As the title suggests, I’m curious to hear thoughts on what is considered “rich.”
Consider your life now, how much would you need to say, “damn, I’m rich.”
Is it about income, material wealth, assets?
Is someone that makes $500,000 a year that rents with nothing in the bank richer than a person making $60k a year that owns his house and has a sufficiently large retirement fund?
And finally, can a person making $30k a year ever be considered rich?
Rich is assets, not income. If you make $500K a year but spend it all on gambling, expensive meals, upscale vacations, etc., then you’re broke.
Rich, of course, is all relative. If we drive by a mansion, and my kids ask how someone gets rich, I tell them some people think we’re rich. Anyway, to put a figure on it, to me, rich means you have “fuck you” money. You have enough money to live in your chosen lifestyle without ever having to work again. I would be happy with maybe $5 million in income-producing investments.
Inflation means that being a millionaire is no longer a big deal. “I want to be a billionaire, so fucking bad…” (explicit version :))
A person making $30K a year has a challenge. That’s just over $1 million over an entire working life of 35 years. But this person could get rich with a frugal lifestyle, careful savings, and brilliant investments. But if a person could do all that they probably could figure out how to make more than $30K a year.
Rich means being able to live the lifestyle I live now without having to work at all.
A friends grandparents started out poor, but kept investing their income into buying land. They owned about 4 million in land when they died. However it was all illiquid assets, so I wouldn’t consider them rich.
My definition of the characteristics of rich.
No disaster can destroy your financial security. It doesn’t matter if your family falls apart, the stock market collapses, you become disabled and unemployable for life, you develop a severe illness that insurance won’t cover, house burns down, etc.
The ability to live off of investment income rather than labor
Your wealth is at least somewhat liquid
You have the money to reinvent your career and devote your time to your passion in life w/o worrying about the financial consequences
By those standards, I’d guess 5 million in assets would make one rich.
I find this question profoundly uninteresting. There are any number of concepts that people use to describe themselves or other people that are not that well defined (e.g., fat, tall, ugly, creepy), and I don’t think there’s a pressing need to define those concepts. Stated another way, “rich” can mean different things to different people, and that’s OK.
Also, shortly someone will come along who wants to differentiate “rich” from “wealthy,” thus prolonging and extending the profound uninterestingness of this topic.
The only way to do this is to have a huge amount of cash, in dozens of different banks at $100K a pop. Not the best investment strategy. I can think of no other form of assets that is invulnerable to erosion.
Guess you’ve never heard of private deposit insurance. Also, if “invulnerability” is what you are after, then why are you so jazzed on insurance provided by the U.S. federal government? It may not always exist.
Also, I don’t have a huge amount of cash, but I do have a job that pays far in excess of a riskless rate of return on $5 million (with much more growth potential than a riskless rate of return), and I think I have everything described in Wesley’s first point (through savings and insurance).
The differentiation between income and net worth is a hugely important one. As long as people understand that concept, we will come a long way.
However, it gets more complicated than that. I am technically wealthy myself by any reasonable measure at 37 and that is wealth with real money to my name. However, almost all of it is tied up in really long-term trusts and I don’t have control over it and won’t for a very long time. I could very easily die being a multi-millionaire on paper and never get to spend it on anything I choose. I can petition my own trust if I need something like a car or educational expenses or a house and most people don’t have that but I still have to work and I don’t get any direct cash until I am much older. I can’t do anything frivolous with it at all and it is meant to stay that way across generations. Am I rich?
And . . . my work here is done.
My friend makes about $25k a year and I make about $60k a year and he calls me “rich” all the time.
So I guess the answer is…$60k?
I find myself agreeing with** Rand Rover**. This topic comes up over and over and there is never an answer because there isn’t one. Get over it.
I define rich as people with more assets than me, and poor as people with less. MEconomics 101.
It’s very personal, isn’t it?
To me, being ‘rich’ means having a lot of wealth, but not necessarily so much wealth that you no longer need to work to support your income.
Someone who owns a large house, can afford to upgrade their car each year, goes on several international holidays a year, can shop for clothes/household items without looking at the price tags, that’s my idea of what being ‘rich’ is.
Coming from a British viewpoint, I guess that’s middle class. Upper class is the people who not only don’t have to work to support their lifestyle, but often have never had to work at all. Working class is folks like me who work and enjoy a simple to comfortable lifestyle.
/my 2p
You’re right, I’ve never heard of it. And I’m not “jazzed” about anything, but the U.S. government is more likely to be around than the NYSE. It was not me who was after invulnerability but I was responding to Wesley Clark’s desire that “No disaster can destroy your financial security.”
And…I don’t think you actually read what you quoted.
I’ll never understand why people bother to post to threads that they find profoundly uninteresting. For any given thread, some people do find it interesting, some people don’t. The people that don’t generally quietly move on to the next thread.
You can have more than that safely in a bank. The FDIC insures you up to $250,000 per bank, and possibly more if you have multiple accounts of different types. link
To me there is a big difference between “financially independent” and “rich.”
You could live like the Unabomber on very few assets and not have to work, but most people looking at that standard of living would not consider you rich.
Rich to me is a combination of standard of living and the wealth to support it. You can have a very nice standard of living, but if you can’t back it up, you are (or will be) MC Hammer. And you can have a lot of wealth, but if you live like Hetty Green - its just money.
My wife and I run into the problem that although we make good money and live beneath our means, the bulk majority of our savings goes towards trips. And quite frankly, we just don’t care much for “stuff.” As a result, despite a high income we’ll probably never have a lot of net worth.
But if instead, our “thing” was to buy land, upgrade our house, or collect classic cars, we’d have considerable more “wealth.”
The reason I bring this up is that my wife has a coworker that makes probably twice our combined salary, and gets used as our benchmark. My wife considers this coworker rich, and feels that we should be working harder to achieve that. I get a lot of, “well, she is upgrading her kitchen again…”
A few months ago they were having lunch, and my wife mentions that we’re about to spend a month in Australia. This co-worker freaks out, she couldn’t imagine someone being able to afford that. So while making good salary and amassing much “wealth,” she never had enough savings for a big trip. As a result the co-worker said, “damn, I wish we were rich enough to afford a trip like that.”
Exactly. The numbers are irrelevant. Though I might put in a caveat, "Rich means being able to live the lifestyle that makes you comfortable without having to work at all. I have been uncomfortably poor at times … things like, “Will we buy medicine or food this week?” Being able to afford THAT lifestyle without working would not make me feel rich.
So could we conclude that the ability to retire makes a person rich? I guess said another way would be to ask, is age a factor?
I agree that to be rich is a full time job in itself. Just managing a large amount of money takes time and effort. If you don’t tend it well it won’t last for long. It’s one thing to get rich and another to stay rich.