If you’re like most investors, you’d probably be surprised at the sheer number and value of your total assets once you added ‘em all up.
Also, if you’re like most investors, you don’t even know where to start when it comes to tracking down and adding up the value of every single bank account, real estate property, crypto holding, family heirloom, stock investment, and whatever else you own.
Heck, you might not even be sure why you’d want to bother.
Turns out, there are some great reasons for keeping track of your total assets — as well as a really helpful tool that can add some much-needed automation to the process.
But first: what does total assets actually mean?
What Are Total Assets?
This one’s easy — total assets is a term for everything you own that has monetary value, even if it can’t necessarily be sold easily.
Total assets are usually classified into three different buckets: current assets, long-term assets, and intangible assets.
It’s also important to note that total assets is also the name of an accounting equation that makes up the basis of the double-entry system and helps make sure balance sheets remain, well, balanced.
We’ll talk about balance sheets a bit later when we talk about calculating total assets, but keep in mind that because this is a guide for individual investors instead of businesses, we’ll be using the term “total assets” mostly to refer to all the assets you personally own.
Current assets are those which can be sold for cash within a year of them coming into your ownership. Basically, these are your most liquid asset types. Some common current assets include:
- Stocks and bonds
Long-term assets are the opposite of current assets. It’s usually not that they can’t be sold after a year in your ownership — it’s more that these are often the kinds of assets you usually don’t want to sell quickly. Long-term assets aren’t liquid, but in many cases they won’t be a hard sell.
Long-term assets can look like:
- Real estate
- Retirement account(s)
- Collectibles and heirlooms
- Long-term investments
Intangible assets are nonphysical, and they can represent value that exists in the physical world as well as in the digital world. Intangible assets have varying degrees of liquidity. This is because the value of each type is defined by its own (often volatile) market, so you might not always be able to sell a digital asset quickly — not for the same or more value than you paid for it, anyway. Obscure NFTs are a good example here. But some intangible assets, like popular cryptocurrencies for example, are pretty easy to offload quickly and for a profit.
So what’s the upside? Intangible assets are not traded on the stock exchange, so they offer an uncorrelated outlet in which to invest your money. This can help diversify your portfolio in a big way and protect you from permanent capital losses.
Examples of intangible assets include:
- Digital asset investments: crypto, NFTs, websites, social accounts, etc.
- Insurance policies
Why You Should Calculate Your Total Assets
Aside from it just being nice to have an accounting of all the assets you own, there are some really strategic reasons why you should prioritize calculating and tracking total assets.
Simplify Taxe Time
If tax season is consistently overwhelming and messy for you, we’ve got good news — having total assets already calculated, or at least a system for adding them up quick, can save you some time and help make sure you’re filing in a way that saves you the most money.
If you’re a highly diversified investor who prefers to hire tax help, it’s probably going to cost you less and make your tax preparer very happy if you can send over an accounting of your total assets.
Stay Prepared for Any Rough Financial Waters
Financial preparedness can improve your mental health and lower stress levels.
With full documentation of your total assets, you’re more prepared to handle any unforeseen expenses or financial losses life throws your way. Rough economic waters? Good thing you already understand your assets well enough to quickly identify which can be thrown overboard (aka sold) to protect yourself and your wealth goals.
Create More Informed Financial Plans
OK, we’re done with the sea-themed puns (for now, anyway).
Similar to the above point, with a full accounting of your total assets, you’re always ready to make well informed financial decisions. That means when a really interesting investment comes your way, you’ll be able to consider it quickly and decide whether you’re prepared to hop on it or wait for the next one.
Modernize Your Portfolio Diversification
Ah, one of our favorite topics — diversification.
Portfolio diversification is an absolutely key strategy for modern investors.
With a well diversified portfolio, investors can protect themselves from the capital loss that results from harsh stock market swings and even reap higher returns — because, generally, balanced portfolios have been shown to generate more returns and lower losses and experience less risk overall.
On top of this, a diversification strategy will motivate you to dive into new asset classes, making sure you don’t miss any modern opportunities that could really grow your portfolio.
What does all of this have to do with total assets?
Having all your total assets laid out in front of you is necessary if you’re going to understand what types of assets you already have and which ones you should take on to broaden diversification.
Inform Your Net Worth Calculation
Net worth is a metric that shows the value of what you own, minus the total of what you owe.
Tracking net worth is critical to understanding your current financial health as well as the future of your financial wellness. Of course, you want this number to be positive. And, the higher the better — as long as you aren’t doing anything sketchy to increase it.
And, in order to find your net worth, you must first have an idea of your total assets and what they’re all worth.
So let’s dive into the formula for finding total assets before plugging it into the larger calculation for net worth.
The Total Assets Formula
As mentioned, total assets is the sum of the value of everything you own that has value. It’s a simple metric that’s similarly simple to formulate.
