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What is Wealth and Where Does It Come From?

Wealth comprises not only cash but also assets of every kind. Below is a listing of common assets you may own. When you think about your property, consider what it's worth today. This is called "fair market value"-that is, the cash you would receive if you sold the property to a willing buyer in an arm's-length transaction (a transaction involving two strangers).

* Art and other collectibles.
* Bank accounts (savings and checking accounts, certificates of deposit and money market accounts).
* Business interests (ownership in a sole proprietorship, partnership, limited liability company or corporation).
* Car, boat, motor home.
* Home (your principal residence as well as vacation property).
* Investment property (such as rental properties or land).
* IRAs (including IRA rollovers and Roth IRAs).
* Jewelry and silver flatware.
* Life insurance policies that build up a cash surrender value.
* Personal items (furniture, books, clothing, etc.).
* Qualified retirement plan accounts (for example, 401(k) accounts).
* Stocks, bonds and mutual funds. You may hold a stock certificate or other evidence of ownership directly or through an account with a brokerage firm or mutual fund.
* Inheritance. You may also be sitting on a potential inheritance that will bring you money or property in the future. For example, your father may have died, leaving his estate in trust for the benefit of your mother. You'll inherit your share of what remains in his estate when your mother dies, as well as your share of your mother's own estate.

Gaining wealth

Wealth can come to you in a number of ways. You can earn money through your labor
and use your compensation to acquire assets. This may be a slow process, requiring you to set aside money so that, over time, you'll have what's needed to buy the items you want. If you own a business, its value adds to your wealth, and you can turn that into cash by selling your interest. You can receive a onetime windfall, perhaps even without any action on your part-an inheritance, a lottery win, an insurance settlement or a court award. And your wealth can increase through the appreciation of assets. For example, if you bought a stock several years ago for $10 a share and the same stock is now selling for $90 a share, you've increased your wealth from this asset by 800%!

Of course, don't lose sight of the fact that wealth can disappear just as quickly. Poor planning, bad investments, lawsuits and catastrophic illness can easily wipe out a lifetime of accumulated wealth.