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net worth

net worth questions and answers

Learn about net worth at the number one young investor website Teen Analyst.

Q: Why do you have to have a huge net worth to franchise?
To open a Del Taco franchise in a market, you must have a huge net worth of $750,000.... Why? I think I understand having the liquid assets of $300,000 but I'm not really sure on what that's about either. Basically, if you're not already rich you cannot do this I'm guessing?

A: They want to make sure that you can get thru an extended period of "bad times". Most businesses fail because the owner runs out of personal savings and then can not get a loan. The franchisor is determined not to let that happen to you. You don't have to be rich but you may need to get a partner to open the business. The alternative is for you to sell the same items but not to open a franchise. Just a regular neighborhood restaurant that serves good food and is frequented by local families.

Q: How does one go about opening a franchise without having huge net worth and liquid assets?
I am looking to open a franchise that requires a very high net worth and high investment. Is there anyway around this??

A: you'll then need some partners.

Q: What is the net worth of my inflation indexed $25,000 pension?
I know there are some finance experts out there. I'm 46 years old and have been recieving this pension since 2002. How does it figure into net worth?

A: It sounds like you're saying you've been receiving an annual pension of $25,000. If you assume an annual inflation rate of 3%, then today your pension is only worth $22,212 annual income in 2002 dollars. Going further, if you use the same projection out to 2027 when you're 67, then that same pension will be worth less than $12,000 annual income in 2002 dollars. But another way to look at things is this: how much would you need to have in the bank to generate this kind of income? Well, if you were only getting a 5% return on your money, you'd have to have $500,000 in the bank to generate that much interest income! So while it may not seem like a huge pension - especially if it's not indexed for inflation - it sure beats not having one at all. The term "net worth" is usually used to represent assets minus liabilities. Your pension income represents a future cash flow, which is not usually included among your assets. However, you could represent this as an asset if you picked a discount rate and discounted the future cash stream to calculate an equivalent present value (i.e., what it's worth today in a lump sum). Using the above example at 5%, present value of your pension income (i.e., today's value of $25M annually in perpetuity) is $525M. At a 7% discount rate, the value drops to $382M. Hope that helps.

Q: What are structured products and how can they be used in a high-net-worth portoflio?
Do you have examples of how structured products helped a high-net-worth client's porftolio become more efficient or how they provided higher returns?

A: They're not more efficient (they generally have relatively high fees; even worse, because of the structure it's usually difficult to figure out precisely what the fees are). That said, they may be right for some people who want to participate in equity markets but need principal protection. They don't generally offer higher returns. They usually have some sort of principal protection factor and/or combine bond and equity characteristics in a single product. For example, many are bonds which are tied to some sort of equity index. You might be guaranteed to get all your money back (assuming the issuing company, usually a very large investment bank, remains solvent because you are technically an unsecured creditor) and a portion of the appreciation in the relative index (e.g. the S&P 500) for the next, say, 5 years when the bond matures. The investment bank manages their risk by using zero coupon bonds, futures and long-term options (LEAPS). The American Stock Exchange is usually the trading venue for these products. Go to their web site and look for structured products tab. They'll list a ton of them.

Q: What do you consider to be a high Net Worth for a 20 year old?
What in your opinion is a high net worth for a 20 year old? 30 year old? 40 year old? 50 year old? 60 year old?

A: 10K for a 20 year old would be fantastic. Most have negative net worth at that age. Student loans, car loans and low wages so nothing saved. 50K for a 30 year old since they have only had a few years to build home equity, pay off student loans and save and are just career building. 300K for a 40 year old since a home would have appreciated and retirement savings would be growing. 600K for a 50 year old career getting better and home appreciating, kids leaving home or in college. 1 million at 60 would be more than most, peak career and savings and lower cost of living so are able to save more. Couples would be twice as much if they are combining networths.

Q: Divorce in CA, wife owns business, losing clients (her friends). How do you determine net worth of business?
Business being restructured (big clients leaving every day) to show lesser net worth. Clients back to business after divorce is final as they are mostly personal friends of wife.

A: Show the average cashflow as determined over the life of the business, and use that to argue for a higher valuation.

Q: If you auto liability insurance is equal to your net worth would you ever need to pay out of pocket if sued?
Lets say my net worth was $100,000. If my Bodily Injury Liability insurance was $100,000 would that mean I would never have to pay out of pocket if somebody sued me due to a car accident? Could I be sued for more that I own and still be forced to pay out of pocket? Or can I only be sued for what I have and the auto insurance will pay all of it?

