2 Questions That Help Answer (Almost ) Every Money decision
<p>Most people don’t have a clue how wealthy they really are.</p>
<p>Your net worth or total wealth = assets — liabilities.</p>
<p>So, most people add up the value of all their financial assets like stocks, cash, bonds, and real estate and subtract the total value of all their debts to determine how much wealth they have.</p>
<p>Assets minus liabilities might be how a financial advisor defines wealth, but if you ask an economist, they will give you a very different answer.</p>
<p>As I review in <a href="https://amzn.to/3Ldp4lt" rel="noopener ugc nofollow" target="_blank">The Rational Investor</a>, the financial advisor’s definition of wealth excludes your largest asset: your human capital.</p>
<p>In today’s post, I review why your human capital (how you make money) is the most important factor in nearly every money decision, from how to invest to how much insurance you need.</p>
<h1>Total Wealth = Financial wealth + Human Capital</h1>
<p>If you’re 25 and plan on working until 65, you have as many as 1,040 paychecks left to collect in your life.</p>
<p>Those 1,040 paychecks (or how many you have left to collect) can be assigned a present value.</p>
<p><a href="https://themakingofamillionaire.com/2-questions-that-help-answer-almost-every-money-decision-8a67a8860a5f"><strong>Read More</strong></a></p>