Learn Series: #1
What is Net Worth?
Think of Net Worth as your financial report card. It's the single most important number to understand if you want to track your true wealth over time.
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The Definition (In Plain English)
Your Net Worth is simply the total value of everything you own (your assets), minus everything you owe (your liabilities or debts). If you sold everything you owned today and paid off all your debts, the cash left over in your hand is your net worth.
The Net Worth Formula
What You Own
Assets
−
What You Owe
Liabilities
=
Your True Value
Net Worth
Let's Break It Down
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What counts as an Asset?
- • Cash in your savings and current accounts
- • Investments (Mutual funds, stocks, PF)
- • Physical property (Your home, commercial land)
- • Precious metals (Gold, Silver jewelry)
−
What counts as a Liability?
- • Home loans or Property loans
- • Car, bike, or vehicle EMIs
- • Outstanding Credit Card outstanding dues
- • Personal loans or Student loans
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