Thursday, January 3, 2008

Difference Between Wealth, Income and Assets

Wealth and income are quite different and should not be used interchangeably.

  • Wealth is known as a stock,
  • Income is a flow.

What this means is that wealth can be measured at a particular point in time. It is the accumulation of all your assets, both physical and financial investments. If sold these assets could be turned into money.

Your wealth might comprise
  • house: £100,000
  • Shares and Bonds £30,000
  • Cash in the Bank £10,000
  • Other assets such as car £5,000

Total wealth £145,000

Definition Of Income

Income is the amount of money your receive per week, per month or per year. For example, the income of the Prime Minister is about £75,000 per year (excluding all those private directorships). His wealth may be £500,000

See also:

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