How to define wealth

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JGoneRiding
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How to define wealth

Post by JGoneRiding » Sat Apr 27, 2019 11:05 am

Frequently on here we argue over how well off someone is. I believe most here suffer a giant disconnect to how little "normal" people have and how much they really have! (Exhibit a the poster terrified her in laws with 700k liquid would run out and she would have to support them)

This article talks about defining wealth

https://awealthofcommonsense.com/2019/0 ... -wealth-2/

I thought about half way down the meme of household income to upper and middle was shocking and I am a poor bobblehead. But those are lower incomes than I expected for upper!

How do you define wealth?
The table of savings is an excellent reminder.
As I probate my aunts estate I keep reminding people that ask that she had little wealth but a great income. But unfortunately she struggled to see it that way and thought herself poor when she wasnt (however since it was income and that stops on death the estate is poor!)

Shallowpockets
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Re: How to define wealth

Post by Shallowpockets » Sat Apr 27, 2019 11:18 am

Wealth could be having a reserve as a fall back position from what you need.
Take it like this. Person A retired with six figures in assets. Lives off SS and pension.
Person B retired, no assets, lives on SS and pension.
Person A is wealthy because they have money to tap into should the need arise.
Person B has nothing excepting the month to month money coming in.

delamer
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Re: How to define wealth

Post by delamer » Sat Apr 27, 2019 11:58 am

I read an interesting analysis recently about tax rates where they discussed the 1%.

A physician couple with an annual income of $800,000 and a net worth of $10,000,000 is literally doing better financially than 99% of their fellow tax payers. But the difference between them and a techie who makes $6,000,000/year and has a net worth of $55,000,000 is astronomical. But most of us would consider them both wealthy. OT comment removed by moderator Misenplace.

I can live the life I want to live without worrying about money. Is that the definition of wealthy? Do I care if others have more (except for the ethical and economic implications)?

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mrspock
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Re: How to define wealth

Post by mrspock » Sat Apr 27, 2019 12:12 pm

delamer wrote:
Sat Apr 27, 2019 11:58 am
A physician couple with an annual income of $800,000 and a net worth of $10,000,000 is literally doing better financially than 99% of their fellow tax payers. But the difference between them and a techie who makes $6,000,000/year and has a net worth of $55,000,000 is astronomical. But most of us would consider them both wealthy. (The article argued that the latter should be much more heavily taxed, but I digress.)
Is it though? The techie might have a bigger home(s), nicer car and fly private... but I wouldn’t call that astronomical. Also, I know of no techies who make $6M/yr unless they are C-level or it was a buy-out situation, $1-2M yes (top 0.1% of engineers) ... not $6M.

dknightd
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Re: How to define wealth

Post by dknightd » Sat Apr 27, 2019 12:24 pm

If you can smile and be happy, you are wealthy

WillRetire
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Re: How to define wealth

Post by WillRetire » Sat Apr 27, 2019 12:26 pm

Wealthy = being happy with what you have.

I know people who have high net worth but it isn't enough for them.

Grogs
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Re: How to define wealth

Post by Grogs » Sat Apr 27, 2019 12:35 pm

TBH, I'm not sure I'll ever get past #2, not caring about the cost in a restaurant. And I can't imagine ever not caring about the cost of flights/hotels/ etc. on vacations. I might someday be able to *afford* to fly business class to Australia, but I would still feel guilty about it.

Maybe there should be a #4 category, too: don't have to care about the cost of health care. At a certain level (I would argue well into the 8-figure range) you could pay for pretty much any conceivable medical treatment and health care worries would no longer be an issue.

fourwheelcycle
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Re: How to define wealth

Post by fourwheelcycle » Sat Apr 27, 2019 12:39 pm

I read the link. We are definitely beyond Level 1 - no stress about debt. But having been raised by parents who lived through the "real" Depression, my wife and I are pretty far along on the BH scale. My brain says I should order whatever I want and not worry about menu prices, but we still have to fight our instincts to order a $34 entree, so perhaps we are not yet at Level 2. We take lots of vacations, but we particularly like VBT bicycle vacations in Europe because they put us in nicer hotels than we would ever book on our own (Level 3).

