What is the meaning of the net worth of a person?
"An individual's net worth is the value of the person's assets minus his debt. To find your net worth, add up the value of everything that you own: your house, your cars, your bank accounts, your retirement investments, etc.  Then subtract all of your debt: mortgage, student loans, credit card debt, car loans, etc.  If you sold everything you own and paid off all your debts, you would be left with your net worth. If Bill Gates' net worth is $86 Billion, he likely does not have that much cash sitting in the bank.  Much of his net worth is in the form of assets: stocks, real estate, and other investments.  If he sold everything that he has and paid any debts, he would theoretically have the $86 Billion.  I say ""theoretically"" because in the amounts of stock that he owns, he could cause a price drop by selling it all at once."
Data is a funny thing. There are many different ways of constructing data sets. Keep in mind, the cite you linked is fine, I follow this kind of site when I am data mining. They got their data from the Government, and there's no reason to doubt its validity. Keep in mind, it's a survey. They extrapolate from a survey of a small population - In the 2016 survey, 6,254 families were interviewed, and in the 2013   survey, 6,026 were interviewed. 1) Let's set that aside, and look at the numbers as if they were gospel. $10.37M net worth to be top 1%. That's people at all different ages, and not the wealth cutoff for those dying, else the estate tax would hit closer to the 1%. Given the limited data set, I'd only hypothesize, if we graphed the age (along the bottom, X axis) vs number of people, the curve would peek in mid to late 60's, as people retire. With 20 years for the couple to spend and gift, it's not tough to imagine that by the time they pass away, the taxable estate $11M couple falls to just .2%.  2) When the estate tax impacted estates over just $600K, and my daughter was born, we set up a trust. Out net worth was barely positive, but insurance alone would have created enough wealth to have our orphaned child be subject to the tax of our estate before she received a dime. We also used the trust to fund her college. As a completed gift, had we made some bad decisions and lost it all, at least that money would be protected. Keep in mind, there are different flavors of trusts, but it's safe to say that in a survey to collect data, the million dollar+ trusts are considered family wealth. Not tough to imagine a good fraction of those families over $10M have a nice chunk already protected this way.  3) Last - For any illiquid assets, there's a discount that gets applied, typically 30%. I own a ranch, and want to start gifting it to the kids, the process involves creating stock, with restrictions, as a way to transfer the fractions required to gift the $14K/yr per person combination. (That is, a couple can gift 14x4 = $56K to a child with a spouse. 4 kids, all married, and the gifting is $224K/yr, $320K at full valuation. Again, these gifts may be to irrevocable trusts, and still thought of as their wealth. His net worth is going to be very different from his liquid assets. It’s not like he can write an $80B check. When you give a homeless person a dollar, are you basing it on what’s in your wallet or based on the worth of all your assets (home, car, electronics, etc)? Next question you should have is “Why the ef is anyone else telling me how much of my money I should give away?” "I think something telling about this article is how infatuated people seem to be with the 1%. The 1% are exactly that...ONE...FUCKING..PERCENT. Shouldn't we be happy that the top 1% are earning significantly more than $100,000.  The argument of whether or not $100,000 is a ""good"" salary is a far different argument. As many have brought up already, location is a large factor in how far your money will go as well as other factors, but that's not my point.  ""But as income inequality in the US continues to worsen, a $100,000 salary creeps ever-closer to being an upper-middle-class income, not a sure sign of wealth.""  The article seems to subtly suggest one should be unsatisfied that they are not part of or close to being included in the 1% or seen as wealthy." He is worth $17.5 billion today Note that he is worth that dollar figure, but he doesn't have that many dollars. That's the worth of his stake in the company (number of shares he owns times the assumed value per share), i.e. assuming its total value being several hundreds of billions, as pundits assume. However, it is not a publicly traded company, so we don't really know much about its financials. "I'd interpret it as ""Net Worth"" reached 1M where ""net worth"" = assets - liabilities." Very wealthy people usually have an investment manager who is constantly moving money between investments and accounts. They hold cash (or cash equivalent) accounts for use in a near-term buying opportunity, for example if they believe certain stocks will go down in price soon. This amount can vary from under 1% (for a money manager with no intention of any short-term trading) to over 20% (for a market pessimist who expects a huge price reduction shortly).  In rare cases they will also hold significant cash because of a planned large purchase, but there's almost never a reason for that to exceed 1% of their net worth. "Free hint - If you're using some non-traditional definition of a common English word in a public forum then you should choose another word.   But whatever.  Please explain what exactly you were referring to.   I mean ""rather"" isn't even that important.  The real important phrase is this:  ""in most cases, people end up paying more in taxes""  There aren't multiple ways to interpret that.  ""People end up paying more in taxes"" means there are two scenarios - one with more taxes and one with less.  You've claimed that the first of those is tax-deferred accounts and gave a reason why.  But what is the second scenario?    &gt;NOWHERE  Exactly.  You're totally wrong.  That's all I needed to hear.  Have a nice evening." I think you wrong about this. There are two problems I see with your example.  * When you created something which costs $150 you have increased the amount of money in the world from $200 to $450 because money is the storage of value.  * After the first transaction you have said that you have $250, which presumably means the money in the bank. However, at a later point when you go to the bank demanding $500 you only consider physical notes to be money. The bank at this point could give you a check book and if you wanted to spend it would simple credit the other person $500 and remove that amount from your account. In addition, the bank could always repossess the items you have sold to the other person and give them to you in lieu of physical money. If this happened, first you would be breaking the law for driving without insurance. Second, my uninsured motorists insurance would cover it.   