This term refers to the total accumulated value of a particular individual’s assets, minus their liabilities. These assets can include real estate holdings, investments in stocks and bonds, ownership of businesses, and other valuable possessions. Liabilities, on the other hand, represent outstanding debts or financial obligations. Calculating this figure provides a snapshot of an individual’s financial standing at a specific point in time.
For example, a retired athlete might have significant assets accumulated from their playing career and subsequent endorsements. However, they may also have mortgages, loans, or other debts that offset those assets. Another example would be an entrepreneur who has built a successful business. Their net worth would be calculated by considering the value of their company, along with any other personal assets, and subtracting any business debts or personal liabilities.