At what net worth are you considered wealthy ?

[Anonymous]

I'd say 10 million. We have 7.5 million and we're almost there.

[Anonymous]

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Anonymous wrote:$10M for a household. $3M for a forever single person with no kids.

Answers like this are so stupid. According to Kiplinger's, a NW of $2.5M puts you in the top 2% of all households. So by this PP's logic, a lot of the top 2% wealthiest households in the country aren't "wealthy."

https://www.kiplinger.com/personal-finance/605075/are-you-rich#:~:text=People%20with%20the%20top%201,The%20top%2010%25%20had%20%24854%2C900.

2.5M provides 80 - 120k/yr if done right. That is hardly wealthy.

You need to figure out how much money do you need to create a stream of income that allows you to live freely and not worry about money.

In many instances, 300k - 500k would allow people to live fairly freely and not worry to much about money. Travel, treating the kids, etc. That requires about $10M liquid.

why does it need to be liquid? You could own $10mm of real estate free and clear that puts of 6% and you are at $600k a year. If you bought with 50% debt @5.5% and $5mm of cash you would have ~$325k annually after paying your mortgage.

Please tell me where in the DMV real estate is throwing off 6%. That would mean a rent of $5000/mo for a $1M value home. That's... not the going rate. Commercial? That hasn't been doing so well the past few years, either.

What's the purpose of the ellipsis here?

The ellipsis is meant to point out that if you believe that you can have a RE portfolio in the DMV that throw off 6%, you are deluded. This region has terrible rent to property value ratios for landlords.

[Anonymous]

Anonymous wrote:

Anonymous wrote:I think it depends dramatically on age.

A 25 year old with a net worth of $750k is pretty wealthy, I think.

A 65 year old who is retiring this year with a net worth of $750k ($250k in savings and a $500k paid off house) is not.

Let's start with a recent retiree (where the bar is highest). A quick google search says that it's recommended you have 10x your income saved for retirement. An upper class income starts at... say, $250k. So that would mean $2.5 million. Throw in a paid off house valued at $500k, and I think $3 million sounds like the right cut off for wealthy at this age.

At age 50, the recommendation is six times your income. So, now that's $1.5 million. Your $500k house is also mostly paid off at this point, so let's call it $2 million

At age 30, the recommendation is your annual salary. So $250k, plus lets say you've paid off half your house, for another $250k, so $500k?

So I guess that's my bottom line:

Newly retired: $3 million or more
Age 50: $2 million
Age 30: $500k

But honestly, I look at income. If you throw your money away, even though you've been making a good income for years, you're still rich, you're just an idiot.

Lol that you think most 30-year-olds have homes that are 50% paid off.

PP here. No. I’m rounding and looking at defining wealthy. Fine, if you’ve got $100k in home equity at age 30, you can still be wealthy at $350k.

[Anonymous]

Anonymous wrote:Everyone has their own definition of wealthy. Surprised people call anything under 10M wealthy. I'd draw the line at 30M.

signed NW individual at 5.5M

10M at age 30, with all your kid and other expenses yet to incur, may not be, but at age 60, 10M is wealthy. No debt, house fully paid off over a decade ago, no interest in a second home, kids out of college, travel going to slow down in the next 10 years.

[Anonymous]

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Anonymous wrote:It depends on the assets. Net worth doesn’t make you wealthy. Cash flow makes you wealthy. Cash flow is more important than net worth.

You sound like someone who lives above your means. NW always connotes wealth....not how much you earn and spend. I know plenty who earn over $500K but have little to show for it....others earn far less and have a health NW

It's your ability to generate cash flow that makes you wealthy, not your net worth.
Person 1: No debt but only $10 in their account and no source of income. Positive net worth of $10. Can't pay rent and end up on the street and homeless.
Person 2: Owe $2M to a bank. Has assets that are valued at $1.5M. Has a job making $300k a year. Negative net worth -$500k. Live a good life in a nice house.

I'm sure you would rather be Person 1 because they have a positive net worth. lol
Net worth isn't everything.

If your net worth can't generate cash flow, it means nothing.

This is an extreme example. Unless it's stolen bitcoin on an USB or a rare diamond/art that cannot be sold your Person 1 scenario is unrealistic. While I get that a $10M business may not generate as much cash as, say, a stock portfolio, the owner will still be able to extract some cashflow out of it to sustain themselves. It would be a pointless business otherwise and not something I've encountered.

This example isn’t as extreme as you think. Do you know that many poor people have no debt? Because they can’t even borrow money. They live in poor condition with very little. Their net worth is positive though but insignificant. Go in poor communities and you’ll see many.
Why are they poor? Because they can’t earn or generate enough income to even start building wealth net worth.
Nobody in these communities thinks that they are better off than the millionaires across the river who are living large and have a lower net worth because they aren’t saving.

