Alto
Glossary

What is net worth?

Your net worth is determined by subtracting your total liabilities from your total assets.

Let’s assume you have the following hypothetical balance sheet:

Assets Amount Liabilities Amount
Bank Account $150,000 Student Loan $35,000
Stock Market Investments $500,000 Car Loan $20,000
Car $55,000
401(k) $400,000
NET WORTH $1,050,000

Subtracting your total liabilities ($55,000) from your total assets ($1,105,000) gives you a total of $1,050,000.

In this case, your net worth exceeds $1 million, meaning you’d fulfill the net-worth based requirement to be considered an accredited investor. When calculating net worth, your primary residence and related mortgage values are typically not considered unless your loan amount exceeds the fair market value of your home (an “underwater mortgage”) or you have a remaining balance on a home equity line of credit, meaning you borrowed against your existing home equity.

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