The Watermark of Wealth
What amount of money would it take for you to feel wealthy?
I never used to give this question much thought. As the years have passed and I have spent more time around financial industry players and professionals, the question has slowly crept to the back of my brain. This nuisance has hung around and by now probably has some sort of squatter's rights on my Occipital Lobe.
It is funny how being around the business of money changes your perception of its value in life.
I often debate the true value of money in the world, especially with changing wealth demographics of the world. It never fails to amaze me how different the views and definitions are with regards to such a seemingly simple and straight forward issue.
Recently, Fidelity surveyed 1,000 of their millionaire clients and here is what they had to say...
The millionaires were defined as having a minimum of $1M in net investable assets, excluding retirement accounts and real estate. Despite the $1M cutoff, the average net worth of those who were surveyed was actually $3.5M. Overall, 42% of respondents reported that they didn’t feel wealthy despite having $1M+ in their savings account, investment portfolio, etc. When asked how much it would take for them to feel wealthy, the average response was $7.5M.
How does this number sound to you, both in terms of feasibility of achievement and functionality of possession? Too much? Too little? By the time you guys retire... what will $7.5M actually provide?
I remember growing up and thinking of people with a million bucks as having no contact with us plebs. They lived on a gilded learjet cloud somewhere high above. Even having a six figure stash seemed pretty high up the ranks in those days. Not so long ago a mil really made you somebody. A player, a factor in the equation. Today, we have a record number of American millionaires and steadily advancing inflation. I feel like I have lost a tight grip on what defines wealth and riches. Where do you guys draw the line between comfy and wealthy? Does one even exist, anymore?
Everything has a price and money is no different. What is the relative value of the millions achieved by retirement age, versus enjoying your current hundreds or thousands today? Our presumptive $7.5 M would yield you $300K/year, assuming 4% returns. I see many guys reasoning that the loss of time and youth is worth the long range payoff...but what are you really scrounging for? Is it security? A better life?
I no longer find the solace and comfort in wealth acquisition I once did. At the risk of sounding like a cliche with a body attached, my experience has been that true wealth and money...have no correlation. Now that I have raped the sacred cow and eaten from her belly, let the monkey shit fly where it may...what's your I done did it baby thresh hold and how long do you think it'll take you to get there?
This depends on one's personal goals.
For me, the threshold would be around $2mm liquid. At 5% return, that's about $100k a year pre-tax. Throw in any job that can pay a threshold of 30 to 40k+ and you've got $100k in after-tax income--more than enough to live comfortably. This is assuming that you do not get married or have kids, which complicates the picture. Given the current all-in cost of a top-notch private school is $60/year/kid, that's $240k per kid in cash, not even considering the possibility of going to prep school, raising the child, etc...
I think Felix Dennis came up with the definitive answer: http://blogs.wsj.com/wealth/2010/03/17/how-to-be-comfortably-poor-on-3-…
My threshold is owning my favorite soccer team. My guess is it will take a very long time.
Best part of this is link the quote at the end: “If it flies, floats, or fornicates, rent it. It’s cheaper.”
You reminded me of this:
I'd say $5m is the threshold of wealthy these days. $1m-$5m is rich, not wealthy, at least in my book.
That's interesting because it seems very similar to findings from the "happiness literature" (also known as "positive psychology"). Basically, whenever they survey people and ask them how much income they'd need to be happy, everyone always says twice as much as they currently make. With the average numbers quoted above, I suspect millionaires were giving a similar response, except instead of income they were talking about wealth.
$20 million- 1) $1 million to start my hedge fund. (80% equities, 20% LEAPS) 2) $9 million invested conservatively. 3) $5 million on a house. 4) $5 million to dick around with until one of my hedge funds take off.
Honestly, I don't have super expensive tastes, so I'd probably feel wealthy on 1M (to a few million). One thing I've realized as I've gotten older, is that I care much more about freedom and autonomy than money. With 1M-3M, I'd definitely feel comfortable enough to do any number of random things, such as, a year long vacation, starting a business, angel investing, playing poker professionally, etc.
comfortable would be to stop whatever i have planned without a second thought, not worry about taxes eating away at my income and most of all going forward my goals involve preserving capital, while pursing everything that makes me happy, because either I could afford it or i finally have the time to
I'll be "wealthy" the day I can flip the bird to my boss and live off interest/investments I've made over the years. But if the point is to throw out a number...I'd say enough so that i have $60k/year in interest/investment income. So 1-2M I guess.
