A quantification of an individual’s total assets, minus liabilities, represents their accumulated wealth. This calculation considers various holdings, including real estate, investments, and other valuable possessions. Understanding this figure provides insight into an individual’s financial standing and overall economic position. It’s a snapshot of their financial health at a specific point in time.
For instance, a business owner might have a substantial net worth due to the value of their company, while a salaried employee might accumulate wealth primarily through investments and savings. Another example could be a real estate investor whose net worth is largely tied up in property holdings. These examples demonstrate the diverse ways in which individuals can build wealth.