Net worth is a feel good number because it treats every dollar the same. It is not the same. A million dollars in index funds in a normal brokerage account and a million dollars locked in a private deal act nothing alike the day you need cash.
The one question to ask
Look at everything you own and ask: would a bank lend against this, and how much? That one question sorts your whole list into two piles.
- Easy to borrow against: home equity, rental property, well known stocks and index funds in a regular account, cash value life insurance, and safe bonds.
- Hard or impossible: risky crypto, small private deals, collectibles, restricted shares, and anything sitting only in a retirement account.
The retirement account trap
This is where careful savers get stuck. Someone can put money in a 401k for twenty five years and build a great balance, and still not be able to touch a dollar without penalties or tax before retirement age. You cannot borrow against it. Your family does not get the same tax reset on it. It is real money with very few options.
The fix is not to stop saving there. It is to also build a regular brokerage account next to it, because that is the account that can be borrowed against and passed down cleanly.
How much banks actually lend
Banks never lend the full value. A loan against your stocks might get you 50 to 70 percent of the account. A home equity line usually gets you to about 80 percent of the home's value including your mortgage. Knowing those numbers before you need them tells you what cash you could really reach, which is far more useful than your net worth.
Money you cannot borrow against is money you can only reach by destroying it.