Topic Guide
What Is Illiquid assets?
Illiquid assets is a subject covered in depth across 1 podcast episode in our database. Below you'll find key concepts, expert insights, and the top episodes to listen to — all distilled from hours of conversation by leading experts.
Key Concepts in Illiquid assets
Personal financial statement for fire
This is a specialized financial document tailored for individuals pursuing Financial Independence, Retire Early (FIRE). Unlike basic net worth statements, it meticulously segments assets into liquid (suitable for a 4% withdrawal sequence) and illiquid categories, incorporates a sophisticated estimation of all tax liabilities (federal, state, and FICA), and explicitly calculates the 'savings rate' as the most crucial variable for tracking progress towards financial independence.
What Experts Say About Illiquid assets
- 1.A good personal financial statement for FIRE separates personal property (homes, vehicles, 529s) from a financial portfolio for clearer tracking.
- 2.The financial portfolio should differentiate between liquid assets (stocks, bonds, retirement accounts) used to calculate a "4% withdrawal sequence" and illiquid assets (real estate, private equity, pensions).
- 3.Sophisticated tax estimation, including federal (ordinary income, capital gains), state (progressive brackets), and FICA, is vital for accurately understanding cash flow.
- 4.Computing your "net cash accumulation per year" (gross income minus spending minus tax liability) reveals your true ability to generate cash for FI.
- 5.Scott Trench identifies the "savings rate" as "the variable that is most important on the journey to financial independence" [01:09].
- 6.BiggerPocketsMoney provides a free, downloadable personal financial statement template in XLS or Google Sheets format at biggerpocketsmoney.com/resources, requiring no email for access.