Wealth Gap2018-08-09T07:11:43+00:00

What is the Wealth Gap?

Wealth inequality in the United States (a.k.a. the wealth gap) is the unequal distribution of “assets” among residents of the United States. Wealth inequality is even more pronounced than income inequality.

The United States exhibits wider disparities of wealth between rich and poor than any other major industrialized nation. This disparity is due in large part to the lack of ownership of appreciating assets in excess of their liabilities by over 90% of American families.

What is wealth?

Wealth includes the value of the “assets” owned minus the debt owed on assets like homes, automobiles, and businesses. These assets may include savings, investments and other personal valuables. The foundation of all wealth is appreciating assets. When you seek to own appreciating assets you want to own things that store value, guard against inflation, severe economic fluctuations and have the potential and proven history of increasing in value over time.

What is Wealth Building?  

Wealth is a measure ot the value of all the assets of worth owned by a person, community, company or country. In accounting terms wealth is equated with net worth, the sum total of the value of your assets minus liabilities. Stated another way Wealth is determined by taking the total market value of all physical and intangible assets owned, then subtracting all debts.

The wealth building has at its core the goal to acquire and hold appreciating assets with a history of performance and growth that lead to increased value and produces an ever growing net worth. Wealth building is best defined as asset building. It is important to note assets that appreciate can also decline in price and lose value depending on both micro- and macroeconomic factors.

Assets: can be divided into two basic classes intangible and tangible:

  • Intangible financial assets can include investments in stocks, ETFs, bonds, retirement accounts, insurance and cash in savings accounts or Certificates of Deposit (CDs).
  • Tangible Assets are usually in the form of real estate including personal residences, vacation homes, commercial property and land. Tangible assets also include computers and other assets such as ownership interest in commodities like oil, jewels or precious metals.

Liabilities: include the debt the household owes against its assets: a mortgage, a car loan, credit card balance, student loan or any other bills yet to be paid: be divided into two basic classes intangible and tangible:

  • LiabilityClassification  includes current liability, Bank Loans, mortgages, car loans, Bank Overdraft Short Term Bank Loan ,Tax Payable, other Payables
  • A current liability is an obligation that is payable within one year.  Current liabilities should be closely watched. , an individual or business must have sufficient cash on hand to ensure that they can be paid when due.

Net worth:   Net worth is a concept that can be applied to both individuals and businesses, as a measure of how much value they hold.

  • Your net worth then is the amount by which the value of your assets exceeds your liabilities.
  • Another simple way to say this is: Net worth is the value of everything you own, minus all your debts.
  • In America, wealth is often equated with well being when it comes to overall quality of life including such things as the health care we receive, our life expectancy and our ability to support causes we believe in