What Does Being a Millionaire Really Mean?

[Spanky]

One definition is $1MM in financial assets. Since the term millionaire was coined in late 1800s to signify wealth, you need to have at least $25 million dollars to qualify as a millionaire.

 

[Retire Soon]

When considering one's net worth, it's wise to consider "phantom assets" as well. For example, if someone receives a cola'd pension of $40,000 a year, it would take $1,000,000 in savings to be equivalent to this amount of annual income with a safe withdrawal rate of 4%. Even with no other assets, this example would make someone a millionaire.

 

[Enuff2Eat]

i totally agree with RetireSoon. that's exactly how i feel. To me having a $40,000/yr pension truely is a millionaire. Many people in this forum have assets exceed ONE million dollar but they still pack their lunch and going to work the next day.... WHY??


because there net worth does NOT generate money for them, in some cases their net worth still taking money away from them. for ex. real taxes, maintenance, broker fee, insurance...

i personally know someone in this case. they have $650,000 paid off , their stocks, 401k... yet still does not feel the millionaire status.

enuff

 

[hayekcapitalist]

Potpourri

Or does the idea of millionaire matter any more? Maybe The Millionaire Next Door concept is already dated, and the next version of the book should be The 5-Millionaire Next Door--about ordinary people who have assets of $5 million. Whaddayathinque?[/quote]

Prof. Stanley, one author of The Millionaire Next Door, the other being Prof. Danko, carried the research begun in same book forward in The Millionaire Mind, where he studied deca-millionaires. The second book supported a conclusion similar to Next Door: the deca-millionaires are not inherited, LBTM, recognized value in their purchases, etc.

What cost $1000000 in 1955 would cost $7243671.97 in 2006.
Also, if you were to buy exactly the same products in 2006 and 1955,
they would cost you $1000000 and $138051.53 respectively.

The various and sundry computations invoving nominal 2006 dollars v. constant 1955 dollars, as one observer already opined, involve adjusting the $1,000,000 in 1955 dollars forward 51 annual periods (end of year assumption rther than "annuity due" at beginning of year) to future 2007 dollars (actually in the present) of $7,243,671.91. Using a financial calculator, or lots of guess, check, and revise using the exponential functions of a scientific calculator, and solving for the i (the implied interest rate) or in this case the inflation rate indicaters that an inflation rate of 3.959% per year compounded was assumed, not an unreasonable simplifying assumption. "Going the other way," deflating 2006 purchasing power to 1955 purchasing power, $1,000,000 and $138,051.53, equates to an implied average annual compounded inflation also of 3.959%.

No, $1 mil ain't what it used to be, but it sure ain't chopped liver, and it beats having $0.00, or worse, insolvency anyone?

So how do I spell millionaire: net worth is o.k if you don't need to live in a house and can sell it in a hurry at a price certain with very little frictional transactional costs (aka "vigorish"); or furnish an abode; will or can sell your jewelry and collectibles to raise cash in an emergency; can sell car and walk, etc.

Therefore, for me, and IMO it has always been about having $1,000,000 invested in marketable securites. Marketable, for me, means trading in an active market, at transparent prices, where buying or selling my tiny amounts does not influence the price.

 

[W2R]

To me, you aren't a millionaire unless you normally have a million in the bank, stocks, and bonds.

I know, I know... you COULD count one's home and you COULD count a cola'd pension and you COULD count social security and you COULD count your car and you COULD count that toaster that you bought for $9.95 last year.

I just don't happen to think of it that way.

I also think being a millionaire means having a million dollars, not 25 million.

Not gonna argue, too old to change, and that's what being a millionaire means to me so I will agree to disagree.

Scrooge McDuck had a million dollars in the bank. I'm sure he did!

 

[hayekcapitalist]

GoGirl

I couldn't agree more with your definition of "millionaire." Some think it doesn't matter, and they may be right. They can define it any way they want, but, we all have the earned right to dream and through self-actualization turn those dreams into reality. i.e "a millionaire is one who can afford the luxury of debating whether one enters the club through the front door because she has $1 mill invested and/or liquid, or through the back door of the house on the left coast that six months ago was "worth" a million dollars and now has no determinable value because, if you believe the pundits, the credit markets have seized and buyers can't step up to the plate."

Oh....wait a minute, maybe it does matter? But, what if the U.S.D. dives, dragging everything including equities to perdition with it, and, then where would I hide, and I wouldn't be a millionaire anymore, perhaps gold is the place to be, no, the yellow metal doesn't appear to be the safe haven in troubled times it once was, or so "they" say.

One is rich who attempts, at least, to maintain perspective, along with dignity. And the perspective is this:

Most of our "fellow Americans" spirits are so poor and will so weak they can't fathom having 100 G's much less 1 million.

 

[DblDoc]

When considering one's net worth, it's wise to consider "phantom assets" as well. For example, if someone receives a cola'd pension of $40,000 a year, it would take $1,000,000 in savings to be equivalent to this amount of annual income with a safe withdrawal rate of 4%. Even with no other assets, this example would make someone a millionaire.

In "Four Pillars" Bernstein writes about how in other countries your "financial worth" is discussed in terms of annual income produced, regardless of its origin. This makes more sense then our "net worth" mind set for the many reasons discussed above.

