Net Worth
Explanation: Net worth is the total value of an individual’s or entity’s assets minus the liabilities. It is a measure of financial health, indicating what you own versus what you owe. Positive net worth means that assets exceed liabilities, while negative net worth indicates more debt than assets. Net worth can be calculated for individuals, companies, and even countries.
Example: An individual has assets totaling $500,000, including a house, car, investments, and savings, and liabilities amounting to $200,000, including a mortgage, car loan, and credit card debt. Their net worth is $300,000 ($500,000 – $200,000).
Reference Link: For more information on net worth, visit Investopedia’s Net Worth.
FAQs:
- Why is knowing your net worth important?
- It provides a snapshot of your financial health and can help you set financial goals and track progress over time.
- How often should I calculate my net worth?
- It’s a good
- What is portfolio rebalancing?
- Rebalancing involves adjusting the proportions of assets in a portfolio to maintain the desired level of asset allocation.
- What is the difference between a portfolio and a fund?
- A portfolio is a collection of individual investments, while a fund is a pooled investment vehicle that holds a diversified portfolio of assets.
- Can portfolios be customized?
- Yes, portfolios can be customized to fit an investor’s specific financial goals, risk tolerance, and investment horizon.