Networth Vs Cash flow

Mr. X have ₹5 crore in assets.

On paper, it sounded impressive. But when we broke it down… the picture looked very different. 1. ₹4 crore was locked in a house or Land he couldn’t (and didn’t want to) sell. 2. ₹1 crore was in private investments with zero liquidity. 3. His bank balance barely covered 2 months of expenses. Net worth? Huge. Cash flow? Almost zero. One job loss and he’d be in panic mode. Now compare this with another Mr. Y who had just ~₹50 lakh invested. Not flashy. Not “headline-worthy.” But that portfolio quietly generated ₹4–5 lakh a year in rent, dividends, and interest. - No stress about EMIs. - No anxiety about the next paycheck. His cash flow paid his bills - not his salary. That’s when it hit me: I. Net worth is a snapshot.
II. Cash flow is survival. It’s why businesses obsess over cash flow statements more than valuations. And individuals should too. Because you can’t pay EMIs, school fees, or hospital bills with “₹5 crore on paper.” You pay it with actual money coming in. So the real question isn’t: “What’s my net worth?” It’s: “What income does my wealth create without me working?” That’s the number that decides if you’re actually rich… or just look rich.

Comments

  1. AnonymousSeptember 13, 2025 at 11:24 AM

    Well said,
    Assets generating monthly or periodical revenue with long term appreciation makes more faster accumulation of wealth

    ReplyDelete

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