The Nominal Definition of Wealthy

The Definition of “Wealthy” -

One way to define wealthy is by dictionary definition - “Wealthy is a person having abundance of material possession.”

Another definition to define wealthy is by “Net Worth”. Net Worth means what you own minus what you owe. In simple words,

Net Worth = Assets – Liabilities

Suppose if you have 1 lakh rupees of assets (Stocks, Bonds, Gold, Real Estate, Mutual Funds, Intellectual properties…etc..) and you have Rs.20,000 of Credit card debt, your Net worth is Rs. 80,000. Net worth can be negative also, if you owe more than you own. Typically students who have taken higher educational loans have negative net worth during the initial phase of their earning lives.

According to our definition, Wealthy is a person having net worth of more than US $ 1 Million (Or Rs. 5 Crore).

According to this definition, only 3.5% households in USA, are considered wealthy. And rest of the America is not wealthy. In countries like India, the scenario is even worst. Less than 1 % people in the Total population are wealthy. And 95% of millionaires in America have a net worth of US $ 1-10 Million. And this much amount of wealth can be achieved in one generation.

Yes, Up to $ 10 Million of wealth can be achieved in one generation only. Few people have achieved much more wealth than this in single generation. But 95% of the millionaires have achieved this much amount of wealth in one generation only.

Again carefully read the formula of Net Worth. According to the formula, if you want to be wealthy, you have to increase your assets and reduce your liabilities. You have to accumulate more assets and reduce your liabilities if you want to increase your Net Worth…!!!