A projection of an individual’s total assets minus liabilities at a specific future date. This calculation considers current assets, anticipated income, potential investment growth, and foreseeable expenses to arrive at an estimated figure. Predicting net worth several years out requires careful analysis and consideration of various economic and personal factors, making it subject to change. It’s a valuable tool for financial planning and goal setting.
For example, projecting a business owner’s net worth in five years would involve estimating the future value of the business, alongside personal investments and anticipated income streams. Another example would be projecting the net worth of a young professional, considering their salary growth potential, savings rate, and any planned large purchases, such as a home.