What is Net Worth?
Your Net Worth, is the difference, in value, between what you own—your house, retirement funds, investment accounts, checking account balance, etc.—and your liabilities, such as the mortgage, credit card debt and so forth.
In simple English, your net worth looks at everything you own, including assets that will be part of your retirement plans, such as your PF, EPF stocks, investments, etc. If you create a separate list of your all your outstanding balances (debts) and subtract that amount from the total sum of everything you own, what’s left is your NET WORTH
Understanding the Benchmarks
In Your 20s
When you Turn 30
When you Turn 40
When you Turn 50
By age 50, your goal is to have a net worth of 4 times your annual salary at the age of 49. If you’re earning 25 Lakhs at the age of 49, then your net worth target at age 50 is 1 Crore! That is the power of compounding magic, especially if your start investing in early in your adulthood.
When you Turn 60
- Your Base Salary was, and remains still, at about 40% of your Cost to Company (CTC). This is extremely common.
- You will continue to maintain your salary increment, till you retire.
Multiply your age times your realized pretax annual household income from all sources except inheritances. Divide by ten. This, less any inherited wealth, is what your net worth should be.