Net worth
Net worth is the one number that summarises every financial decision you have made. It is also the easiest one to flatter.
Net worth is everything you own minus everything you owe. It is the only single number that responds to every financial decision you make — a raise that was absorbed by spending does not move it, one that was split and invested does, and debt repaid moves it exactly as saving does.
It is also the easiest number to flatter, and most people who calculate it do. Property valued at what it should be worth, a car at what it cost, a card balance omitted because it will be cleared next month. Each individually forgivable, and together they can move the figure by twenty lakh in a household with nothing unusual about it.
This topic contains no net-worth-by-age table, deliberately. Every such table in circulation is derived from an unrepresentative sample or invented outright, and reading one produces either false reassurance or unnecessary anxiety against a number that measures nothing. What is worth understanding is the shape of a trajectory and why its first years feel like failure when they are not.
Key terms
- Net worth
- Total assets less total liabilities, at realistic values on both sides. The only figure that captures the combined effect of earning, spending, saving, investing and borrowing, which is what makes it the one worth tracking over years.
- Liquid net worth
- The portion of net worth that could actually be converted to cash within days without a forced sale. Frequently much smaller than the headline figure, and the number that determines whether a bad year is survivable.
- Realisable value
- What an asset would actually fetch, as opposed to what was paid for it or what the owner believes it is worth. The valuation standard for an honest statement, and the one people most often abandon for property and vehicles.
- The inflection point
- The stage at which annual investment returns begin to exceed annual contributions. Before it, growth is mostly what you added; after it, growth is mostly what the balance earned — and the curve visibly steepens.
Frequently asked questions
How do I calculate net worth?
List every asset at what it would realise — cash, investments, retirement accounts, property at a comparable sale price, a vehicle at resale value. List every liability in full, including the outstanding principal on loans, any card balance carried, and money owed informally. Subtract. Twenty minutes, once a quarter.
Should I include my house and my provident fund?
Yes to both, with the loan on the other side for the house. They are genuinely yours and omitting them understates the position substantially. What is worth tracking separately is how much of your net worth they represent, because both are illiquid — a figure that is almost entirely home equity and EPF is a real position and not an available one.
What is a good net worth for my age?
Not a question with a defensible answer, and the tables that offer one are not measurements. Whether your own figure rose over the last four quarters, and whether the rate of increase is improving, is a question with a real answer that controls for every circumstance a benchmark cannot.
Why does it barely move in the early years?
Because early growth is almost entirely your own contributions — returns on a small balance are small in absolute terms whatever the percentage. The inflection comes when annual returns begin to rival annual contributions, which takes several years. Years three to five feel like failure and are simply the flat part of a curve that steepens later.