I always understood that if someone was a millionaire, they had over a million dollars in ‘liquid assets’ - savings accounts, stocks, and other transferable and disposable forms of wealth.
But does anyone who’s total assets reach a million dollars count as a “millionaire”? If so I imagine a lot of people who own small business or office - even a farm, a home, and have a rather ordinary amount of savings, investments, and retirement funds could be termed ‘millionaire’ - especially if they live in California or the East Coast (where a suburban house alone may easily be in the hundreds of thousands).
I know the word “millionaire” is not some official designation (unless there really are ‘millionaires’ clubs). But its a term used frequently enough.
Most people think of “millionaire” in terms of liquid assets, but since it’s a glamourous term and a sign of status, it could be used for total assets by the speaker. You’d have to decide whether you accept that definition.
Since the dictionary says it’s “A person whose wealth amounts to at least a million dollars, pounds, or the equivalent in other currency” (dictionary.com), there is not clear dividing line was to whether that wealth is liquid assets or not.
Millionaire: One whose annual income exceed a million dollars (or other unit of currency).
The ‘old’ definition based on wealth, whether it is total assets less liabilities or limited to liquid assets, is too broad in today’s world. A hundred years ago, “millionaire” meant something along the lines of “top 1% of wealth.”
Basing the definition on income would bring back some of that exclusivity to the word. Movie stars, sports stars, CEOs and others of that ilk would be the only millionaires. An average lawyer/doctor who owns a house in San Francisco would be excluded from the new definition.
BCE
BCE…I bet someone’s grandmother has more than a million dollars, but her income is only $15,000 a year (or whatever the pension is). Why does it matter when one earned the million?
By my definition, the granny was a millionaire back in 1923 when she earned that million from the IBM IPO, but she hasn’t been a millionaire since.
By my definition, you could be a millionaire one year, and not one the next. If your income drops below a million, you are not a millionaire.
If you are an executive and get promoted to CEO, earning a salary of $1.1m, you are now a millionaire. Two years later, you are sacked by the board due to accounting irregularities. You now have no income but have about $1.5m cash in the bank from savings and selling short your own company’s stock - you are NOT a millionaire.
If you are a Movie star and get paid $5m to play Harry Potter’s long-lost twin, you are a millionaire. The next year, Weekly World News exposes your past as a star of Gay Porn Infomercials and you can’t find work. Even though you own three Ferraris and a house in Bel Aire, your only income is $250k/year from the SAG unemployment fund and you are NOT a millionaire.
Now, if your assets/wealth is great enough to provide you income over $1m per year, you could be a permanent millionaire. For example, having $50m in a passbook savings account earning 2.1% interest would provide you with just over $1m income each year.
BCE
I have worked with a lot of farmers whose assets (land and equipment) total well over $1 million. Subtracting their mortgage and equipment debt, however, they are worth considerably less than $1 million. When they count only their after tax net annual income, some of them would actually qualify for food stamps.
The usual term for that is “land rich, cash poor.”
Main Entry: mil·lion·aire
Pronunciation: “mi(l)-y&-'nar, -'ner, 'mi(l)-y&-”
Function: noun
Etymology: French millionnaire, from million, from Middle French milion
Date: 1826
: a person whose wealth is estimated at a million or more (as of dollars or pounds)
So, BCE, if I win a 40 megabuck lottery at age 20, and decide that that’s enough for me for the rest of my life and just retire, I’m not a millionaire? That doesn’t seem to fit. If a person has enough assets that they can live comfortably on those assets for an entire working lifetime, that sounds to me like they’re well-off enough to deserve some sort or label.
I was once a multi-millionaire - In fact, I still have a couple of 1,000,000-zaire notes with a picture of President Mobutu on them. One afternoon in the eastern Congo I blew two million on a couple of bottles of warm beer.
Your definition of ‘enough working assets’ is not precise enough. A person living in NY city would probably need assets well over $1m to live comfortably on the interest. Someone in a rural area with few material needs could probably accomplish the same on assets of less than a quarter million.
