Equity

Equity is partial or full ownership of any kind of asset or investment. When talking about equity, we assume that the asset can be sold. A common example of equity is:  A $250,000 townhouse, purchased with a mortgage and a $30,000 down payment. Your equity is your $30,000 portion of the home. Say you had borrowed that $30,000 from a friend, technically, you would not have any equity. You have no equity because the money you borrowed money is a liability. Equity is calculated after all liabilities are paid off.  Another common area where people have equity is “common stock.” Simply owning shares of a public company, like Microsoft.

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