delamer
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Re: How to define wealth

Post by delamer » Sat Apr 27, 2019 12:43 pm

mrspock wrote:
Sat Apr 27, 2019 12:12 pm
delamer wrote:
Sat Apr 27, 2019 11:58 am
A physician couple with an annual income of $800,000 and a net worth of $10,000,000 is literally doing better financially than 99% of their fellow tax payers. But the difference between them and a techie who makes $6,000,000/year and has a net worth of $55,000,000 is astronomical. But most of us would consider them both wealthy. (The article argued that the latter should be much more heavily taxed, but I digress.)
Is it though? The techie might have a bigger home(s), nicer car and fly private... but I wouldn’t call that astronomical. Also, I know of no techies who make $6M/yr unless they are C-level or it was a buy-out situation, $1-2M yes (top 0.1% of engineers) ... not $6M.
I was just using a techie as an example; substitute entrepreneur if you want. The issue isn’t the job type. It is the huge discrepancy between entry into the 1% versus entry into the 0.1%/.01%.

The resources to own a private jet versus flying first class is a distinct difference in lifestyle. So is having the resources to buy a vacation home versus having homes in multiple countries. Or endowing a chair at your alma mater versus making an annual donation to the alumni fund.

delamer
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Re: How to define wealth

Post by delamer » Sat Apr 27, 2019 12:45 pm

Grogs wrote:
Sat Apr 27, 2019 12:35 pm
TBH, I'm not sure I'll ever get past #2, not caring about the cost in a restaurant. And I can't imagine ever not caring about the cost of flights/hotels/ etc. on vacations. I might someday be able to *afford* to fly business class to Australia, but I would still feel guilty about it.

Maybe there should be a #4 category, too: don't have to care about the cost of health care. At a certain level (I would argue well into the 8-figure range) you could pay for pretty much any conceivable medical treatment and health care worries would no longer be an issue.
Excellent point about health care. People don’t avoid retiring because they are worried about how much their next restaurant meal is going to cost.

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JoMoney
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Re: How to define wealth

Post by JoMoney » Sat Apr 27, 2019 12:47 pm

"Wealth" means having an abundance. There are lots of different lifestyles out there, what is "abundance" for some is not enough for others.
There is also time component needed for context. If you have the means to live for a period of time without having to earn a paycheck, you're wealthy. With any amount of money, you can be wealthy one day, and broke the next.
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham

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bligh
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Re: How to define wealth

Post by bligh » Sat Apr 27, 2019 12:52 pm

I think the levels can be sliced many different ways and most of them do make good rules of thumbs.

The two levels that I care about are :

1) Financial Freedom lite. Wealthy enough such that, provided I am not trying to live like a rock star, cost isn't a factor in most things I do. If I want to go to a restaurant, event, vacation, or participate in some activity... If I want to purchase something for myself or my family... If I want good medical care, I have access to it (either through insurance I can afford, or through paying for it directly)... I don't have to work a job I don't like, I have no issue leaving it and taking a few months to get another one, possibly even with a pay cut. At this level, I do not have to go without simply because I do not have the money for it. My present and future is taken care of either way. This corresponds approximately to level 3 from the article. Beyond this there is not a lot of happiness to be gained by more money/net worth. But I do need to keep working.

2) Financial Freedom - All of the above, and I don't need to work ever again in my life. I can choose to, but that too would not be a financial decision. Beyond the prior level, this is the next level at which I feel I would see a major improvement in my quality of life.

I consider both of the above stages to be Wealthy. Put another way, if I couldn't claim I was at 1 or 2, I would not claim myself to be wealthy.
Last edited by bligh on Sat Apr 27, 2019 1:01 pm, edited 3 times in total.

Spirit Rider
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Re: How to define wealth

Post by Spirit Rider » Sat Apr 27, 2019 12:54 pm

WillRetire wrote:
Sat Apr 27, 2019 12:26 pm
Wealthy = being happy with what you have.
^^^ This

If you have your health, good friends, good family and enough*, you are truly wealthy.

*For Americans who earned approximately 1/2 the Social Securtity maximum wage base (2019 = $132,900) over their working lifetime and retired fully owning their house. Low to mid six (6) figures in retirement savings is often more than enough. They may even live a better lifestyle in retirement.