To find total assets, add up current assets, long-term assets, and intangible assets. Here’s what that should look like:
Total Assets = Current Assets + Long-Term Assets + Intangible Assets
How to Calculate Your Total Assets and Uncover Your Net Worth
Once you have your total asset accounted for, you have half of the factors needed for finding your net worth!
Here’s how to go from finding total assets to finishing the rest of the process and calculating your total net worth.
1. Make a List of Your Total Assets
To take it from the top, first, list out your total assets.
Yes it’s a simple concept, but that doesn’t mean it won’t be time consuming.
Half of your time in this step will probably be spent remembering what assets you own — and logging into any accounts you need to access to view them. The other half you’ll probably spend figuring out exactly what they’re worth.
You might have spotted a problem here — what about assets that change in value due to volatility (like crypto) or because you add cash flow to or take cash flow out of them (like real estate)? There’s no magic trick for dealing with assets like these. You’ll have to find their value again every time you want to find your net worth.
That is, unless you employ technology to automate the repetitive elements of this process. Which you can do — and we’ll even show you how later after we explain the rest of the traditional, manual steps.
2. Identify All Your Liabilities
Now for a new concept — finding all of your liabilities.
Liabilities are debts, such are car loans, student loans, mortgages, credit card debt, and so on. Don’t add expenses into the mix. These include regular expenditures on things like bills as well as one-off purchases.
Similar to documenting your assets, most of the time you spend on liabilities will probably be remembering your debts and nailing down exactly how much you owe.
3. Put Everything Into a Personal Balance Sheet to Find Net Worth
Finally, it’s time to bring it all together!
What you need now is a balance sheet, which is basically a document that compares the value of your assets against the value of your liabilities to display a very important number: your net worth number.
The traditional way for individuals to create a balance sheet is to start with an Excel spreadsheet or a balance sheet template like this one.
Once you have total assets and total liabilities plugged into your balance sheet, you should be able to see your net worth.
Here’s where that same problem with manual calculation rears its head again. This balance sheet is like a snapshot. It captures assets, liabilities, and net worth at a single moment in time. It will need to be updated, at your own time and expense, every time you want a fresh take on the numbers.
For diversified investors, this manual process simply isn’t tenable.
Save your time, save your wealth, and save your sanity with a little help from an automated friend.
Kubera: An Automated Assets Calculator, Balance Sheet, & Net Worth Tracker
You can sit around all day tracking down and adding up all of your assets and liabilities as they gain and lose value, fluctuate up and down with the market, and so on. Or, you can use a tool that makes asset and liability monitoring easy, automates the repetitive stuff, and displays real-time data on the value of most of your holdings and your overall net worth.
That tool is Kubera — personal balance sheet software that we custom built to automatically connect to all kinds of bank, brokerage, crypto, NFT, and various other types of financial accounts (see ‘em here).
Got assets (like heirlooms) and debts (like personal cash loans) that aren’t account-based? No worries, because we also built it to handle those. Our spreadsheet-like interface makes it easy to plug in and update all the info you need to track these elements and still get an accurate accounting of your net worth.
In addition to being your personal balance sheet software, Kubera can also automatically show you the returns on your investments, so you know where to double-down and where to ditch assets in order to grow net worth.
To find internal rate of return (IRR is like a more detailed version of ROI) in Kubera, just make sure purchase price, current value, and cash flow are all up to date on your assets. Kubera will automatically add its holding time to the equation before displaying your IRR in your preferred Fiat currency.
This is a huge deal for investors who buy assets using a volatile, independent currency such as cryptocurrency. When you’re only able to view the value of an asset in crypto, it’s difficult to compare its performance to other assets purchased in your preferred Fiat currency. With Kubera, you can level the playing field and view asset performance in an actionable way.
Learn more about Kubera’s IRR calculator in our IRR help center article.
On top of the portfolio tracker features, Kubera also integrates with tools such as Zillow and EstiBot which can automatically provide the real-time value of real estate assets, web domains, and more. No account plug-ins or manual entry needed.
And to make sure you get the ultimate insight into all of it, Kubera’s much-loved recap screen crunches your numbers for you to provide a breakdown of portfolio and assets performance daily, weekly, monthly, quarterly, and yearly.
Kubera can be used on desktop, Android, and iPhone. Want to show it to your other DIY investor friends? Share your Kubera portfolio via a read-only link on which you can set a password, assign an expiration date, and even mask any information you want.
Want to work closely with a financial advisor, wealth manager, or another financial expert from inside Kubera? We made that possible, too! All your expert needs to do is start using Kubera’s white-label-ready solution as part of their client management suite — something they can spin up quickly by simply requesting a Kubera demo today.
Or, you can always get started on your own with an affordable personal subscription.
Kubera’s team is made up of modern DIY investors just like yourself. We build features that we know you’ll love, because we love them! Have a question or a request? Reach our team at firstname.lastname@example.org.