What net worth do you consider wealthy?

[guru1000]

Although wealthy is a broad term, I'm interested to hear how some of you define monetary wealth, both younger and older DJs. Be specific with a dollar amount. I'll share my thoughts at the end.

 

[Tenacity]

I do believe that you have to tie in what someone's expenses are because you could make $100k a year but spend $120k a year, but I assume when you state "wealthy" you are referring to "rich/affluent," correct?

To me, you can call yourself a success if you are at least Middle Class in the United States, anything above Middle Class is "thriving" in my opinion but if you can get to the Middle Class you are a success.

In terms of levels of Income and Net Worth, I believe the following based on "The Individual" not "The Household":

- I believe that you make a Middle Class level of income, if you make at least $50,000 in a lower COL area, and if you make at least $70,000 in a higher COL area.

- I believe that you make a Higher Class level of income, if you make at least $90,000 in a lower COL area and $130k in a higher COL area.

- I believe that you make a Rich/Affluent level of income, if you make at least $250,000 in a lower COL area and $400,000 in a higher COL area.

In terms of Net Worth, this obviously will depend upon your age, your race and also your Generation. My Generation has mountains of student loans to payback which drive down our Net Worth.

This is a good tool to use to determine how you stack up compared to your age group, your race, your generation as well as the country as a whole in terms of Net Worth: http://www.stackmeup.com/net-worth/average-net-worth-by-age.php

I'm a 31 year old black guy, and my net worth is in the top 100% based on my age group and my race. My age group has an average net worth overall of anywhere from $11,000 - $15,000 and when you include race, it goes down significantly further because black people as a whole just have a very bad net worth standing across ALL age groups. So while I'm not rich/affluent (yet), I'm damn sure kicking most of the people in my age group and race's a.ss in terms of financial management .

I personally believe you can say you have a Rich/Affluent Net Worth once you get to at least $1 million. Others might disagree with me, but again all of these things are also depended upon how the person is managing their Expenses, Taxes and Investments. If you are making $100k but you have 5 kids paying $60,000 in child support payments, you aren't living a higher class lifestyle even though you make a higher class income!

Also when I calculate Net Worth, I include every single asset a person has, which includes cash, cars, clothes, jewelry, furniture, real estate equity, electronics, the value of social security benefits, obviously your business portfolios/investments, etc. Some calculations don't include every single asset which I think doesn't account for a person's true standing.

 

[Gimple]

To me, wealth means having the amount of money required to become, do, and have the things a person wants in their life. This, of course, assumes a person knows exactly what they want in terms of their entire life.

So for me personally, I would consider myself wealthy with $2M of expendable income in my lifetime -- if I don't have a family. But if I change my mind and have a family, it would probably be about $5M.

 

[JustinBustin]

I think gimple's closer to the mark here. Maybe read The Monk and the riddle, 4 hr work week etc. and prioritize your life. Even dudes who sell companies for hundreds of millions get bored and depressed after a while if they lack an actionable plan. J work on a plan that excites u bro, if that includes making lots of money cool, figure out what u can do w ur skillset. entrepreneur or company man? Personally I feel like most Wall Street execs and directors are narcissist psychos but that's just me.

 

[evan12]

Wealthy can mean to have enough money to not need to work the rest of your life , and without being in need to reduce your life style , so I think wealthy mean 5 million dollar . less than that you can call yourself rich .

 

[Oxide]

All bills paid,
new car within 6 months if you want to.
travel any time you want to.
while doing all this off passive income with small active work (no more than 8 hours per week)

 

[Tictac]

'Wealthy' means that your portfolio earns more than you do.

 

[Bible_Belt]

I'm happy with a stack of $20 bills.

 

[LiveFreeX]

A healthy body.

 

[prison/con.net]

the younger you are, the more $ you need to cover your butt. Get some disability and medical insurance, ASAP. SOME of you WILL need such, about 10% of you, actually. If you're dumb enough to want kids and a non-working wife, you need 5 million, if you're in your 20's and don't know how to invest it. If you're 60, got plenty of insurance and are content to live simply and have great investments, 1/2 mill is plenty to cover you for life.

