Your net worth is a snapshot of your financial health; it’s the difference of what you own and what you owe. You can calculate your net worth by adding up assets, like cash and property, and subtracting your liabilities, like loans and credit card debt.
Asset allocation refers to how you distribute your investments across different asset classes, such as stocks, bonds, and cash. The goal of asset allocation is to balance risk and reward based on your financial goals and risk tolerance.
Your debt-to-income ratio (DTI) is a measure of how much of your income goes toward paying off debt. It’s calculated by dividing your total monthly debt payments by your gross monthly income. Lenders often use DTI to assess your ability to manage monthly payments and repay borrowed money.