However, I know some high income individuals who earned > 2X the SS MWB over their working lifetime, but still have 20 - 30 years remaining on their mortgage if not with substantial HELOC balances, high credit card debt and two leased cars where seven (7) figures in retirement savings will not begin to be enough. Many of them will be in for rude awakening when/if they can retire.

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Abe
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Re: How to define wealth

Post by Abe » Sat Apr 27, 2019 1:11 pm

I'm sure most people here are familiar with the fisherman and the businessman story. If not you can read it here. There are several versions of the story but this one is as good as any:

https://paulocoelhoblog.com/2015/09/04/ ... sinessman/
Slow and steady wins the race.

DrGoogle2017
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Re: How to define wealth

Post by DrGoogle2017 » Sat Apr 27, 2019 1:29 pm

mrspock wrote:
Sat Apr 27, 2019 12:12 pm
delamer wrote:
Sat Apr 27, 2019 11:58 am
A physician couple with an annual income of $800,000 and a net worth of $10,000,000 is literally doing better financially than 99% of their fellow tax payers. But the difference between them and a techie who makes $6,000,000/year and has a net worth of $55,000,000 is astronomical. But most of us would consider them both wealthy. (The article argued that the latter should be much more heavily taxed, but I digress.)
Is it though? The techie might have a bigger home(s), nicer car and fly private... but I wouldn’t call that astronomical. Also, I know of no techies who make $6M/yr unless they are C-level or it was a buy-out situation, $1-2M yes (top 0.1% of engineers) ... not $6M.
Maybe with RSUs and stock options.

Wricha
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Re: How to define wealth

Post by Wricha » Sat Apr 27, 2019 2:05 pm

Wealthy is having the cash flow from your investments to cover your lifestyle. To often the folks on this site focus on a net worth number (as if net worth is a consistent number for everyone) that means, you are on track, wealthy, retirement or some other goal. Check your goal against your cash flow number and you will have the answer.

shell921
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Re: How to define wealth

Post by shell921 » Sat Apr 27, 2019 3:17 pm

WillRetire wrote:
Sat Apr 27, 2019 12:26 pm
Wealthy = being happy with what you have.

I know people who have high net worth but it isn't enough for them.
This is my view ! I know 2 people with VAST amounts but they are miserable.

fposte
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Re: How to define wealth

Post by fposte » Sat Apr 27, 2019 3:26 pm

I don't find wealth that useful a thing to define; it's too vague. I'd like to have enough to live as I wish, and for me it's also important to keep in mind that a lot of people don't have the resources that I do. Where in there you call it "wealth" doesn't really matter to me.

student
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Re: How to define wealth

Post by student » Sat Apr 27, 2019 4:21 pm

Definition of wealth: I am middle class, so everybody who has more money than me is wealthy. This is a joke but I agree with others who said it is too vague. It is also relative. For example, if your net worth is $100,000, you are in the top 8.16% of the world. http://www.globalrichlist.com/wealth

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AerialWombat
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Re: How to define wealth

Post by AerialWombat » Sat Apr 27, 2019 4:34 pm

Given my past bouts with homelessness, I personally define “wealth” by the flexibility of my housing choices. I’ve never formally defined the levels, per se, but it’s clearly how I view it.

For example, I currently live in 3 to 3.5 star hotels for many months of the year. I could stretch it to 4 star and actually be OK (without impacting savings goals), but 5-star luxury resorts like the place I just spent one week, I couldn’t do that for months on end.
“Life doesn’t come with a warranty.” -Michael LeBoeuf

DrGoogle2017
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Re: How to define wealth

Post by DrGoogle2017 » Sat Apr 27, 2019 4:44 pm

Wealth means never having to say you’re sorry. Oops that love, Love a story I mean.

