1. By calculating the couple’s asset/net worth ratio, I have found that assets currently make up 11% of
their net worth. Formula below.
Net worth calculation
372,620(ta)-374,285(li)=-336,665(nw)
Investment assets to net worth.
372,620(ta)/-336,665(nw)=-1.1 or11%
This means that 11% of their (currently negative) net worth is made of investments. Over the next few
years, I strongly recommend this couple develop a serious plan to begin paying off their debts and
building up their savings fund to the equivalence of a few months salary. I would also ask them to really
look at their variable expenses and start cutting out any frivolous money spending.
2. The couple’s current investment choices look pretty sound. They’ve put money into multiple things
such as stocks, bonds, real estate, and employer retirement benefits as well as personal property and
home value. So far it looks pretty good.
3. The couple’s current asset–to-debt ratio stands at 1:1. This means that their investments are equal to
that of their debt. This will prevent them from ever being able to make a noticeable investment income.