How to Estimate your Net Worth

[Linton]

Hi all.
I joined few weeks ago and I have read some interesting and useful postings here. I decided to post this, with the hope that it will be useful to someone in this forum.

According to Thomas J. Stanley (Ph.D.), the author of "The millionaire Mind" and other books, A person's minimum net worth (NW) should be = 10% x Total annual gross income x age (yrs).

An example: a 30 yrs old lawyer that grosses #200,000 per annum should have minimum NW of (10/100)*#200.000*30 = #600,000.0. - This applies to any economy/currency.

Individuals can then estimate their NW and compare to above to see how they stack-up. Note that primary residence should never be included when estimating Net Worth. It is also generally suggested to check one's NW every 6 months. I started doing this in 2003 and just doing it is incredibly powerful.


Best Regards

[Avocado]

Interesting post.

How does this method hold up to a NW calculator as this one:
Net Worth Calculator - Money - MSNBC.com ;
or this one: Understanding and Controlling Your Finances: Net Worth Calculator
or this one: Calculators - Net Worth Calculator

Stanley's method, I think, gives a deceptively low minimum NW value.
.

[chidiohaz]

Linton and Avocado, you guys are great! You've contributed a tool that is indispensable to those who knows the worth. I have been search for a long time a tool of this nature to no avail.

I kept on using the one from Cashcraft Asset Management Limited - A member of the Nigerian Stock Exchange site and I needed variety, thanks alot you guys. Pls keep this up!!!

[ogo]

Linton and Avocado, I must say this is real interesting stuff. I noticed that both calculations are somewhat the same with little difference but I think I would go with Linton on Thomas J. Stanley (Ph.D.), calculation. Thanks for this useful Information.

[Linton]

Avocado,
Your eqautions are the actual ways to estimate Net Worth, but what I posted is the generally accepted way to estimate what minimum net worth should be for an individual. So typically they both go hand in hand. The correct title should have been "what your Net Worth should be".

Thanks all for your comments

[juliusdudu]

Originally Posted by Linton

Avocado,
Your eqautions are the actual ways to estimate Net Worth, but what I posted is the generally accepted way to estimate what minimum net worth should be for an individual. So typically they both go hand in hand. The correct title should have been "what your Net Worth should be".

Thanks all for your comments

I really thank u guys for this. It is a good post and very nice link.
Thanks alot but i will go with Stanley for the minimum worth and avocado (MNSM) for higher stat.

[nwoyearoh]

Tested all links on my current position: pretty much same answer with exception of considering things like cars/boats/etc. as assets without considering the cost of keeping them "alive". I believe Robert (Rich Dad Poor Dad) do not consider the house one lives in as an asset except one is paying fair rent for it - how much of the mortgage one has built in a rented accomodation can/should be counted as an "asset"?