While income is often seen as a type of wealth in colloquial language use, wealth and income are different measures of economic prosperity.
Assets are known as the raw materials of wealth, and they consist primarily of stocks and other financial and non-financial property, particularly homeownership, that allows individuals to increase their wealth.
Home ownership is one of the main sources of wealth among families in the United States, but can be inaccessible to low income households due to high interest rates.
Any property or object of value that one possesses, usually considered as applicable to the payment of one's debts.
Many wealthy individuals, particularly those with inherited wealth or substantial stock or real estate holdings, actually have low incomes.
One way that many wealthy individuals increase their wealth is by investing in the stock market. To invest, individuals need to have sufficient assets to buy stock shares.
When a person decides to buy a house, they take out a mortgage from the bank at an interest rate that may or may not be fixed to stay the same over time. When they can no longer pay back the loan at the agreed upon interest rate, their home is foreclosed and the bank that gave them the mortgage takes ownership of it. Many low to middle-income Americans have had their homes foreclosed upon during the recent recession.
Wealth in the United States is commonly measured in terms of net worth, which is the sum of all assets, including home equity, minus all liabilities. The wealth—more specifically, the median net worth—of households in the United States varies with relation to race, education, geographic location, and gender. While income is often seen as a type of wealth in colloquial language use, wealth and income are two substantially different measures of economic prosperity. While there may be a high correlation between income and wealth, the relationship cannot be described as causal.
Assets are known as the raw materials of wealth, and they consist primarily of stocks and other financial and non-financial property, particularly home ownership, that allows individuals to increase their wealth. Home ownership is one of the main sources of wealth among families in the United States. However, there are racial differences in the acquisition of housing, and this inequality reproduces stratification in wealth across race. For white families, home ownership is worth, on average, $60,000 more than it is worth for black families. A lower proportion of people of color than white people have access to the financial resources needed to purchase a home with the intention of letting its value appreciate over time to increase personal wealth. In many communities with large minoritypopulations, high interest rates can cause roadblocks to home ownership.
Data on personal wealth in the United States shows that the inequality between the nation's richest and poorest citizens is vast. For example, just 400 Americans have the same wealth as half of all Americans combined. In 2007 more than 37 million U.S. citizens, or 12.5% of the population, were classified as poor by the Census Bureau. In 2007 the richest 1% of the American population owned 34.6% of the country's total wealth, and the next 19% owned 50.5%. Thus, the top 20% of Americans owned 85% of the country's wealth and the bottom 80% of the population owned 15%.