 

[Milton]

To me, you aren't a millionaire unless you normally have a million in the bank, stocks, and bonds. I know, I know... you COULD count one's home and you COULD count a cola'd pension and you COULD count social security and you COULD count your car and you COULD count that toaster that you bought for $9.95 last year. I just don't happen to think of it that way.

I agree.

 

[Milton]

And then there is this: In Silicon Valley, Millionaires Who Don’t Feel Rich - New York Times

Wow, that's some article. Thank you for sharing it.

 

[hayekcapitalist]

Yes Thanks

"Today, he has roughly $1.2 million left in savings and another several hundred thousand dollars’ worth of home equity, Mr. Barbagallo said, with one child in college and a second on her way.
So he works as hard as ever, logging more than 70 hours a week at a San Francisco start-up.
“Poor Tony, he’ll never be able to retire,” Catherine Barbagallo said."

I don't whether to laugh or cry. God bless 'em.

 

[Spanky]

The literal or technical definition of a millionaire is one who has over a U.S. $1 million in financial assets. The true meaning, however, is one who has over $25 million (U.S.) since the term was first coined in the late 1800s to symbolize wealth. [SIZE=-1]That is, someone who can afford mansions, limousines, yachts, jets, luxury, expensive trips, etc.
[/SIZE]

 

[trumpeting_angel]

I inherited some money a few years ago, but after some research quickly learned that retirement with a half million was not in the cards! Still inching my way toward that first million, I've been interrupted by this summer's market shenanigans and beginning to put my kid through college. Alas, not only have I not reached it, but hitting the big $1mm isn't going to be the answer!

A few more years of work, sigh.

Anne

 

[xyz]

Ok, so if $1 million is a millionare what constitutes a multi-millionare?

 

[Texas Proud]

Ok, so if $1 million is a millionare what constitutes a multi-millionare?

Multi means many... so, some will say that 2 is not multi, but I do.... if you do not, then it is 3...

 

[Spanky]

Multi = 2 or more. However, a multimillionaire means a person having several (whatever that means) millions of units of currency. A million Vietnam Dong (VND) is only worth $61.5858 USD. Thus, a multimillionaire in Vietnam is the same as a multimillionaire in the U.S.

 

[Milton]

The literal or technical definition of a millionaire is one who has over a U.S. $1 million in financial assets.

Really? What is your source for the US currency requirement? That seems quite ethnocentric.

I suspect that people living in, say, Australia or Canada would probably consider themselves to be "millionaires" if they had over a million dollars in their respective currencies. And an Englishman with a net worth of £1 million would be worth rather more than an American with US$1 million.

 

[theloneranger]

These days, it would take a net worth of about 5 mil to be comfortably extravagant.
Not there yet and don't think I will be.

 

[travelover]

......... And an Englishman with a net worth of £1 million would be worth rather more than an American with US$1 million.

Yes and an Englishman worth a billion pounds would be about 2000 times as rich as an American billionaire.

 

[kumquat]

Really? What is your source for the US currency requirement? That seems quite ethnocentric.

I suspect that people living in, say, Australia or Canada would probably consider themselves to be "millionaires" if they had over a million dollars in their respective currencies. And an Englishman with a net worth of £1 million would be worth rather more than an American with US$1 million.

DW and I qualify as Canadian multi-millionaires (if 2 or 3 is enough). We also qualify in US$ since the C$ is worth about US$0.96. WE don't really think we are 'multi-millionaires' in any currency. Multi-millionaires have yachts, private jets, mansions, servants, fine cars etc. We live like our neighbours except we don't have j*bs.

Edit to add: I expect that most C$ millionaires expect to be US$ millionaires within a year.

 

[Telly]

Really? What is your source for the US currency requirement? That seems quite ethnocentric.

I agree.

We must be careful not to discriminate against other civilizations such as the Fisher-Price People of the Plasticscene Era. Their units of monetary exchange were invisible. We hypothesize that many were millionaires, due to the large number of convertibles that they were found in, or found laying next to.

Research continues, but grants have not been forthcoming. We appeal to Ottawa for funding.

 

[Milton]

I expect that most C$ millionaires expect to be US$ millionaires within a year.

No kidding, eh.

 

[Grizz]

They say that a million dollars won't buy happiness, but it'll make one hell of a down payment.

 

[W2R]

They say that a million dollars won't buy happiness, but it'll make one hell of a down payment.

If I ever reach a million, I'll let you know! (I'm not holding my breath, though.)

Seriously, once the basic needs for adequate food and shelter are met, happiness is pretty much a do-it-yourself project (at least for me).

 

[burnthiscube]

Millionare

Our net worth is approx 2M. As an earlier poster stated, we live much as our neighbors (probably more LBYM) except we don't work, at least for pay.
It does create a sense of security, and time to enjoy the smaller, more subtle elements of life. We're currently planning our daughter's wedding, which is great fun, although it will reduce our net worth by 50K or so.
Bruce

 

[Bigritchie]

Kinda off topic in a way, but I think being a millionaire to me, basically can be summed up in this.

Before when say a water heater exploded and made a mess, there was incredible stress, the stress of taking much needed money and cleaning up, and buying a new water heater, and then worrying about other bills. Or if something stopped working at my store it was just mass mass stress.

Now when something breaks, it is still super annoying, but that pit of fear in the stomach is gone. It is more of a "O well, just fix it". It still sucks spending the money, but I don't sit up all night worrying anymore.

Besides that it is all about the same to me. (except I have zero tolerance for rude customers when they start with me now hehe)