Written by:
Paul Tracy

Paul has been a respected figure in the financial markets for more than two decades.

Prior to starting InvestingAnswers, Paul founded and managed one of the most influential investment research firms in America, with more than 2 million monthly readers. While there, Paul authored and edited thousands of financial research briefs, was published on Nasdaq. com, Yahoo Finance, and dozens of other prominent media outlets, and appeared as a guest expert at prominent radio shows and i...

View all posts
Updated September 30, 2020

What is Net Worth?

Net worth refers to the total value of an individual or company expressed as total assets less total liabilities.

How Does Net Worth Work?

The net worth of an individual is simply calculated as total assets (e.g. home equity and portfolio value) less total debt (e.g. mortgage, credit card debt, auto loans, and educational loans).

For example, an individual with total assets of $100,000 and $30,000 of total debt would have a net worth of $100,000 – 30,000 = $70,000. 

A company's net worth is calculated in a similar manner, but is referred to as stockholder equity

Why Does Net Worth Matter?

For a company, net worth is a necessary consideration for the purposes of valuation, particularly in the event of a acquisition or merger. For an individual, net worth is important for tax purposes, wealth management and estate planning.

Ask an Expert about Net Worth
At InvestingAnswers, all of our content is verified for accuracy by Paul Tracy and our team of certified financial experts. We pride ourselves on quality, research, and transparency, and we value your feedback. Below you'll find answers to some of the most common reader questions about Net Worth.
Be the first to ask a question

If you have a question about Net Worth, then please ask Paul.

Ask a question

Read this next

Don't Know a Financial Term?
Search our library of 4,000+ terms
 - profile
Ask an Expert about Net Worth

By submitting this form you agree with our Privacy Policy