How Do You Calculate Net Worth
By EvrWonder
@EvrWonder (3571)
Canada
September 22, 2011 5:32pm CST
If a person has several million dollars in assets rather than disposable income, are they considered a millionaire?
This has been puzzling me somewhat since conversing with one who does hold such value in assets yet considers themselves pretty much broke otherwise.
What are your thoughts fellow mylotters? All opinions very much appreciated.
5 responses
@Aussies2007 (5336)
• Australia
23 Sep 11
Net Worth is the total of what you own.
If you own a million... you are a millionnaire.
However... most people under 50 are still repaying their mortgage.
Living in a million dollars house does not make you a millionnaire if the bank owns half of it. You first have to repay the mortgage.
It also depends in what country you live.
Being a millionnaire in Australia does not mean much anymore.
Most of the middle class is millionnaire.
And if you don't have a million dollars... as well as your house... when you retire at 60... you are a nobody.
When you consider that there are probably half a million houses in Sydney worth a million dollars or more... that makes half a million people millionnaires.
For someone to consider you rich in Sydney... you have to live in a house worth a minimum of 2 million dollars.
Most millionnaire are always broke because they don't keep any cash. They invest every dollar they make to make more money. They only see that cash when they retire at 60 and start collecting on their investments.
I don't have any sympathy for poor millionnaires. They are poor per choice because they are greedy and always want to make more money.
@EvrWonder (3571)
• Canada
12 Oct 11
Even more interesting! Thanks Aussies.
Surprised that if you reside in Australia and your house isn't worth a million, bought and paid for, you are basically a nobody.
Is that true? Do people in Australia really think like that?
It sounds like per capita, there are more millionaires in Australia than anywhere else.
How is it that being a millionaire in Australia doesn't mean so much anymore? Would one then require multi billionaire status in order to be considered wealthy if they reside in Australia?
I mean a house worth two million might sound like a lot but ..
IMHO I believe that investing profit to earn more is a wise business decision. Most of the Millionaires I know and have known are frugal. Live a simple life. Likely because they have not much cash on hand. I think this way of living helps to maintain a healthy fortune as well as builds character having to learn and be able to tolerate compromise.
Who is happier? The wealthy who live a frugal lifestyle or those who spend lavishly?
An interesting take on the Wealthy of Australia. Thanks again. I have enjoyed your response.
@Aussies2007 (5336)
• Australia
12 Oct 11
You are only a nobody financially.
It will not permit you to live a lavish life.
It has been published as a well know fact... that to retire at 60... you need to have your house paid and one million in the bank. If you don't... you stand to live in poverty by the time you are 75.
@drannhh (15219)
• United States
24 Sep 11
I guess there is a big difference between liquid assets and things people have like cars houses and boats. But I think you take all of the assets and subtract all the debts and what is left is what they are "worth." If some of it is real estate that devalued or stocks that went down, then the next time the calculations will show a different net worth, but it is whatever they have at the moment. I don't think it matters whether it is old or new money.
@EvrWonder (3571)
• Canada
12 Oct 11
Age of money I don't think money matters what age it is. Not yet anyway.
Thanks a lot for your response drannhh. Good to see you here.
What is a liquid asset, as appose to say property or a house, a car, stocks etc?
Yes, take all assets and deduct any debits equals worth. Interesting.
Naturally recalculating would be necessary, perhaps annually.
Thank you for your response.
1 person likes this
@drannhh (15219)
• United States
12 Oct 11
A liquid asset is something you can convert to currency very quickly, not a house or car, but more like a money market account (not a CD) or gold bullion (Canadian Maple leaf coins for example) which you can take to an exchange and trade in for cash.
Some people sew small coins in the hems of their garments. I have never done that, though.
@EvrWonder (3571)
• Canada
18 Jan 12
Lol, can't say I have either but hey thank you for your comment. Now I know and am aware of this type of asset.
Thanks again. All the Best for 2012 and beyond!
@MsTickle (25180)
• Australia
30 Sep 11
When it all boils down, it's really just numbers. Unless there is something to show for it...then it's assets. If the assets are owned along with any disposable cash, that is a persons net worth. If they can liquidate their assets and turn them into cash or if the assets are capable of generating an income or if the value of the assets is appreciating, then the guy isn't broke.
Does he live with friends and pay no board, does he catch the train or bus to get places?...I'm guessing not.
@EvrWonder (3571)
• Canada
12 Oct 11
Hello Ms Tickle, Thank you for the explanations in your response in reference assets. I agree, what it boils down to is really just numbers. Not so much in reference to any one but rather a generic question that I sometimes wonder about. How to find your net worth. Now I know thanks to these great responses.
Good to see you! Thanks again for your response.
@stephcjh (38473)
• United States
24 Sep 11
Yeah. I think we have to add up all assets no matter if they are possessions or money forms.
@EvrWonder (3571)
• Canada
12 Oct 11
Right and then minus any debt=net worth. Thank you for the response. Very cute dog btw.
@sishen4429 (108)
• China
26 Sep 11
It depends how much debt he or she load.If he or she is in debt which is big enough to cause a bankrupt.It means he or she is not a millionaire.If it is not the situation like this he or she is a millionaire
