What is Above Water?
How Does Above Water Work?
For instance, let's say John Doe has $30,000 of debt and has no savings. He gets a better job that pays him twice as much, enabling him to pay off his cards and start a retirement account. Finally, John is above water.
Similarly, let's say Company XYZ buys a robot for $10,000. It records the value of the asset as $10,000 on its , and then it depreciates that asset by $1,000 a year. By the end of two years, the of the asset is therefore $8,000. However, the demand for these robots has skyrocketed and they are in short supply. Company XYZ could actually sell its two-year-old robot for $15,000 -- far more than its recorded value. The robot is above water.
Why Does Above Water Matter?
Above water is usually a good place to be. The phrase denotes financial stability. Its opposites are "underwater" or "treading water."
Personalized Financial Plans for an Uncertain Market
In today’s uncertain market, investors are looking for answers to help them grow and protect their savings. So we partnered with Vanguard Advisers -- one of the most trusted names in finance -- to offer you a financial plan built to withstand a variety of market and economic conditions. A Vanguard advisor will craft your customized plan and then manage your savings, giving you more confidence to help you meet your goals. Click here to get started.
Read This Next
When it comes to Mother's Day, it's the thought that counts. Right? The average person is expected to spend $152.52 on gifts for mom this Sunday, according to the National Retail Federation...Read More →
Each week, one of our investing experts answers a reader's question in our InvestingAnswers' Q&A column. It's all part of our mission to help consumers build...Read More →