Lots of research shows about a 8-10% gap, that only at very specific ages finally achieved parity.
The consequence of this is a difference in wealth building, economic security, and family planning for millions.
Most all else would have inflated or depreciated.
Remember you won't live forever (at least not to current medical knowledge, you can bet otherwise if you want), and you can't take it with you (according to most religions). Thus once you have retirement covered and emergency savings you should be spending everything you earn. You should have enough money left at the end of the month to afford the things you buy at the end of the month, but there is no point in any more, enjoy life with what you earn. (donating to charity counts as enjoying life!)
And even homes are now sieving into institutional buyers.
https://medium.com/newco/your-financial-shock-wealth-4845e6d...
Joe has a 300k house with 100k equity and 200k mortgage. He has 100k in stocks in a 401k. Net worth negative 100k.
Pete has $300 in his cheques account, and isn't eligible for loans or mortgage. Net worth positive $300
Obviously Joe is richer than Pete though.
Net worth = assets - liabilities
Yeah, because Joe’s net worth is $200,000 and Pete’s is $300
House equity = current value - mortgage balance
You subtracted the mortgage twice, so your math is off by $200,000.00
This is why middle class people often feel poor than those who are poor: they make more money and have more in total, but they also have large bills and if something happens those bills will catch up with them fast.
if you have 100K in equity and owe 200K on your mortgage, then you’re net -100K on your house
that combines with the 100K in the retirement account to produce a net worth of $0
Where is my mistake?
(Another way of thinking about equity, specifically, is it is the real estate contribution to net worth, because it is what is left when you subtract the real estate liability (mortgage) from the real estate asset (value of house). That's why you shouldn't subtract the mortgage from the equity: equity is what's left after you've already subtracted the mortgage.)
(Edit: Adjusted sign in first equation to subtract mortgage. It's probably more technically accurate to keep it as addition and consider the mortgage to be a negative value, but I believe it's more straightforward and intuitive for most people as it is now represented.)