The maths is easy, the calculations can be done in minutes and it can be viewed as an investment for your future.
That’s what many wealth managers believe.
But the maths can be very complicated and there is a risk that the math might be wrong.
Here is a guide on how to calculate the wealth percentile.
What is the wealth percentage?
The value of a person’s assets is calculated by multiplying their net worth by their assets.
A person’s net worth is the total of their assets minus their liabilities.
The wealth percentage is then divided by this ratio to get the value of the person’s wealth.
For example, if your net worth and liabilities are Rs 500 lakh, the value is Rs 500,000 multiplied by Rs 500.
In terms of wealth, assets can be any kind of financial assets such as shares in companies, property, shares in trusts, or property that is used for income, capital gains, dividends, etc. But the main consideration is whether the assets are owned by a person or not.
Here is an example of how assets can represent a person:You can see in the example above that the wealth is equal to Rs 500 crore, or Rs 500 crores in the past.
The person owns assets worth Rs 50 crore and the value can be summed up to Rs 50 crores.
However, assets worth less than Rs 50 lakh are still considered as assets.
For the same person, assets of Rs 1 lakh and above are considered as wealth.
This means that, in a given year, a person owns Rs 1 crore and their assets are worth Rs 1.1 lakh.
This person owns a Rs 1,000,000 house, shares worth Rs 5 crore, shares of companies worth Rs 500-1 crore, and property worth Rs 3 crore.
This means that they have a net worth of Rs 10 crore and Rs 2.5 lakh in the same year.
So, their wealth is Rs 1 crores and their net wealth is around Rs 3 crores for the year.
The net worth does not necessarily equate to wealth.
Net worth may vary by person, industry, and industry sector, for example, a property owned by an engineer might not have the same value as a property bought by a factory owner.
However the value will always be equal to the amount of assets the person has.
In a sense, wealth is a measure of the ability of a society to produce, absorb and use assets.
Wealth is not something that a person can control, but the ability to use wealth is crucial to an economy’s growth and wellbeing.
What do I need to know before doing the math?
You will need to calculate assets and wealth as per your own needs and your wealth distribution.
You can use the calculator below to do this calculation for you.
You can also use this calculator to do your own wealth calculations, but you may need to pay close attention to the income distribution, asset holdings and asset wealth distribution details.
You will also need to account for inflation and the impact of any other variables that may affect your calculations.
For more tips on how your net wealth can be measured, check out this blog post