Number of Millionaires Update

I wonder how many of the additional millionaires are accounted for simply because they have successfully kept up with inflation?
 
Sometimes my own stupidity amazes me. Here I am a number of a very select few in this world - living in the USA and being only 1 of 2.27m in this country with a net worth over $1.0m.

Think about that for a second - I grew up poor and now I'm a member of a small club.

It was never really on my mind to have so much money - I just lived in a way that it happened - if that makes any sense.
I'm living a wonderful life and plan to retire next year at 50 - so what am I worrying about? Not having enough money!
In a way I'm humbled.
 
I'm with Nords - a mllion ain't what it used to be SO I plan to keep recyling those dryer sheets. Perhaps I can recyle my way to ten mil. Naaa - I think I'll just enjoy ER - ? I wonder how select 'that' group is - more fun than some millionaires I know.
 
BTY - three that come to mind are poster boys for Millionaire Next Door - own their own business (two seafood/shrimping, one fill/bulldozing), drive old pickups/Detroit Iron, work 6, 7 if needed days/wk, $$$ tied up in equipment. The poorest has the biggest house(??wife influence). No way you could pick these guys out of a crowd.
 
it's nothing to be a millionaire these days -- buy a house, pay it off, have a little savings -- or even just home equity in the SF Bay Area. Nothing special.

IMHO real wealth should exclude the value of the primary residence as most always need a home. True there are those who spend their ER floating blissfully from one location to another, like the Terhorsts, but many seem to have a home base.
 
IMHO real wealth should exclude the value of the primary residence as most always need a home.
Click to expand...
gayl,
I think the study is based around financial assets only, (if it is the same study profiled in yesterday's wsj -- from the 2004 World Wealth Report?). That saw # of millionaires (financial assets only) rising 13.5% to 2.5 million, which would meet your point about home equity.

I kept wondering if that counted a couple as needing 2 million to qualify, since ithere were several references to 'individuals' and none to 'families'.

Anyway, I think it is just the normal effect of last year's stock market rise, and not really the result of anything 'new' that couldn't be taken back by another bad year in the markets.
 
I disagree completely with those who opine that
the value of your home should be left out of your
balance sheet/financial planning. Sure, everyone needs
a home, except the Terhorst's :) But, not everyone "needs" the home they are in. This means
if your home is worth $500,000 and you could live in one
costing $100,000, you have $400,000 available for
investing elsewhere or whatever. Or, take our case.
We bought a condo this spring. It is worth about half
the value of our house. We could easily move into the condo, sell this place and thus free up 100% of our equity
here. I think that excluding your home makes no
financial sense.

John Galt
 
I also believe your home should be included in you calculation and thought process.

The technical term is "opportunity cost"

With a 100K home and assuming a net return on invested income of 7% the Opportunity cost is $7K plus operating costs - taxes, maintance ets $3K. Total Oppotunity cost $10K or said another way - $10K/year not in you pocket. You should subtract the cost of renting est 6K and appreciation est $2k/year for a true opportunity costs - net opportunity cost of owning the house $2K per year. Again $2K not in your pocket

People should go through this exercise to see put in perspective the true cost of owing a house. Of course this does not factor in the emotional aspects of owning a house.
 
I realized the high cost of owning a home when my husband and I moved into rental property he owned. We have a nice but small apartment in a fourplex, and we earn a regular income from the three other tenants. The tenants always behave themselve because they live in the same building as the landlord. Although my husband sold all his other rental properties we just can't imagine selling this one because we live here so cheaply. It is amazing how much money we have left over every month because tenants pay the taxes, utilities, repairs and upgrades and we can deduct a good portion of what they pay.

So of course, I view my "home" as an income producing asset.

Martha
 
We have a nice  but small apartment  in a  fourplex, and we  earn a regular income from the three other tenants. Martha
Click to expand...

Martha, you may have already mentioned this, but where do you live? Can a 4-plex be bought on your market today (25% down) and expect the other 3 units to cover mortgage, property taxes and insurance? Actually, I would be happy if I could do something like that and cover maybe 1/2 to 2/3 of my equivalent rent, if the building would not be expensive to maintain. I would look on this mainly as hedging my occupancy costs.

I tried to do this about 5 years ago, on a 9 plex. The market was soft, and I was trying to get more concessions than the seller ultimately would give. Shortly thereafter, it was made clear that he was right and I was wrong.

Mikey
 
Martha, you may have already mentioned this, but where do you live? Can a 4-plex be bought on your market today (25% down) and expect the other 3 units to cover mortgage, property taxes and insurance? Actually, I would be happy if I could do something like that and cover maybe 1/2 to 2/3 of my equivalent rent, if the building would not be expensive to maintain. I would look on this mainly as hedging my occupancy costs.

I tried to do this about 5 years ago, on a 9 plex. The market was soft, and I was trying to get more concessions than the seller ultimately would give. Shortly thereafter, it was made clear that he was right and I was wrong.

Mikey
Click to expand...


Mikey, this is a tough question to answer. We live in Minnesota. We moved into the 4plex 8 years ago. At that time we had a mortgage. If I can recall, the income was enough to cover utillities, insurance, taxes, and a good part of the mortgage but not all by any means. I have this vague recollection that we figured it cost us $300 or $400 a month to live there, far less than rent for an equivalent space. We also had a tax loss we could use to offset passive income.

Since that time, the mortgage was paid off and rents have increased substantially. So has the value of the building. For us, the rental income far exceeds expenses. But could someone buy it now with 25% down and cover all expenses with rental income from only 3 of 4 apartments? I think not given current values in our market. In fact, because of increases in apartment values, my husband sold his other buildings. We questioned whether the properties would cash flow for the buyers. They all are banking on future appreciation.

Martha
 
Hey Mikey, re. "he was right and I was wrong" and
"concessions", I have a little different slant on it.
You were not necessarily wrong, maybe you just had the wrong seller. If you find the right one (preferably a
don't-wanter) you will have a slam dunk situation
vis-a-vis cash flow and etc. It takes a lot of leg work
to find these, but they are out there.

John Galt
 
Thanks Martha and John

Martha,

I kind of figured that cash flow would be hard to achieve at present. Thanks for your answer.

And John, good point. One can walk away at a time that would have been a good buying time in retrospect, and still be doing a sound thing. As they say, hindsight is always 20/20.

Mikey
 
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