, both offer significant tax advantages so take advantage!

Did this spark interest in learning about the different retirement accounts? Check out this article to learn all about IRAs and 401(k)s!

4 – Invest and diversify your investments

Are you interested in investments aside from retirement or maybe you’ve maxed out your retirement funds? You can invest in stocks by choosing an online brokerage like Vanguard or Fidelity (both have an incredible reputation and allow you to invest with little to no fees). There are many options in the marketplace for investment brokerages so just make sure you’re choosing one with no account fees or minimums. When investing you want to make sure that your portfolio can weather whatever financial storms may come, you do that by diversifying your investments. That is what makes having retirement funds, stocks, and other investments such as bonds and money market accounts a sound investment strategy.

Ready to start investing in stocks? Here’s an article on how to buy stocks online!

How to manage investable assets

So you have the information on how to acquire investable assets and now you’re wondering how much work will this be? And how do I manage these assets? Great news, a lot of it will be built in! Sure, you want to stay on top of your progress and recalibrate from time to time, but overall you want to think of this as a long-term financial plan. So that means, trusting the process and being proactive instead of reactive.

1 – Understand your risk tolerance and tax implications

Investing is about as personal as it gets because money IS personal. That means you need to get real with yourself about the amount of risk that you’re comfortable with when it comes to your investments. Understand your risk tolerance and align it with your investment strategy. Consider diversification and asset allocation techniques to manage risk and create a healthy investment portfolio.

One of the main advantages of retirement funds like a 401(k) and IRA are the tremendous tax advantages. But, you need to be familiar with your accounts and strategically aim for the greatest tax-efficient strategies. Understanding the tax implications of your investments can help you avoid hefty fines and optimize tax savings.

2 – Evaluating investment performance and rebalancing

Depending on where and how you’re investing, you may want to periodically evaluate your investment performance and rebalance your portfolio to maintain your desired asset allocation. By assessing the performance of your investments you can identify areas for improvement of potential adjustments to your investment strategy.

So be interested and curious about your investments, make sure you understand how your investments are performing, and don’t be afraid to ask for guidance or support! Many investment platforms have knowledgeable advisors on hand to answer questions FOR FREE. Make sure you’re taking advantage of whatever help is available to you.

3 – Expert assistance and support

If you prefer a more hand-held approach or have a lot of questions and need more guidance in your investment strategy, you can consider hiring a financial advisor or investment professional who can provide expert guidance and assist in managing your investable assets effectively.

Please consider your FREE options before resorting to paid support. I have had so many clients come to me and after learning the basics of investing, they find out that their advisors were essentially taking advantage of them. If you go down to the stories on this page, you will find two key examples of why I don’t recommend working with advisors (at least not before you know some things about investing first). Spoiler: both of these students fired their advisors and now have continued to grow their net worth the lazy way.

If you’re going to pay make sure it’s fee-only or a flat fee – do not sign up for a percentage-based fee schedule. Again, there is a wealth of free information available online that can lead you in the right direction.

So consider those options first.

If you’re interested in a free investing webinar, click here to sign up!

Final Thoughts

Now that you understand that investable assets are the foundation for building wealth and achieving financial stability. It’s time for you to take the next steps by calculating your investable assets! You’ll need to understand where you are and what your goals are to get started.

You have all of the tools to set your goals and take control of your financial future. Steadily grow that emergency fund, start investing for your retirement and most importantly be committed to being patient, curious and disciplined. Those are the things that will keep you moving forward on your path to financial freedom.