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What is rich? $5 million and plenty of cash
Old 07-22-2013, 05:36 PM   #1
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What is rich? $5 million and plenty of cash

I just read an article on CNBC published Monday, 22 Jul 2013.

"But a new survey from UBS shows that most investors say "wealthy" means $5 millionówith at least $1 million of that in cold, hard cash."

Does FIRE fit into this definition?
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Old 07-22-2013, 07:41 PM   #2
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Impossible to answer without knowing one's level of spending. Plenty of athletes & entertainers have gone bankrupt on $5+M in annual income, nevermind "just" $5M in net worth.
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Old 07-22-2013, 08:28 PM   #3
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There are so many things that have to be considered: age, marital status, size of family, where you live, your lifestyle, your social circle, that make an absolute number fairly meaningless.

Plus, richness in life is not determined by money alone.
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Old 07-22-2013, 09:11 PM   #4
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.......richness in life is not determined by money alone.
AMEN!!!!!
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Old 07-22-2013, 09:21 PM   #5
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Is it bad that I would be happy with just one million dollars right now. I don't need to be considered wealthy I'd just like to pay off my bills and house so I can have a little fun in life! One million would do me fine, and five would probably set me for life.
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Old 07-22-2013, 09:22 PM   #6
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Originally Posted by FIREdWannaBe View Post
"But a new survey from UBS shows that most investors say "wealthy" means $5 millionówith at least $1 million of that in cold, hard cash."
Really - How much is enough? It's like contemplating your navel.
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Old 07-22-2013, 10:51 PM   #7
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Quote:
Originally Posted by FIREdWannaBe View Post
I just read an article on CNBC published Monday, 22 Jul 2013.

"But a new survey from UBS shows that most investors say "wealthy" means $5 millionówith at least $1 million of that in cold, hard cash."

Does FIRE fit into this definition?
So if I had $5 million I should have 20% in cash?
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Old 07-22-2013, 11:15 PM   #8
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Quote:
Originally Posted by FIREdWannaBe View Post
"But a new survey from UBS shows that most investors say "wealthy" means $5 millionówith at least $1 million of that in cold, hard cash."
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Originally Posted by pb4uski View Post
So if I had $5 million I should have 20% in cash?
It is odd that they cite investors, because I wouldn't be surprised if wealthy people who aren't as aware of maximizing their returns simply keep a cool mil in their savings/checking accounts...however, perhaps they were foresightful enough investors to have liquidated their 20% bond allocation to cash a few months ago, awaiting rates to rise, and their other 80% holdings are in equities?
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Old 07-23-2013, 12:36 AM   #9
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There are so many things that have to be considered: age, marital status, size of family, where you live, your lifestyle, your social circle, that make an absolute number fairly meaningless.

Plus, richness in life is not determined by money alone.
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Old 07-23-2013, 07:47 AM   #10
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Depends on where you live. In MS, yes. But you have to be sensible in your spending. Easy to blow that here if you go to a casino very often. Of course the same thing could be said with any amount of money.
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Old 07-23-2013, 08:48 AM   #11
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Opinions vary on what wealth is, but when using money as the wealth measurement, IMO, I'd consider someone wealthy if they have enough $$ to retire (if that is what they want to do) and live in the lifestyle they want/enjoy without having to invest in higher risk investments to maintain that lifestyle.
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Old 07-23-2013, 09:02 AM   #12
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$5 million clients are probably what the private bankers/wealth management specialists at UBS prefer to work with.
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But it still won't be "enough"
Old 07-23-2013, 09:08 AM   #13
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But it still won't be "enough"

I'd bet many of these investors probably still wouldn't feel they've got enough once they got $5 million.
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Old 07-23-2013, 09:31 AM   #14
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$5 million clients are probably what the private bankers/wealth management specialists at UBS prefer to work with.
I think that is pretty on the money

Have you noticed the advisor industry is starting to use the term "penta-millionaire" a lot now ?? Must make their "private family" clients feel they have more status than the hoi polloi with only 1 MM

Isn't the definition of rich anyone who has more money than you ??
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Old 07-23-2013, 09:54 AM   #15
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According to the article 40% of those with $5M or more do not consider themselves wealthy. Only 60% acknowledge they're wealthy.

