If you have high networth it means you are a rich man. Net worth gives the financial strength of a person or a Company. If you have negative net worth, it means you are financially weak and have low credit rating.
So, what is net worth? Net worth is nothing but Assets – Liabilities. It is everything you own minus loans and debts. Net worth applies to both people and businesses.
What is net worth in Companies? It’s the value of financial and non-financial assets which are owned by a Company minus all outstanding liabilities. You have the net worth of people, Companies, Governments and entire Nations.
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Let’s take a look at the net worth of some really rich people. Mukesh Ambani the Chairman of Reliance Industries is the richest Indian with net worth in excess of $47 Billion. Wipro Chairman Azim Premji has net worth around $21 Billion. The ArcelorMittal Chairman, Lakshmi Mittal has a net worth of $18.3 Billion.
Take a look at some really rich Indians. Shiv Nadar, the founder chairman of HCL has a net worth of $14.6 Billion, the founder of Sun Pharma, Dilip Shanghvi, has a net worth of $12.6 Billion, Kumar Mangalam Birla, the Chairman of Aditya Birla Group has net worth of $12.5 Billion and Gautham Adani, the Chairman and Founder of the Adani Group has a net worth of $11.9 Billion.
There are some women too on the list. You have Kiran Mazumdar Shaw, the biotechnogy pioneer, who has a net worth of $3.6 Billion. Other women include Smitha Crishna, Roshni Nadar, Indu Jain, Kiran Nadar, Shradha Agarwal who have high net worth.
Net worth tells how rich you are. It defines the rich and the poor. Net worth is the total value of all your assets minus all liabilities.
Net Worth = Total Assets – Total Liabilities
Total Assets:
Total liabilities:
Steps to calculate net worth:
Example 1:
Madukar is 37 years and owns a house of Rs 50 Lakhs. He has a car loan outstanding of Rs 10 Lakhs and a personal loan outstanding of Rs 5 Lakhs. He has credit card debt of Rs 2 Lakhs. He has Rs 3 Lakhs in his savings bank account and Rs 5 Lakh in FDs. What would be his net worth?
Assets:
House = Rs 50 Lakhs
Savings Bank Account = Rs 3 Lakhs
FD = Rs 5 Lakhs
Total Assets: Rs 58 Lakhs.
Liabilities:
Car Loan = Rs 10 Lakhs
Personal Loan = Rs 5 Lakhs
Credit Card debt = Rs 2 Lakhs
Total Liabilities: Rs 17 Lakhs.
Madukar’s net worth = Rs 58 Lakhs – Rs 17 Lakhs = Rs 41 Lakhs.
Example 2:
Sharmila is 26 years and owns a car of Rs 8 Lakhs, but still has a car loan outstanding of Rs 5 Lakhs. She still has an education loan of Rs 4 Lakhs to pay. She has Rs 1 Lakh in savings bank account and Rs 1.5 Lakhs in FD. She has credit card dues of Rs 4 Lakhs. She also has Rs 1.5 Lakh in her EPF account. What is her net worth?
Assets:
Car: Rs 8 Lakhs.
Money in SB account: Rs 1 Lakh
FD: Rs 1.5 Lakhs
EPF: Rs 1.5 Lakhs
Total Assets: Rs 12 Lakhs.
Liabilities:
Car Loan = Rs 5 Lakhs
Education Loan = Rs 4 Lakhs
Credit card dues = Rs 4 Lakhs.
Total liabilities: Rs 13 Lakhs.
Sharmila’s net worth = Rs 12 Lakhs – Rs 13 Lakhs = (Rs 1 Lakh).
Sharmila’s net worth = minus 1 Lakh. This is a negative net worth of Rs 1 Lakh.
Prime Minister Narendra Modi has assets of over Rs 2 Crores. PM Modi’s movable assets are Rs 1,28,50,498. His movable assets include Rs 48,944 cash in hand. He has Rs 11,29,690 at an SBI branch in Gandhinagar. He has FDs and a Multi Option Deposit worth Rs 1,07,96,288 Crores.
PM Modi has L&T Infrastructure Bonds of Rs 20,000, NSC worth Rs 5,18,235, Life Insurance Plans of Rs 1,59,281 , gold jewelry worth Rs 1,38,060. (These are 4 gold ring pieces of around 45 grams). PM Modi has no loans to repay. He doesn’t have a motor vehicle, aircraft or a yacht.
PM Modi has immovable assets of Rs 1 Crore. He owns a residential building at Plot No 401/A, Sector 1 Gandhinagar. He had purchased this building on October 25th 2002. The land was bought at Rs 1,30,488 and amount invested was Rs 2,47,208. The property enjoys a current market value of Rs 1 Crore.
All these details are public and you can assess them at Prime Minister Narendra Modi website.
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Checked your net worth and found it negative? There’s no need to panic. It means that you most probably have a lot of debt to repay and you could be struggling with it. It also means you have no earned enough or if you are, there’s no saving and investments.
If you are struggling with loans and credit cards, you could have negative net worth.
If you repay loans and credit card dues, the net worth increases. If you earn more and save and invest money, the net worth grows. You can cut down on spending and increase net worth. Every home loan EMI, personal loan EMI or credit card due repaid, increases net worth.
Cut unnecessary Spends, pay back loans, Save and Invest more to increase net worth.
Your goal should be to increase net worth over the previous month. Cut unnecessary spending and save money. Use this money to pay back loans and credit card dues.
Use net worth calculators to get an idea on net worth. It would be good to check net worth at least once each month so that you can repay loans, save/invest money and grow rich.
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