A prediction of an individual’s financial standing at a specific future date, encompassing all assets and liabilities, represents a forward-looking assessment of their wealth. This projection considers potential income growth, investment returns, and anticipated expenses to arrive at an estimated figure. Such estimations are often subject to market fluctuations and unforeseen circumstances, rendering them speculative in nature. However, they can provide a general idea of potential future wealth based on current trends and projections.
For instance, estimating the value of a real estate portfolio in five years based on projected market appreciation is one application. Another example involves projecting the future value of a retirement account based on assumed average annual returns.