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.