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KlingKlang
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Re: How to define wealth

Post by KlingKlang » Sat Apr 27, 2019 5:03 pm

For me the most important point in the Ben Carlson article was the penultimate paragraph:
The standard of living where you choose to reside can have a huge impact on how far any of these income or wealth numbers can get you. And how much or how little you choose to spend of that income or wealth also plays a role. Lifestyle inflation can be a killer if you’re not careful, no matter how much money you make.
In other words if you define wealth as being able to outspend everyone else you will never be wealthy.

trueblueky
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Re: How to define wealth

Post by trueblueky » Sat Apr 27, 2019 5:10 pm

"Annual income twenty pounds, annual expenditure nineteen six, result happiness. Annual income twenty pounds, annual expenditure twenty pound ought and six, result misery." -- Dickens

student
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Re: How to define wealth

Post by student » Sat Apr 27, 2019 5:10 pm

AerialWombat wrote:
Sat Apr 27, 2019 4:34 pm
Given my past bouts with homelessness, I personally define “wealth” by the flexibility of my housing choices. I’ve never formally defined the levels, per se, but it’s clearly how I view it.

For example, I currently live in 3 to 3.5 star hotels for many months of the year. I could stretch it to 4 star and actually be OK (without impacting savings goals), but 5-star luxury resorts like the place I just spent one week, I couldn’t do that for months on end.
Very impressive. I see from your other posts that you are doing very well. Congratulations.

Independent George
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Re: How to define wealth

Post by Independent George » Sat Apr 27, 2019 5:28 pm

Compared to most Bogleheads, I'm probably in the bottom 20% - modest income (22% bracket), "only" 10x annual expenses in my retirement accounts, six figure mortgage debt. When I compare myself to the average American, I'm extraordinarily wealthy, especially as compared to my income (I have met people earning far more to than myself who basically live paycheck to paycheck, and owe about as much in car loans as I owe in my mortgage).

I'm not sure where I fit on stage 2, because I select restaurants based on my ability to pay and my annual restaurant budget. I mean, I don't usually care about what individual items cost at a restaurant, but I do care about the overall cost at a restaurant, and tend to dine out only a handful of times a year at really nice restaurants because if I go out, I want to be impressed. Does the fact that I'm budgeting so carefully mean that I do care what it costs, or does the fact that I'm budgeting at the level of a Michelin 2-star mean that I don't care, especially since many of those places are price fixe? Or is level-2 supposed to mean you can eat at that level all the time without caring? Given that dinner for two can easily run to $800+ with drinks and gratuity, I'm not sure how many people can really afford to "not care" about blowing $80k/year going out to dinner twice a week. I'd estimate that requires at least $800k/year income or a $15M net worth.

Minty
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Re: How to define wealth

Post by Minty » Sat Apr 27, 2019 10:13 pm

I would define "wealthy" exclusively in financial terms. Health, friends, and family are sometimes said to be relevant to wealth, but to me, it distorts the meaning of the word to describe a miserable, lonely billionaire as something other than wealthy. "Wealthy" is not necessarily a synonym for having a meaningful life; I mean, if I made an appointment at "Regal Wealth Advisors" I wouldn't expect them to tell me to get to the gym more and think about how to be a better person even if, hypothetically, those acts would most improve my life. In any event, we need a concept of "this is where rich starts, financially speaking." My personal definition of wealth would have no relation to spending; a person who, say, lives exclusively and well on Social Security and a $6k annuity with no other liquid assets might be frugal and wise, financially independent, in a great position financially, etc. but they are not, as I see it, wealthy ("comfortable," maybe). Similarly, someone with a $500M annual burn rate and $1 Billion liquid today is wealthy, even if it is likely that they will not be for long. I would vote that "wealthy" starts at something like having a net worth of 50 times the median household income of the nation in which the individual lives, net of foreseeable expenses such as college or extraordinary medical or care costs.
Core Four with nominal bonds and TIPS.

bhsince87
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Re: How to define wealth

Post by bhsince87 » Sat Apr 27, 2019 10:25 pm

That seems like a ridiculous way to measure wealth.

Comparing restaurants and vacations is just another form of measuring success by consumerism.

The truly wealthy never have to eat in a restaurant or take a vacation.
"If ye love wealth better than liberty, the tranquility of servitude better than the animating contest of freedom, go home from us in peace." Samuel Adams

jbranx
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Re: How to define wealth

Post by jbranx » Sat Apr 27, 2019 10:35 pm

{I deleted a naked link. Rule 2b: refrain from posting naked links}

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munemaker
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Re: How to define wealth

Post by munemaker » Sat Apr 27, 2019 10:37 pm

WillRetire wrote:
Sat Apr 27, 2019 12:26 pm
Wealthy = being happy with what you have.