Third, your personal net worth is not zero. You are the owner of all those corporations which happen to own those assets. I could sue you and you would have to liquidate your stakes in those corporations. Your example is just saying someone doesn't have any assets if all their cash is tied up in stocks (equity ownership of corporations). If you're argument held true in court, no one could sue anyone successfully, because everyone would just put all their money in equities before a lawsuit. I think you take some pretty big liberties assuming I think people deserve failure. If you assume I think that, please note that this speaks more to how you view people who are not wealthy than I do.  That aside, I think you're using lucky in a way that most people do not in this instance.  Is it lucky to eventually achieve a reasonable goal with decades of consistency? Sure, in the ways that I mentioned - nuclear war didn't break out, no fatal traffic accidents happened, etc.  Do you think that is what people usually mean when they say people who have more money are just lucky? Or do you think they use the term lucky to mean there is no merit basis for the difference?  Side note - I'm not saying everyone with money has it because of merit any more than I am saying everyone without money deserves to be broke. If anything, I'm disagreeing with the semantics used to discuss wealth and income disparity, partly because it is divisive. All value given to products is subjective and is different from person to person.  It can also vary for the same person from year to year, month to month, day to day, or even hour to hour as a person analyzes different products and prices to determine which imparts the most value to him or her at a given point in time. In regards to losing money in your investment accounts.  This reminds of a book I read on Jesse Livermore.  Jesse was a famous stock broker who made millions (in the 1920's so he would be a billionaire in today's money) in the stock market multiple times.  Jesse felt like  you - he felt like after a while the losses on paper did not seem to concern him as much as he thought it should.  He thought it was due to the investment accounts being simply being numbers on papers and not cold, hard cash. So what did Jesse do to remove the abstract nature of investment accounts?   From here: Livermore always sold out all his positions at the end of every year   and had the cash deposited in his account at the Chase Manhattan Bank.   Then he would arrange with the bank to have the money, in cash, in the   bank’s vault in chests. “There was a desk, a chair, a cot and an easy   chair in the middle of the cash.” On the occasion described in 1923,   there was $50 million in cash.  In the corner was a fridge with food,   enough for a few days. There was lighting installed. Then, like   Scrooge McDuck, Livermore would have himself locked in the vault with   his cash. He would stay a couple of days and “review his year from   every aspect.”  After his stay was over, he would fill his pockets with cash and go on   a shopping spree.   He would also take  a vacation and not re-enter   the market until February. But unlike Scrooge McDuck, this was not the act of a miser, explains   Smitten.  Livermore lived a world of paper transactions all year long.   He believed that “by the end of the year he had lost his perception of   what the paper slips really represented, cash money and ultimately   power.”  He “needed to touch the money and feel the power of cash.” It   made him re-appraise his stock and commodity positions. Imagine the $60,000 from your investment account sitting on your kitchen table.  Imagine seeing $1,000 dumped into the trash can one day.  I know I would appreciate the money much more seeing that happen. "If it isn't measurable, his quote makes no sense.  ""People ought to be paid in a way that bears some relationship to the value they contribute to society... which can't be measured.""  Somehow I doubt that's what Keynes was thinking." "The expression ""in debt"" when talking about a person's financial affairs means that the sum of debit balances on all accounts exceeds the sum of credit balances on all accounts.    A mortgage account is not excluded from that. This definition also does not consider whether any of the debt is secured, or ownership of assets (shares, property, chattels, etc).   So, someone with a mortgage of one million dollars for a home that is worth two million is in debt by one million dollars, until they they sell the home (for that amount) and pay down the mortgage. That means ""in debt"" is not necessarily a statement about net worth." You are not asking for insurance purposes. So I'll go with this - I have two asset numbers I track. All investments, retirement accounts, etc, the kind that are valued at day's end by the market, etc. From that number I subtract the mortgage. This produces the number that I can say is my net worth with a paid in full house. The second number simply adds back the house's value, give or take.  Unless I owned art that was valued in the six figures, it seems pointless to me to add it up, except for insurance. If my wife and I died tomorrow, the kid can certainly auction our stuff off, but knowing that number holds no interest for us. When most people talk 'net worth', I don't see them adding these things up. Cars, maybe, but not even that. The worth of a share of stocks may be defined as the present cash value of all future dividends and liquidations associated therewith.  Without a crystal ball, such worth may generally only be determined retrospectively, but even though it's generally not possible to know the precise worth of a stock in time for such information to be useful, it has a level of worth which is absolute and not--unlikely market price--is generally unaffected by people buying and selling the stock (except insofar as activities in company stock affect a company's ability to do business). If a particular share of stock is worth $10 by the above measure, but Joe sells it to Larry for $8, that means Joe gives Larry $2.  If Larry sells it to Fred $12, Fred gives Larry $2.  The only way Fred can come out ahead is if he finds someone else to give him $2 or more.  If Fred can sell it to Adam for $13, then Adam will give Fred $3, leaving Fred $1 better off than he would be if he hadn't bought the stock, but Adam will be $3 worse off. The key point is that if you sell something for less than it's worth, or buy something for more that it's worth, you give money away.  You might be able to convince other people to give you money in the same way you gave someone else money, but fundamentally the money has been given away, and it's not coming back.