This term refers to the total value of an individual’s accumulated assets, including investments, properties, and other holdings, minus their liabilities. It represents a snapshot of their financial standing at a specific point in time. Calculating this figure requires a thorough assessment of all assets and debts, and the resulting number can fluctuate based on market conditions and personal financial decisions. Understanding this concept is crucial for evaluating an individual’s overall financial health.
For example, a business owner might have a significant net worth due to the value of their company, real estate holdings, and stock portfolio. Conversely, a recent graduate with student loan debt might have a negative net worth. These examples illustrate the wide range of financial situations that can be represented by this calculation.