I know people who have high net worth but it isn't enough for them.
To me, if you have high net worth but are unhappy, you are still wealthy. I think wealth is a financial measure, not a measure of happiness.

socaldude
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Re: How to define wealth

Post by socaldude » Sat Apr 27, 2019 10:57 pm

Enough.

Topic Author
JGoneRiding
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Re: How to define wealth

Post by JGoneRiding » Sun Apr 28, 2019 12:00 am

student wrote:
Sat Apr 27, 2019 4:21 pm
Definition of wealth: I am middle class, so everybody who has more money than me is wealthy. This is a joke but I agree with others who said it is too vague. It is also relative. For example, if your net worth is $100,000, you are in the top 8.16% of the world. http://www.globalrichlist.com/wealth
I have meet a lot of people who say they are middle class but who are in fact wealthy! Some ridiculous so and then they just don't appreciate the rest of the real middle class doesn't have that kind of income!

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NotYourAverageJones
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Re: How to define wealth

Post by NotYourAverageJones » Sun Apr 28, 2019 4:36 am

How do we define wealth? Prob for us its more about having an overall sense of security, both emotionally and financially. But the literal term is so ambiguous because it holds such a different meaning to many different people. I think it's silly and irrelevant to rate or compare our personal success or try to define our idea of "wealth" against that of others because "Comparison is the Thief of Joy." Also, very few people tell the whole truth about themselves or their financial situation in the first place. Maybe because they only feel validated by having a certain bank balance. Society puts a lot of status on financial success, being this much or that much, so that creates a false narrative in our world around ones true wealth.

But after living in the UAE now for 10 years, I can tell you that the majority of people here are throwing around so much shade, its really all just smoke and mirrors. People are suffering financially everywhere, but they are spending a ton of money to convince people they probably don't like anyway (and themselves) that they are in the upper class section, when in reality, they are leveraged to the hilt and in debt up to their eyeballs. Bottom line: Most people aren't what they "post" to be and the only way anyone can achieve true wealth is to get honest with their finances and stop comparing themselves to everyone else. :wink:

We can relate to the article about not knowing or feeling like we are really sitting in the upper class section of this financial stadium. It has taken us a long time to accept just how truly well off we are, as compared to the vast majority of people we know today. Even when compared to all the so called "rich" people here in UAE, we are doing much better than most. We have been guilty in the past of comparing ourselves to those we thought were doing better, especially when we were living in So Cal where it feels like everyone around you has more money than you because it's so expensive to just exist there and everyone feels the need to "KUWTJ!"

In the end, it doesn't matter to us the label others want to give our situation: "rich, wealthy, upper class, etc." We are just grateful for what we have accomplished. We refuse to take any of it for granted or attempt to define it in such a way, as to present ourselves better than others. We honestly would rather have people label us as that " happy, kind, grateful, secure, generous, and fun-loving couple." :beer

jcar
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Re: How to define wealth

Post by jcar » Sun Apr 28, 2019 7:32 am

Wricha wrote:
Sat Apr 27, 2019 2:05 pm
Wealthy is having the cash flow from your investments to cover your lifestyle. To often the folks on this site focus on a net worth number (as if net worth is a consistent number for everyone) that means, you are on track, wealthy, retirement or some other goal. Check your goal against your cash flow number and you will have the answer.
I think this reply defines it well, at least for me
and the people I observe at my part time work, mostly retired folks looking to stay fit. Some comment they could care less about travel and spending money. They are enjoying grand children, visiting with like minded friends, etc. Then you have people who wish to see the world. As quoted, if they have the cash flow to attain their desires they are wealthy.

student
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Re: How to define wealth

Post by student » Sun Apr 28, 2019 7:57 am

A recent article on wealth and middle class with a number of links including the one from Pew Research. https://www.thestreet.com/personal-fina ... s-14833259

SQRT
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Re: How to define wealth

