Understanding Basic Accounting For Managing Your Wealth

By Author: Avendusgroup
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You may hear a variety of terms when in relation to wealth management but unless you know the basics, most of them would sound gibberish. At most, every individual should have a certain amount of knowledge in accounting in their life. Knowing so can make life much more easier. A little knowledge about accounting goes a long way while planning to take a loan or jumping into a business venture or with handling huge sums of money. It provides you control over your budgets and gives you the confidence to be the master of your own destiny.
To understand accounting, you first have to know the difference between assets and liability.
The asset and liability management are an integral part of learning. So what exactly are those?
Assets is something that brings you money over a period of time, regardless of your current work or lack of it. It is something that provides value for a long long time. Assets can be primarily divided into three categories
1. Fixed Assets – These assets include land, property, equipment etc that are generally not for sale.
2. Intangible Asset – Things that cannot be touched such as patents and copyrights and therefore provide huge monetary value
3. Current Asset – Current assets include cash, savings, stocks etc
Liabilities are something that goes out of your pocket on a regular basis. It could be as simple as your monthly bill to as big as your house loan or more.
Liabilities are mainly divided into two types.
1. Current Liabilities – Current liabilities are those that comes on a time limit of a month or a year with or without the need of bills. These include taxes, monthly bills etc.
2. Long term Liabilities – These liabilities also come with a time limit but which is something more than a year so that you can pay it at your ease and convenience. Loans are one such example of long term liabilities.
Now that you have a gist of it, you can either study more or get an expert to help manage your money or grow your money. Growing your money on your own is a tricky business unless you have sufficient knowledge about the market and how it works. Letting an expert help you is the most obvious way. An expert can help in identifying the correct places to invest, whether in mutual funds, gold, stocks or by being a venture capitalist.
Venture Capital is basically money that is offered by someone who invest in the success of young, rising companies and startups. Even though successful professionals with a large sum of wealth generally fall into this category, anyone can be a venture capitalist if they’re planning on helping startups grow by sharing their experience or being a part of their growth so as to ensure their money is spent in the right reasons and for the right reasons. Today VC funding is generally done by firms and individuals who prefer to do it alone are nowadays known as “Angel Investors”.