Final answer:
Wealth is the sum of all economic assets owned by an individual or family, including liquid assets like money in bank accounts and investments, as well as real property like homes, minus any debts. It doesn't only reflect current income but also accumulated savings and investments over time.
Step-by-step explanation:
The money and other economic assets that a person or family owns, including property and income, is known as wealth. Wealth encompasses the sum of the value of all assets someone has, such as money in bank accounts, financial investments, a pension fund, and the value of a home. To arrive at a net wealth figure, it's important to subtract any debts, like those on home mortgages or credit cards, from the total asset value.
An interesting point to note is the distinction between income and wealth. Income is the regular flow of money, often on a monthly or annual basis, while wealth is more akin to the stock of all assets owned by a person at any given time. This means that despite having a low income in a particular year, an individual's accumulated wealth can still be high if they have consistently saved and invested.
For example, the total value of all home equity held by U.S. households was $11.3 trillion at the end of 2015, demonstrating how a single type of financial asset can represent a significant portion of accumulated wealth.