If the amount you won in the Megabux lottery provided you with interest/investment income over $1m per year, then yes I would call you a millionaire under my new definition. Winning $40m and investing it at 5% would give you $2m per year, a millionaire in my book.
However, winning $10m and getting $500,000 per year income - although putting you into a great lifestyle and no need to work, etc. would not entitle you to the “millionaire” label.
If they deserve some sort of label, call them filthy rich, lazy rich bastard, top tax bracket, etc.
BCE
So you can have $100,000,000 invested in the stock market but if it goes down that year, then you are not a millionaire by your definition? That is not right. Your focus on on income is completely misplaced. The focus should be on accumulated wealth as others have pointed out. It is how much money you have rather than the rate that you pulled it in that is important.
The only thing that I agree with is that a million dollars doesn’t buy what it once was but stealing the word to mean something even more arbitrary is ludicrous IMO.
One reason I like BCE’s idea is not that $ are now worth less, but that the earnings seem to have overtaken wealth as a measure.
There was a time when the ‘rich’ were the big landowners, etc. But now, a ‘rich’ person might earn $$$ per year, and live as extravagently as possible, and actually have no net worth if a bank offers him silly mortgages on mansions and yachts, against future income.
If you want to actually have $1,000,000 to roll in, you need to live below your means.
IMHO a better definition of millionaire would be one whose net worth (total assets less total liabilities) equals or exceeds 1,000,000, expressed in some constant term, e.g. 1971 (or pick any year) dollars (or pick any currency). This would provide a meaningful comparability to those for whom the term applies.
Possibly relevant: This recent bestseller explored the questions of who are millionaires and how did they get that way. The book makes the points that, using a definition of net worth, there are a lot more millionaires around than anybody imagines, and most of them live simply and quietly.
The Millionaire Next Door: The Surprising Secrets of America’s Wealthy http://www.amazon.com/exec/obidos/tg/detail/-/0671015206/002-2431694-5525662?v=glance
IMO, looking at income is totally wrong. The point of designating someone as a millionaire isn’t that to realize that they made a lot of money this year. The point is to realize that they have a lot of money and can probably buy and sell you, and generally do what they want in life, financially. BCE is certainly free to definie the word anyway he wants for his own use, but it seems pointless. It’s like me deciding that in my world, “Dog” only means the larger breeds because I think the little ones are basically big rats with fur. That’s fine in my head, but I don’t get much mileage out of it, except watching football with the guys.
My point is that “millionaire” originally meant someone who was at the extreme end of the rich-poor scale. Maybe the top 1%. It was defined as being worth $1m in dollars because very few people were worth that. A million was simply shorthand for “a heackofalotta”.
So it had two meanings: an explicit and implicit one. Explicitly meaning you had at least $1m in the bank or in assets. Inplicitly meaning you were at the very “top of the heap” financially.
Nowadays it doesn’t mean both of those things. If we retain only the explicit definition where a “millionaire” is number-based, we lose the connotation (the implicit definition) that a millionaire is something way beyond the average Joe, top 1% of rich people, Champagne-and-Caviar lifestyle, etc.
That is why I am arguing for a new definition. If someone could propose a term which retains the exclusivity that “millionaire” used to, I’d be glad to jump on that bandwagon.
Maybe it should be, by default, “Billionaire.” Just make sure to notify Dr. Evil of the difference!
BCE
Interestingly enough, the thing seems to be clear with billionaires - if Microsoft shares perform poorly, and as a result of it Mr Gate’s annual income this year drops below the $1b mark, or his fortune even decreases on paper, you’d hardly deny him the extremely exclusivre billionaire[sup]TM[/sup] tag.
That said, I agree that inflation has corrupted the $1m number a lot. Having one million in total assets is not that hard*. Problem is that there’s no other really catchy number you could attach the -aire prefix to between “million” and “billion”. Hey, math guys! Isn’t there a mathematically relevant number in the range of say 10,000,000-100,000,000 that bears its own short name?
[sub]* That’s another point where the euro really helped. Since one million deutschmarks equalled roughly half a million euros/dollars, the single currency put things a bit back to the right perspective.[/sub]
