Net worth and valuation in your personal financial life

Introduction to Financial Concepts in Python

Dakota Wixom

Quantitative Finance Analyst

Net Worth

• Net Worth = Assets - Liabilities = Equity
• This is the basis of modern accounting
• A point in time measurement

Valuation

• NPV(discount rate, cash flows)
• Take into account future cash flows, salary and expenses
• Adjust for inflation

Reaching financial goals

• Saving will only earn you a low rate of return
• Inflation will destroy most of your savings over time if you let it
• The best way to combat inflation is to invest

The basics of investing

• Investing is a risk-reward tradeoff
• Diversify
• Plan for the worst
• Invest as early as possible
• Invest continuously over time

Let's simulate it!

Introduction to Financial Concepts in Python