Post by SQRT » Sun Apr 28, 2019 8:24 am

NotYourAverageJones wrote:
Sun Apr 28, 2019 4:36 am
How do we define wealth? Prob for us its more about having an overall sense of security, both emotionally and financially. But the literal term is so ambiguous because it holds such a different meaning to many different people. I think it's silly and irrelevant to rate or compare our personal success or try to define our idea of "wealth" against that of others



In the end, it doesn't matter to us the label others want to give our situation: "rich, wealthy, upper class, etc." We are just grateful for what we have accomplished. We refuse to take any of it for granted or attempt to define it in such a way, as to present ourselves better than others. We honestly would rather have people label us as that " happy, kind, grateful, secure, generous, and fun-loving couple." :beer
I like these ideas as they reflect my views on the subject. I’m too busy enjoying whatever wealth I may have to participate in these silly comparisons and definitions. One thing that is pretty clear though is that American society is bifurcating into relatively rich and relatively poor, with the middle shrinking. Not a good trend.

masonstone
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Re: How to define wealth

Post by masonstone » Sun Apr 28, 2019 8:45 am

mrspock wrote:
Sat Apr 27, 2019 12:12 pm
delamer wrote:
Sat Apr 27, 2019 11:58 am
A physician couple with an annual income of $800,000 and a net worth of $10,000,000 is literally doing better financially than 99% of their fellow tax payers. But the difference between them and a techie who makes $6,000,000/year and has a net worth of $55,000,000 is astronomical. But most of us would consider them both wealthy. (The article argued that the latter should be much more heavily taxed, but I digress.)
Is it though? The techie might have a bigger home(s), nicer car and fly private... but I wouldn’t call that astronomical. Also, I know of no techies who make $6M/yr unless they are C-level or it was a buy-out situation, $1-2M yes (top 0.1% of engineers) ... not $6M.
I know of no techies making $1-2M and my sibling is a manager at FAANG company in silica valley.

Dandy
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Re: How to define wealth

Post by Dandy » Sun Apr 28, 2019 9:02 am

there are many ways to define wealth. If we stick to just financials i.e. not how many friends or loving relatives, neighbors etc you have -- then hear are some thoughts:

1. Do you have enough income you can rely on to support a reasonable life style? Pension, SS, Annuities, distributions.
2. Do you have enough reasonably liquid assets to cover some major unexpected expenses? I wouldn't consider a house a liquid but stock/bonds/mutual funds for this purpose I would.
3. Can your financials take a big hit and you would still be in good shape. Say a 50% drop in your investments.
4. Is you health insurance good enough to cover large one time or large ongoing expenses.
5. If you are withdrawing from your nest egg to support your current lifestyle is it 2.5% or less.
6. Is your debt minimal.

If you can say yes to all of the above I'd consider you wealthy.

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gilgamesh
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Re: How to define wealth

Post by gilgamesh » Sun Apr 28, 2019 9:21 am

JGoneRiding wrote:
Sat Apr 27, 2019 11:05 am
...... (Exhibit a the poster terrified her in laws with 700k liquid would run out and she would have to support them)

I may not know the word to use for that $700k, but I know irrelevant of whatever word you may want to use, that statement is incomplete without expenses. If one has a $300k/yr lifestyle then that $700k, whatever it’s called IS not enough.

So, whatever term you use for that $700k has to take into effect the expenses. If you think that $700k is wealth (otherwise you would not have picked that example) then the measure of that $700k on the individual is solely based on expenses.

WillRetire
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Re: How to define wealth

Post by WillRetire » Sun Apr 28, 2019 9:27 am

munemaker wrote:
Sat Apr 27, 2019 10:37 pm
WillRetire wrote:
Sat Apr 27, 2019 12:26 pm
Wealthy = being happy with what you have.

I know people who have high net worth but it isn't enough for them.
To me, if you have high net worth but are unhappy, you are still wealthy. I think wealth is a financial measure, not a measure of happiness.
Yes, but more precisely, wealth is a financial measure of SUSTAINABLE assets & income. If you have X and can live within or beneath your means with X and are happy with your lifestyle with X, then you are wealthy. If you have 10X and cannot live within your means on 10X, or are unhappy with your lifestyle under 10X, then I assert you are not wealthy. Wealthy is a long-term thing. High net worth is fleeting if you cannot live within or beneath your means, or if you are unhappy with your lifestyle.