It's kind of like the definition of middle class - are you middle class with a household income of $50k? Of $250k? Both probably consider themselves middle class.

The video part of the article discusses that the categories of "needs and wants" - and that they differ between a person who has household income of $46k vs someone with millions of investable assets.
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Old 07-23-2013, 10:30 AM   #16
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According to the article 40% of those with $5M or more do not consider themselves wealthy. Only 60% acknowledge they're wealthy.

Since there are so many other variables involved in determining what your lifestyle would be like, this is not surprising.


1. Since the term "or more" is thrown in, it leaves the question open as to whether we're talking about $5M or even more.

2. Expenses determined by geographic area and family are not considered. A FIRE'd couple with two kiddo's and $5M doesn't seem wealthy to me. They move to SF, Calif., buy a typical $700k house and begin withdrawing 3.5% from the remaining $4.3M. Living on that $150k in that area, buying your own health insurance, saving for the kiddo's college, etc., etc., would all be very possible but I'd be stretching it to call the family "wealthy." They wouldn't be flying first class, regularly dining a gourmet restaurants, playing golf at an exclusive country club or the other typical activities of the "wealthy."

3. The same ER'd family as above, that also has a pension coming in the future, a source of cheap HI, lives in an area where a beautiful home only costs $300k (and has lower property taxes), has a commitment from grandma to pay for the kids to go to college, etc., etc. might very well live a lifestyle of the "wealthy." Things are relative.
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Old 07-23-2013, 10:38 AM   #17
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From the bottom looking up, if I suddenly awakened one day to find that my portfolio was worth $5M, I think I'd consider myself rich! But, who knows? Once I get there, I may feel differently. Once upon a time, $100,000 felt like a lot of money. Not "rich", but a lot of money. But today it doesn't. Even as I approach the $1M mark, it doesn't seem as lofty as it did once upon a time.
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Old 07-23-2013, 10:40 AM   #18
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I see your point youbet. But they talked about investable assets. So presumably, the $5M is outside of housing.

I don't consider myself wealthy - but plan to retire with 1.5M or less in expensive So. Cal with minor children. That said - I'll still have to watch my budget. And the house will be paid off when I retire.

That's why I brought up the needs/wants thing in my previous post. Some folks may consider private elementary/secondary school for their kids a "need", others consider it a "want". Some folks may consider a 4000sf house a "need" - others are fine with a 2000sf house. Some folks consider funding a private college education a need? I feel lucky to be planning to fund a public (UC or CSU) education for my kids.

I don't consider myself wealthy - but I'm a heck of a lot better off than most of my peers.

Yes - my planned 1.5M would go further in a cheaper location. But the paid for house will help mitigate that. And I "want" to live a 10 minute drive from the beach so my kids can surf and boogie board.
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Old 07-23-2013, 10:50 AM   #19
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With my portfolio of investments worth about $1.2M, up from somewhat below $1M when I ERed in late 2008, I can easily live the same lifestyle I had been living before I ERed. I don't "look" wealthy, but I feel wealthy because I do not need to work to generate the income as my portfolio grows.
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Old 07-23-2013, 11:05 AM   #20
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I see your point youbet. But they talked about investable assets. So presumably, the $5M is outside of housing.
OK. Assume they have $5M in investable assets. They move to SF and rent a home appropriate for a family of four who will be considered "wealthy."
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I don't consider myself wealthy - but plan to retire with 1.5M or less in expensive So. Cal with minor children. That said - I'll still have to watch my budget. And the house will be paid off when I retire.
Will you ever have any income beyond withdrawals from your $1.5M portfolio?

I don't think we really disagree. I'm just pointing out that "wealthy" is a very subjective and relative term. One's personal position on the economic scale is key as to how "wealthy" is interpreted. And life circumstances plays in as well.

To consider myself "wealthy" (my own view of "wealthy") with a net worth of $5M, I'd have to be unencumbered by any expensive family situation or other obligation and living where $150k - $200k annual income is far, far above average.
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