This “net worth” theory no longer works when you are talking about people of very different social classes.

No one is talking about people with a net worth of $10. We're talking about people with a net worth of multiple millions, at which point your money is typically working for you (interest, dividends, rental income, business income, etc). With enough millions working for you, you don't need wage income to live a nice life.

The net worth itself is just a mean to generate money and cash flow. That's why generating money and cash flow is always the most important thing.

If you have $10m invested in low performing stocks or investments that don't generate enough return, your net worth is high.
If I have $5m invested in investments that consistently generate huge profits, my net worth half yours but I'm actually better off than you.

A high net worth means nothing if it can't generate income and cash flow. If you can continuously generate income and cash flow, your net worth doesn't matter much. It only matters if your goal is to leave a fortune to your heirs.

[Anonymous]

Anonymous wrote:It depends on the assets. Net worth doesn’t make you wealthy. Cash flow makes you wealthy. Cash flow is more important than net worth.

Can’t DISagree more.

Wealth can generate cash flow, but typically cash flow if from a combination of W2 salary and investments. Most people owning a company worth $100M would be considered wealthy, even if they only get a salary of $100k and don’t sell any part of the business.

[Anonymous]

Anonymous wrote:

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Anonymous wrote:

Anonymous wrote:It depends on the assets. Net worth doesn’t make you wealthy. Cash flow makes you wealthy. Cash flow is more important than net worth.

You sound like someone who lives above your means. NW always connotes wealth....not how much you earn and spend. I know plenty who earn over $500K but have little to show for it....others earn far less and have a health NW

It's your ability to generate cash flow that makes you wealthy, not your net worth.
Person 1: No debt but only $10 in their account and no source of income. Positive net worth of $10. Can't pay rent and end up on the street and homeless.
Person 2: Owe $2M to a bank. Has assets that are valued at $1.5M. Has a job making $300k a year. Negative net worth -$500k. Live a good life in a nice house.

I'm sure you would rather be Person 1 because they have a positive net worth. lol
Net worth isn't everything.

If your net worth can't generate cash flow, it means nothing.

This is an extreme example. Unless it's stolen bitcoin on an USB or a rare diamond/art that cannot be sold your Person 1 scenario is unrealistic. While I get that a $10M business may not generate as much cash as, say, a stock portfolio, the owner will still be able to extract some cashflow out of it to sustain themselves. It would be a pointless business otherwise and not something I've encountered.

This example isn’t as extreme as you think. Do you know that many poor people have no debt? Because they can’t even borrow money. They live in poor condition with very little. Their net worth is positive though but insignificant. Go in poor communities and you’ll see many.
Why are they poor? Because they can’t earn or generate enough income to even start building wealth net worth.
Nobody in these communities thinks that they are better off than the millionaires across the river who are living large and have a lower net worth because they aren’t saving.

This “net worth” theory no longer works when you are talking about people of very different social classes.

No one is talking about people with a net worth of $10. We're talking about people with a net worth of multiple millions, at which point your money is typically working for you (interest, dividends, rental income, business income, etc). With enough millions working for you, you don't need wage income to live a nice life.

The net worth itself is just a mean to generate money and cash flow. That's why generating money and cash flow is always the most important thing.

If you have $10m invested in low performing stocks or investments that don't generate enough return, your net worth is high.
If I have $5m invested in investments that consistently generate huge profits, my net worth half yours but I'm actually better off than you.

A high net worth means nothing if it can't generate income and cash flow. If you can continuously generate income and cash flow, your net worth doesn't matter much. It only matters if your goal is to leave a fortune to your heirs.

DP. Do you actually believe what you are saying or just being obtuse? Which idiot is capable of accumulating $10M do you know of that's sleeping on the streets or going hungry because his assets are not generating enough cashflow? Assume for a minute it's all in Amazon stock, no dividend - sure, but definitely you can sell a few shares to buy bread, can't you? The smart move would be maximize net worth over the long haul while generating just enough income/liquidating just enough equity to keep up your lifestyle. And NO. If you have $5M and I have $10, I'm better off than you. Twice as much. 5 times two = 10.

[Anonymous]

Anonymous wrote:

Anonymous wrote:It depends on the assets. Net worth doesn’t make you wealthy. Cash flow makes you wealthy. Cash flow is more important than net worth.

Can’t DISagree more.

Wealth can generate cash flow, but typically cash flow if from a combination of W2 salary and investments. Most people owning a company worth $100M would be considered wealthy, even if they only get a salary of $100k and don’t sell any part of the business.

