What's Net Worth worth?

Net Worth

So, about two weeks ago my father started giving me extensive futures trading lessons. He has been trading commodities since I was 13 or 14, and now is pretty savvy at spotting a good move. Last year he went for 23 favorable trades out of 23! I figured since he shot 100% last year, I'd find out if I could learn a little from my old man!

While opening new trading accounts and moving funds, there were a lot of application questions regarding Net Worth. So what's this big deal about net worth? I thought hey... if takes $5,000 to open an account, then if you can afford that ... you've got an account. Upon further questioning I guess that's not the case. Now, I didn't get denied or anything like that (in fact I wasn't even the one applying). But I was curious and asked a few questions.

Calculating Net Worth

Here's an over simplified formula for calculating your net worth.

Fixed Assets + Liquid Assets + Things you own of value - All Debt = Net Worth.

Of course there is more to it than just this formula. This will give you a rough idea of where you are at. Although there are many things I would like argue as to what "Fixed Assets" are, this often includes your home and your car. Liquid assets are cash, stocks, bonds, money in the bank, etc. The rest is pretty straight forward.