What is wealth?

hi it's Patti her marketplace so when people talk about wealth they're usually talking about money but actual fact wealth is all about assets and a way you can tell how wealthy somebody is okay is by looking at the assets that's the stuff that they own and subtracting the debt the stuff that they own and when you run that equation on somebody who you think is wealthy a lot of the time they turn out to be not quite as wealthy as you thought they were let's take our neighbors here we got Anne and John right and there's in this beautiful mansion out in the country's huge house and down the road from her lives John and this little two up to dine and Anne's got this garage stuffed full of beautiful cars Rolls Royces and Ferraris and John's got like a little Toyota Camry that he bought secondhand a couple of years ago Anne's got this beautiful boat that she keeps in the marina it's fabulous motor yacht as John's got like a little sort of 10-foot dinghy right that he keeps in his garage so when it comes to assets Anne has clearly got a lot more all right her assets add up to about seven million dollars Jon's assets on the other hand are about six hundred thousand but remember wealth is about assets - debt and Anne has got a lot of debt for one thing her house is really heavily mortgaged for another thing she still owes serious inheritance taxes to the IRS and she still has student debt and altogether her debts add up to about eight million dollars so her wealth is actually negative 1 million John on the other hand bought his house his car and his boat for cash which means he has zero debt so when you add his due his wealth equation you see he's actually got wealth of positive $600,000 so although Anne looks like she's wealthier it's an actual fact John who's the wealthy person here and Anne if she fails to make all these interest payments and all this debt that she's got well she's gonna be left with very badly needing a drink

Channel: paddy hirsch

Views: 71,359

Keywords: wealth, money, finance, earnings, rich, poverty, debt, assets

Id: RMr504P0GPM

Length: 1min 50sec (110 seconds)

Published: Tue Apr 01 2014