Yellowhouse
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Re: How to define wealth

Post by Yellowhouse » Sun Apr 28, 2019 9:53 am

We live in a capitalistic society and that means the rich get richer. That's why they control the country's wealth to such a large degree. The working people might very well make good salaries but those salaries largely go to paying debt. Working people typically have a 1k-2k mortgage, a $500/mo car or truck payment and very often large student loan payments. That all comes off the top of their salary....little wonder why most people have such meager net worth.

A person making a 100k salary with the above expenses, has very, very little wiggle room to actually put away money to create wealth. Saving money is wealth in a nutshell. Making a fat paycheck is the primary tool to create wealth, but you MUST save a portion of it to eventually have wealth.

Many Americans make large paychecks but many don't save their money because of this consumerism world we live in.

sailaway
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Re: How to define wealth

Post by sailaway » Sun Apr 28, 2019 9:53 am

gilgamesh wrote:
Sun Apr 28, 2019 9:21 am
JGoneRiding wrote:
Sat Apr 27, 2019 11:05 am
...... (Exhibit a the poster terrified her in laws with 700k liquid would run out and she would have to support them)

I may not know the word to use for that $700k, but I know irrelevant of whatever word you may want to use, that statement is incomplete without expenses. If one has a $300k/yr lifestyle then that $700k, whatever it’s called IS not enough.

So, whatever term you use for that $700k has to take into effect the expenses. If you think that $700k is wealth (otherwise you would not have picked that example) then the measure of that $700k on the individual is solely based on expenses.
So if someone wastes a billion dollars, they were never wealthy?

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TheTimeLord
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Re: How to define wealth

Post by TheTimeLord » Sun Apr 28, 2019 10:19 am

It seems like this question unnecessarily asks the responder to compare their situation to others. People's dreams are killed by worrying about keeping up with the Jones'. To me the only amount you ever need to focus on is the amount you need to do what is important to you, whether that is $30,000/year or $500,000/year. Focus on you and what is important to you not where you rank in some no win game of who has the biggest pile.
IMHO, Investing should be about living the life you want, not avoiding the life you fear. | Run, You Clever Boy! [9085]

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gilgamesh
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Re: How to define wealth

Post by gilgamesh » Sun Apr 28, 2019 11:06 am

sailaway wrote:
Sun Apr 28, 2019 9:53 am
gilgamesh wrote:
Sun Apr 28, 2019 9:21 am
JGoneRiding wrote:
Sat Apr 27, 2019 11:05 am
...... (Exhibit a the poster terrified her in laws with 700k liquid would run out and she would have to support them)

I may not know the word to use for that $700k, but I know irrelevant of whatever word you may want to use, that statement is incomplete without expenses. If one has a $300k/yr lifestyle then that $700k, whatever it’s called IS not enough.

So, whatever term you use for that $700k has to take into effect the expenses. If you think that $700k is wealth (otherwise you would not have picked that example) then the measure of that $700k on the individual is solely based on expenses.
So if someone wastes a billion dollars, they were never wealthy?
They were wealthy when they didn’t spend any of it, but if they did they are not. See how spending defines everything, if not for “spending’, a billionaire is wealthy, but ‘spending’ the billion changed him from being wealthy to nothing. You are proving the point, ‘spending’ is integral to the question about ‘wealth’.

P.s: However , I have to say...this is assuming that $700k or $1B is ‘wealth’ - I didn’t say that. Whatever you wish to call that number, the weight/value of which can only be determined when spending is known.
Last edited by gilgamesh on Sun Apr 28, 2019 1:45 pm, edited 2 times in total.