 

[Tictac]

However you want to measure 'wealth' using income to do it is kind of crazy because income can go up and down and go away rather quickly.

It leads to stupid arguments like whether income tax cuts are 'for the rich' as income is the measure of 'the rich' in that argument. This leads to comparing someone that makes some arbitrary income figure (say $200,000/yr.) to Bill Gates, Warren Buffett or Mitt Romney. And that is just stupid.

I think 'wealthy' is when your portfolio pays the bills and gives you some security. That means that your portfolio (whether that's financial investments, business earnings, real estate - whatever) earns as much or more than you do as income.

 

[Tenacity]

Yes, it's all about security. With the way I manage my money, I have an over 10 year cushion period right now, per the end of the 2nd Quarter.

That means that I can STOP working today and stop producing any new income, and I can live off of the current assets, business investments as well as doing a little bit of expense slashing, and that will take me to at least a 10 year period mark when I have ran totally out of money/income streams. When I say "live off of" I'm talking about covering all annual liabilities/expenses.

That's what I call financial freedom right there, it's having the ability to (if you want to) tell the world to go to hell because you have your financial house in order to do so.

In order to get this done, you have to manage efficiently (this means to the "T") your Income, Credit, Expenses, Taxes, and Savings/Investments. Like I said, if you make $100,000 a year in income but you have an ex-wife you have to pay alimony to with 3 kids (who hate you) that you have to pay excessive child support to, then it's going to be hard to reach these levels because your expenses are too high.

* Seek to make as much income as you can.

* Seek to live (and spend) below your means as much as you can while still having a decent quality of life

* If you have to go to college, please don't be "stupid" about how you acquire your education, instead choose a college you can afford

* Seek significant tax reduction strategies (get a good CPA)

* Seek nice conservative passive investments where your principal is protected and you are getting growth big enough to beat inflation (remember there's no inflation right now, we are in a deflationary period) and taxes

* Build your credit, try to get to a solid 720 plus credit score across all three bureaus and try to build your line of credit to at least $50,000. My line of credit availability is about $120,000 right now and I'm striving to get it to around $200,000. The Credit Card companies compete with each other and with your 720 fico score, you will get monthly Promo Offers on your card for NO Interest for 12 - 18 months, with a 1% - 3% fee upfront. That means you can draw money off the card and only pay 1% - 3% for the entire 12 - 18 month time period, just make sure to pay it all back in FULL before the end of the Promo period. This is how I use my cards, I never (absolutely never) pay the standard APR on the cards. Even some of my vendor cards have a 0% interest for 6 - 18 months with no upfront fee, such as PayPal Credit, Care Credit, and GoodYear, this means I used their money for the 6 - 18 month period for free.

This guy right here is pretty cool, he thinks how I think on some of these financial matters: http://www.mrmoneymustache.com/

 

[prison/con.net]

if it's all just paper assets and a home/car which make you no money, (especially if they are high/end homes/cars) If you have no shtf supplies, knowledge/plan, no disability/medical insurance, no catastrophic illness/personal liability insurance, you're taking big, stupid chances.

 

[Wen]

about a few Million..........cash, then I don't have to worry about work and I can finally enjoy life.

 

[Moonshiner]

I would consider someone wealthy if, without working, their investments could earn them at least the median income for an American household - which is about $52,000 per year.

Assuming an 8% return, $52,000 income per year would require investments worth at least $650,000.

If someone were bringing in $52,000 a year from investments without working, they could get a regular job, live off that job income, and invest the after tax amount from their investments. That's like having another American family working on your behalf, and investing those proceeds year after year will likely result in being very wealthy by retirement.

 

[sodbuster]

My goal isn't a set number as far as NET WORTH..... land can be worth alot, but not give you income. For me, wealth is going to be how much INCOME my investments bring in. Factoring in inflation. I want to have about 20k a year more passive income than expenses..... So, when you know what you want to live on, then you know how much you'll need to have generating it..... and how far away you are from getting it

 

[BeTheChange]

I have quite a few wealthy clients and the general consensus is you need around 50 million to be in a position where you and your family can sustain that level of wealth while still enjoying a high standard of living.

