This net worth calculator estimates an individual’s net worth by considering the assets owned such as cash, home, auto or investments & the liabilities owed such as mortgage, loans and similar debts. There is in depth information on this topic below the tool.


Assets owned

Fixed assets - Real estate

Home:
$
Lands:
$
Other real estate:
$

Liquid assets - Cash

Savings accounts:
$
Cash in hand:
$
Other cash in bank:
$

Liquid assets – Investment portfolio

Retirement account:
$
Life insurance:
$
Bonds:
$
Mutual funds:
$
Stocks:
$

Mobile assets – personal valuable objects

Auto and similar:
$
Motorcycle and similar:
$
Jewelry and similar objects:
$
Other household objects:
$

Liabilities owed

Long term debts

Home mortgage:
$
Other mortgage:
$

Short to medium term debts

Personal loan:
$
Car loan:
$
Credit card balance:
$
Student loan:
$
Other debts:
$

Assumptions

Annual asset growth:
%
Annual liability growth:
%

How does this net worth calculator work?

This personal net wealth calculator estimates the net worth of an individual, which represents his economic position seen as a difference between total assets (usually long term assets) and all liabilities owed.

The algorithm behind this net worth calculator requires these variables to be provided:

  • Assets owned which refer to all valuable properties of a person

- Fixed assets - Real estate

Home – its current market price.

Lands and similar properties – their value if sold today.

Other real estate – where applicable.

- Liquid assets - Cash

Savings accounts – no matter if it is a fixed account of current savings account.

Cash in hand – where the case.

Other cash in bank – no matter of their currency.

- Liquid assets – Investment portfolio

Retirement account – no matter of its type. Here can be included any type of account such as 401(k) savings account, IRAs, SEP IRAs or variable annuities.

Life insurance – which refers to the cash obtained from a life insurance contract.

Bonds – independent of their type: governmental, municipal or commercial bonds.

Mutual funds – if the case.

Stocks – any share portfolio held.

- Mobile assets – personal valuable objects

Auto and similar car vehicles.

Motorcycle and similar.

Jewelry and similar objects – including gold or any other precious metals or gems.

Other household objects – here can be included any valuable art objects.

  • Liabilities owed (on a short, medium or long run)

- Long term debts

Home mortgage – refers to the principal left to be paid on the loan secured with your home.

Other mortgage – if the case this may include any other loans secured with a commercial property, land or property rented.

Short to medium term debts – may include business loans.

Personal loan – if the case the principal to be repaid.

Car loan – where applicable.

Credit card balance.

Student loan principal to be paid off.

Other debts if the case.

  • Assumptions for the forecasted economic status

- Annual asset growth which is considered a fixed rate over the next 15 years. This is a relative measure of how quickly the assets owned by an individual grow year per year. It depends on the assets structure and the share of each component.

- Annual liability growth which is assumed as a constant rate over the next 15 years and refers to the relative change of the liabilities owed.

The formulas this tool is based on are:

  • Personal net worth = Total assets owned – Total liabilities owed.

  • Total assets = Add all the items considered as assets.

  • Total liabilities = Sum all the figures as debts.

  • In case the assumptions for the future are given the net worth calculator returns a table with forecast of the net wealth over the next 15 years by applying this scheme:

Year

Current Net Worth

Total assets owned

Total liabilities owed

1

A1

B1

C1

2

A2

B2

C2

3

A3

B3

C3

n

An

Bn

Cn

Where:

A1 = Net worth for year 1 obtained by applying the standard formula

B1 = Total Assets owned for 1st year.

C1 = Total Liabilities owed for 1st year.

A2 = B2 – C2

B2 = (1 + Annual asset growth*0.01) * B1

C2 = (1 + Liabilities owed growth * 0.01) * C1

A3 = B3 – C3

B3 = (1 + Annual asset growth*0.01) * B2

C3 = (1 + Liabilities owed growth * 0.01) * C2

Understanding net worth

  • The higher than zero the net worth is the better for the individual in question;

  • If negative the net worth shows that on a long run the individual will not be able to pay in due time his debts and obligations.

Example of a calculation

Assuming this status for a person let’s figure out the net worth and its forecasted levels:

  • Assets owned

- Fixed assets - Real estate

Home = $150,000.

Lands and similar properties = $50,000

- Liquid assets - Cash

Savings accounts =$10,000

Cash in hand = $1,000

Other cash in bank = $2,000

- Liquid assets – Investment portfolio

Retirement account = $100,000

Stocks = $25,000

- Mobile assets – personal valuable objects

Auto = $10,000

Motorcycle = $4,000

Jewelry and similar objects = $2,500

Other household objects = $7,000

  • Liabilities owed (on a short, medium or long run)

- Long term debts

Home mortgage = $100,000

Short to medium term debts = $10,000

Personal loan = $5,000

Car loan = $6,000

Credit card balance = $500

  • Assumptions for the forecasted economic status

- Annual asset growth = 10%

- Annual liability growth = 5%

Current Net Worth = $250,000.00

The evolution over the next 15 years of your current net worth is presented below:

YearCurrent Net WorthTotal assets ownedTotal liabilities owed
1 $250,000.00 $361,500.00 $111,500.00
2 $280,575.00 $397,650.00 $117,075.00
3 $314,486.25 $437,415.00 $122,928.75
4 $352,081.31 $481,156.50 $129,075.19
5 $393,743.20 $529,272.15 $135,528.95
6 $439,893.97 $582,199.37 $142,305.39
7 $490,998.64 $640,419.30 $149,420.66
8 $547,569.53 $704,461.23 $156,891.70
9 $610,171.07 $774,907.35 $164,736.28
10 $679,424.99 $852,398.09 $172,973.10
11 $756,016.15 $937,637.90 $181,621.75
12 $840,698.85 $1,031,401.69 $190,702.84
13 $934,303.88 $1,134,541.86 $200,237.98
14 $1,037,746.16 $1,247,996.04 $210,249.88
15 $1,152,033.28 $1,372,795.65 $220,762.37

02 Mar, 2015 | 0 comments

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