Networth
Networth is the financial position of any individual or any organization. It is the value of one’s assets after deducting one’s liabilities. So, it depicts where one’s stands today. Even if one has not added or subtracted on one’s assets and liabilities over a span of time, one’s networth may vary. This is because the current value of one’s assets is dependent on a number of factors and is subject to appreciation or depreciation. Owing to amortization, the value of one’s liabilities also varies with time.
Advantages
When your networth is high, it is considered that you are financially strong and your credit rating will improve. The networth of an individual or a company is taken into account while determining the credit rating. At times, a bank may even consider offering differential rate of interest while granting advances to organizations having higher networth.
If one has exposure in the stock markets, the value of his assets will vary with the market conditions. So, if the market his bullish, his networth will increase and obviously, his networth will decrease when the market is bearish. The value of gold also varies from time to time. Assets like property, land are appreciating in nature while assets like machineries are depreciating in nature.
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Your networth changes according to your assets. The assets might change in value, so your networth changes.
I’d like to think I’m valuable regardless of how much money I earn or how many expensive assets I have, but that’s not the way the world sees it. It’s all about a financial figure and how much money you have 🙁
I’ve only heard the term net worth relating to companies and organizations. It’s a new learning that it refers to people as well. I think it would be best for all investors to check the net worth of a company before making any investments. It will save a lot of hassle in the long run.