I will be lucky when i have a handful of people i can trust.
I will be rich when I have More Money Than God.
I will be wealthy when I have time to enjoy life and all of the above.
Money is a tool, nothing more & nothing less. I guess I'll feel wealthy when I have enough $$ to pursue my passions without having to worry about sacrificing my basic needs.
+1 imaginary SB
This was a great reminder of why I can't stand Chris Rock (I seem to forget from time-to-time). He loves to harp on the concept of the "man" holding back minorities, which is nothing more than an excuse. At any rate, this is mildly humorous...
http://www.youtube.com/embed/4m37JkkGjAY
But ultimately wealth is relative. To some people $100k would be the world, to others nothing short of $100mm. I think it's hard to decide at this point what my number would be because I'm not yet married, or know if I ever will be, and whether or not I will have kids, etc. My best guess or course of action at this point would be to get my hands on a couple million dollars, use a little bit of that to travel for a year or so, attend a top notch MBA program (potentially vice versa) and then roll a good portion of that money into a business I could (help) run/manage and grow both organically and through some add on acquisitions. Get it to the point where you can sell it off and make a good chunk of change $10mm+ and then slow my life down. Ideally I would like to use part of the proceeds from the sale (a few million) to invest in non-controlling equity stakes in companies and let it ride. The rest I would place somewhere that would/could generate a decent enough return to let me live comfortably ($200k per year) and provide me the opportunity to travel, scuba dive, coach my kid's sports team, etc.
Regards
He lost me at the Shaq ain't really wealthy part. But the "Obama is qualified to be president line" from a later routine was actually quite amusing.
Enough to live comfortably but still have the opportunity to be an active angel investor in startups. So I'd say around $30 million or so.
At the opportunity of sounding a deranged hallucinator let me catagorically put it as of now I have less than 300k luquid and illiquid stashed away somewhere and in four years tops hope to have at least $100 million liquid.. lol
I kid you not monkeys....To infinity & beyond.
I'm liking your style. How much do you plan to aggregate to your pay-per-fuck/recreational drugs budget?
Game plan?
Felix Dennis outlines it best:
TOTAL ASSETS (NET WORTH)
2-4m - comfortably poor 4-10m - comfortably off 10 - 30m comfortably wealthy 30 - 80m the lesser rich 80 - 150m the comfortably rich 150 - 200m the rich 200 - 400m the seriously rich 400 - 800 m - the truly rich 800m - 2B - The filthy rich over 2B - The super rich
Super Rich or bust.
I'd say being on the cover of Bloomberg Markets magazine means you got cash. That's my watermark.
I won't put a number on what the threshold of "rich" is in terms of net worth, but my personal goal is to earn enough over my 35 highest-earning years to have Social Security pay out what my parents earn per year (at the end of their careers). I figure about $500,000/yr average over 35 years gets me ~75k/yr in SS (heavily rounded down).
I like the discussion
For me, I just want more. It's a natural human thought process I guess. In school, you would've done anything for $1 million or $5 million (atleast the majority here)...when you hit the bigger ranks, you find it to be child's play..you invision $25 Million+ and so on. I can only imagine what Mr.Buffett is hitting for haha
“If the son of Adam had a valley full of gold, he would love to have two valleys, for nothing fills his mouth except dust (when he dies)..."- Prophet Muhammad (peace be upon him)
It's not about the money bros. It's all about the ego.
Wealthiness is feeling superior to the people you meet on a daily basis, because you have that big bank account that says you are "more successful" through the most objective measure most people know.
After relatively few years of work a lot of people here will be in a position to feel wealthy living among 99% of the people in the world. They will, of course, continue to feel "comfortably poor" rolling with the hedge fund set.
C'est la vie
P.S. I take it that Chris Rock thing was before Oprah got 2 Bil, because 2B is more than enough to fuel your plane
For me $120 Million.
I would need $20 million to build my dream house on the beach in florida with adequate land so i'm not seeing my neighbors. The other $100 million would be used to generate income to live off of. That is what I consider wealthy.
I doubt I'll ever get there, and I've never made more than 70K in one year in my life, but we can dream, can't we?
I just wanted to add that after I win the lotto tonight I'll be wealthy.
525,600 bucks a year after taxes is my goal. A dollar a minute bitches.
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