KyleAAA
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Re: How to define wealth

Post by KyleAAA » Sun Apr 28, 2019 11:36 am

mrspock wrote:
Sat Apr 27, 2019 12:12 pm
delamer wrote:
Sat Apr 27, 2019 11:58 am
A physician couple with an annual income of $800,000 and a net worth of $10,000,000 is literally doing better financially than 99% of their fellow tax payers. But the difference between them and a techie who makes $6,000,000/year and has a net worth of $55,000,000 is astronomical. But most of us would consider them both wealthy. (The article argued that the latter should be much more heavily taxed, but I digress.)
Is it though? The techie might have a bigger home(s), nicer car and fly private... but I wouldn’t call that astronomical. Also, I know of no techies who make $6M/yr unless they are C-level or it was a buy-out situation, $1-2M yes (top 0.1% of engineers) ... not $6M.
Yeah, you’ll find a fair number of techie individual contributors who will pull in $600k-1mm depending on how good of a year they had and how well their stock performed, but $6mm is in CVP or successful startup founder range. There are some ICs who earn that much, but they are very rare. It is extremely possible for an IC to end up with a $30mm net worth in today’s dollars if they work from 22-65 just working at large tech companies.

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Re: How to define wealth

Post by GCD » Sun Apr 28, 2019 11:59 am

Yellowhouse wrote:
Sun Apr 28, 2019 9:53 am
We live in a capitalistic society and that means the rich get richer. That's why they control the country's wealth to such a large degree. The working people might very well make good salaries but those salaries largely go to paying debt. Working people typically have a 1k-2k mortgage, a $500/mo car or truck payment and very often large student loan payments. That all comes off the top of their salary....little wonder why most people have such meager net worth.

A person making a 100k salary with the above expenses, has very, very little wiggle room to actually put away money to create wealth. Saving money is wealth in a nutshell. Making a fat paycheck is the primary tool to create wealth, but you MUST save a portion of it to eventually have wealth.

Many Americans make large paychecks but many don't save their money because of this consumerism world we live in.
It's more like we live in a capitalistic society and that means the smart and disciplined get richer. Smart people don't bury themselves in student loan debt or buy things they can't afford. Even if you are dumb like me and slam yourself with student loan debt you can build your way out if you are disciplined.

With a 100K salary there is no excuse not to build wealth unless you have some hugely debilitating medical condition or something.

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Re: How to define wealth

Post by SQRT » Sun Apr 28, 2019 12:26 pm

TheTimeLord wrote:
Sun Apr 28, 2019 10:19 am
It seems like this question unnecessarily asks the responder to compare their situation to others. People's dreams are killed by worrying about keeping up with the Jones'. To me the only amount you ever need to focus on is the amount you need to do what is important to you, whether that is $30,000/year or $500,000/year. Focus on you and what is important to you not where you rank in some no win game of who has the biggest pile.
Agree. The constant comparing to others, criticizing those with no savings or who can’t retire, or who just generally spend more than them, etc is tiresome.

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AerialWombat
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Re: How to define wealth

Post by AerialWombat » Sun Apr 28, 2019 2:30 pm

student wrote:
Sat Apr 27, 2019 5:10 pm
Very impressive. I see from your other posts that you are doing very well. Congratulations.
Thanks. I'll never truly think like an affluent person, but I also never again desire to live in a van in the Boulder Library parking lot. :)
“Life doesn’t come with a warranty.” -Michael LeBoeuf

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Re: How to define wealth

Post by MJS » Sun Apr 28, 2019 10:59 pm

Abe wrote:
Sat Apr 27, 2019 1:11 pm
I'm sure most people here are familiar with the fisherman and the businessman story. If not you can read it here. There are several versions of the story but this one is as good as any:

https://paulocoelhoblog.com/2015/09/04/ ... sinessman/
Another take is about the fisherman's and the businessman's wives; one works hard from an hour before the fisherman gets up until he finally gets home; then she cleans up after him. Meanwhile, the other wife is going fishing, playing with her kids, drinking cocktails on the beach, then singing and dancing... At least part of the definition of wealth has to include the family.

One of the things I like about Fiddler on the Roof is that he defines wealth as leisure for his wife (well, "screaming at the servants day and night.")

NotTooDeepLearning
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Re: How to define wealth

Post by NotTooDeepLearning » Sun Apr 28, 2019 11:35 pm

Wealth is the amount of things you can afford to go without.

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Re: How to define wealth

Post by kcxie » Sun Apr 28, 2019 11:43 pm

Wealth is relative. If everyone around you have less money than you do then you are wealthy. If everyone around you have more money than you do then you are pretty poor. :happy

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