A: Lets say you were negligent in a collision where a young mother or father of two or three kids died in the accident. You probably would be sued and a judgment rendered against you well in excess of your limits. Yes you would have to pay out of your pocket and if necessary, they could take almost everything you own. If severely injured, medical alone could eat up $100,000.00 and you would still be sucking eggs.Talk to your insurance agent about an umbrella policy.r

Q: How can I increase my net worth?
What is the best business/investment plan to increase my net worth quickly if I have already paid off all debts?

A: One of the fastest ways to bump it up big is to take out a life insurance policy on yourself. Life insurance premiums are considered an asset. Take out a $500,000 policy and you'll immediately (with the right type of policy) have a net worth increase of that amount! Next, you need to invest and you need to do it as diversely as you can afford. Get into an IRA or a 401k if your employer offers it. Do both if you can afford it! Set aside some money of your own to invest directly in stocks and bonds. I STRONGLY suggest you seek the professional opinion of a certified financial planner to do this. E-Trading on your own doesn't always go real well.

Q: What is the Net Worth of the Netherlands?
I tried to look it up..... but could not find any statistics about net worth of the Dutch. I know the canadian net worth is 5.7 trillion and the american net worth is 56 trillion.

A: I could not find any statistics about the net worth of a country and would appreciate if you tell us the source of your figures. When I compare your given figures with the Gross domestic product (GDP) rate the net worth amounts to approximately GDP * 4. For the Netherlands, it therefore would be approximately 3,1 trillion. These figures however are statistics, and therefore not to be trusted, unless you have faked the numbers yourself. Another intersting rate would be the public debt rate (of the GDP): USA: 60,8 %; Canada: 68,5 %, The Netherlands: 46,2 %

Q: What is Vogue magazine estimated net worth?
vogue estimated net worth, vogue advertising revenues 2008-2007, ad sales for vogue., operating cost vogue. Please send a link of where you found it. I need an estimate or any estimate from any other top magazine any of you guys might have info for.

A: Google it and in the hundred millilons LOL

Q: Will net worth be considered as taxable income under Obama?
I own a home worth $300,000. I chose not to work because I would rather spend my days boogie boarding, however, I do receive a rather hefty Social Security check each month because I have managed to get myself listed as 'disabled' (LOL). Since my net worth is over $250,000 will my SS checks be taxed under Obama or can I look forward to receiving yet another nifty 'tax credit' check for doing nuttin?

A: Net worth is not income. Your Social Security is unaffected.

Q: Is a person a "millionaire" based on their net worth or annual income?
Is a millionaire someone who owns $ 1 Million worth of Net Assets or earns $ 1 Million per year?

A: A millionaire is someone who has $1 million in net worth. Someone who earns $1 million but spends it all does not really have $1 million. Someone who has assets of $1 million or more, but has those assets leveraged, does not really have $1million. Here is a good example to demonstrate what I mean. Donald Trump convinces a lender to finance a condo development worth $125 million. He offers some other property as collateral in addition to the casino. He then "owns" a $125 million property, but there are $125 million or more in loans financing the property. He changes his mind and declares bankruptcy to walk away from the project and the property. He cannot be bankrupt if he has assets in excess of his liabilities. So, is he a millionaire or just a jerk? LOL! On a smaller scale, if you were a potential homebuyer and you were able to purchase a $1 million home with no money down, would you be a millionaire? No, of course not! You would have a $1 million asset but also a $1 million liability. By the way, both of the above examples are based on actual events.

Q: Net worth question in Fafsa says not to include house i live in, what if i dont own the house i live in ?
I own one house only, but i am renting an apartment abroad while i stay abroad - do i have to inlude the house i own in my net worth for FAFSA question number 92 ? It seems to me that the only house i own should be the "one i live in", im worse off paying rent abroad but my net worth will appear higher if i include my only house !!!!! That seems highly unfair - any ideas ?

A: You must include everything you own in your net worth. That includes the house you own. It doesn't matter to them if you live in it or not.

Q: Do you know a website that tells you celebrities net worth?
I want to know a website to go to find out the net worth of celebrities. I have already checked out Forbes.com is there any other's?

A: http://www.knowyournetworth.com/index.html enjoy

Q: what percent of a person's net worth should their home value be?
we're thinking about purchasing...hypothetically if my net worth were $1 million, would buying a $500,000 house be typical?

A: What it should be and what it is are two very different things... The statistics say that for many people their equity in their home is the primary source of their net worth (well over 50%). In my opinion home equity should be a small fraction of net worth (<25%). I would bet that most people with $1 million of net worth would actually have homes worth less than $500,000. I would also bet that most people living in homes that cost more than $500,000 have less than that in net worth... good luck!