In other words, you can spend your afternoons on the golf course and your evenings banging high class ho*kers and your wealth will still grow or stay around the same level.

From what my clients say there isn't a huge difference in lifestyle between someone who is worth 50 million and someone who is worth 500 million. You're all part of the same club.

My aim is to one day be a part of the club but I'm realistic. There's a minute chance of being in such a position by climbing the corporate ladder.

There are only really two ways to reach that level. One is by setting up your own company and then selling it. The other is by working in VC or Private Equity for a few years and then joining the next Uber/Spotify/Facebook as an executive before it gets huge so you can sell off the stock you're paid in once it goes public. I'm aiming for the latter while still working on the former.

 

[HeadLightsOn]

guru - you were going to share your thoughts 'at the end.' Is that now?

 

[IASGame]

in my opinion an 8% sustained return on investment is a very big assumption. Unrealistic.

I agree with that, although I'm more or less on the same definition used by Moonshiner I would not use 8% as the sustained return.

In my opinion wealthy would be a situation where the portfolio reliably returns more than what the person spends on their lifestyle. According to my definition this means that someone that spends little (and is happy to keep it that way) needs less to be "wealthy".

My objective in terms of retirement would be not to drawdown and decrease the portfolio slowly, but actually still have a trickly increase (i.e. the return a bit above what I spend). This does mean I would be living below my means by definition and that someone or some organisation gets a chunk of money when I die. That is fine with me.

 

[Tenacity]

I have quite a few wealthy clients and the general consensus is you need around 50 million to be in a position where you and your family can sustain that level of wealth while still enjoying a high standard of living.

With all due respect, this is just nuts man. You need $50 million to be in a position with a high standard of living? Who is making these rules? Unless you have an insanely high spending habit or insanely high expenses, if you get to the point of having $1 million in the bank and earning safe/conservative interest on that (let's say 4%) then you can consider yourself to be very WELL OFF. Depending on your expenses, you could live off that $40,000 a year without working.

Now again, TO ME, that's very well off. If you want to just be "well off" then having $500,000 in the bank earning 4% a year is pretty solid. You would still have to go out and work with this, but you would still be making $20,000 a year passively and SAFELY and there's millions of people in the country that have to work full time to make the $20k - $25k that you make passively.

In other words, you can spend your afternoons on the golf course and your evenings banging high class ho*kers and your wealth will still grow or stay around the same level.

See this is why these "required wealth numbers" are so inflated, it's because people that are spending insane amounts of money are setting these metrics. What about those of us that aren't looking to bang high class hookers? My goodness, pvssy is pvssy, what the hell do I look like paying a significant amount for something that's been ran through like that? And there are decent golf courses that don't require that level of spending.

Again, go back to my $1 million example, if you keep your expenses managed to be under $40,000 a year, there are Brokered CDs you can put that money into right now earning 4% and you could live off that $40,000 a year interest safely.

To me, being WELL OFF is being able to live off your passive investments for a long period of time. It follows the Mr. Money Mustache mantra. But again, this is ME, depends on YOUR goals. If you want to spend $250,000 a year on worthless crap then you will need to amass a significant amount of money to do so.

I don't HAVE to amass that much to be WELL OFF.

There are only really two ways to reach that level. One is by setting up your own company and then selling it. The other is by working in VC or Private Equity for a few years and then joining the next Uber/Spotify/Facebook as an executive before it gets huge so you can sell off the stock you're paid in once it goes public. I'm aiming for the latter while still working on the former.

- Thousands of people setup companies and sell them, and don't make $50 million - $500 million on the sale.

- Thousands work in the VC and Private Equity industry (or I-Banking), and don't amass $50 million - $500 million.

To get into that level of wealth, you are going to have to create something that is going to change the way the world works in some fashion and on a MASS scale. You are going to have to be the founding father of some extremely innovative concept, setup the business, sell it all over the globe, and then SELL the business. If you can do that, then you will get into that level of wealth.

I'm not against anybody having "dreams", but sometimes you guys go way over board with this stuff to the point you aren't even being practical, logical or reasonable.