Sorry, cash flow PP is correct and you're wrong. Apart from rapid growth companies or during bubble periods, a business can generally only be worth $100M if it is generating lots of cash. Companies are valued at multiples of the cash they throw off - that's Finance 101. As the owner, you own that huge stream of incoming cash. The fact that you only take a small portion of it as salary is a tax-minimization strategy but doesn't mean you don't have great cash flow.

Cash flow trumps net worth.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:It depends on the assets. Net worth doesn’t make you wealthy. Cash flow makes you wealthy. Cash flow is more important than net worth.

Can’t DISagree more.

Wealth can generate cash flow, but typically cash flow if from a combination of W2 salary and investments. Most people owning a company worth $100M would be considered wealthy, even if they only get a salary of $100k and don’t sell any part of the business.

Sorry, cash flow PP is correct and you're wrong. Apart from rapid growth companies or during bubble periods, a business can generally only be worth $100M if it is generating lots of cash. Companies are valued at multiples of the cash they throw off - that's Finance 101. As the owner, you own that huge stream of incoming cash. The fact that you only take a small portion of it as salary is a tax-minimization strategy but doesn't mean you don't have great cash flow.

Cash flow trumps net worth.

Actually the business in this example has good cash flow, the owner does not. Most businesses of $100m are not sole ownership so you have other complicating factors as well to get access to that cash. A similar example was made earlier of a $30m business owner having no cash flow because his net worth is tied up in the business. Is the business owner wealthy or not, which side are you on?

[Anonymous]

To me, wealthy means being independent of a job. How much wealth you need to achieve job independence varies based on your expenses. I like a nice lifestyle, but I don’t need country clubs, golf rounds, and new luxury cars every 3 years. I’m 54 with a paid house and $200k/year of guaranteed spending money indexed to inflation. To me, I’m wealthy.

[Anonymous]

Anonymous wrote:To me, wealthy means being independent of a job. How much wealth you need to achieve job independence varies based on your expenses. I like a nice lifestyle, but I don’t need country clubs, golf rounds, and new luxury cars every 3 years. I’m 54 with a paid house and $200k/year of guaranteed spending money indexed to inflation. To me, I’m wealthy.

Congratulations! How'd you manage that? Pension? Annuities?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:It depends on the assets. Net worth doesn’t make you wealthy. Cash flow makes you wealthy. Cash flow is more important than net worth.

Can’t DISagree more.

Wealth can generate cash flow, but typically cash flow if from a combination of W2 salary and investments. Most people owning a company worth $100M would be considered wealthy, even if they only get a salary of $100k and don’t sell any part of the business.

Sorry, cash flow PP is correct and you're wrong. Apart from rapid growth companies or during bubble periods, a business can generally only be worth $100M if it is generating lots of cash. Companies are valued at multiples of the cash they throw off - that's Finance 101. As the owner, you own that huge stream of incoming cash. The fact that you only take a small portion of it as salary is a tax-minimization strategy but doesn't mean you don't have great cash flow.

Cash flow trumps net worth.

Actually the business in this example has good cash flow, the owner does not. Most businesses of $100m are not sole ownership so you have other complicating factors as well to get access to that cash. A similar example was made earlier of a $30m business owner having no cash flow because his net worth is tied up in the business. Is the business owner wealthy or not, which side are you on?

I posted a week or so ago. My next worth is $36M at 45. For what it’s worth, I think cash flow is more important than net worth. It is in fact that I have always considered cash flow far more important that I accumulated the net worth.

[Anonymous]

Anonymous wrote:I am $3M at 40. When DCUM discusses HHI, we’re barely middle class ($250k). When we talk about net worth, then I’m borderline wealthy.

Yep, describes me as well.
My wife thinks we are wealthy

[Anonymous]

Anonymous wrote:To me, wealthy means being independent of a job. How much wealth you need to achieve job independence varies based on your expenses. I like a nice lifestyle, but I don’t need country clubs, golf rounds, and new luxury cars every 3 years. I’m 54 with a paid house and $200k/year of guaranteed spending money indexed to inflation. To me, I’m wealthy.

What you described is financial independence. Congrats on achieving financial independence, but it’s not the same as being wealthy.
If you live in DC, I’m sure you know that $200k is just a middle class income.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:It depends on the assets. Net worth doesn’t make you wealthy. Cash flow makes you wealthy. Cash flow is more important than net worth.

You sound like someone who lives above your means. NW always connotes wealth....not how much you earn and spend. I know plenty who earn over $500K but have little to show for it....others earn far less and have a health NW

It's your ability to generate cash flow that makes you wealthy, not your net worth.
Person 1: No debt but only $10 in their account and no source of income. Positive net worth of $10. Can't pay rent and end up on the street and homeless.
Person 2: Owe $2M to a bank. Has assets that are valued at $1.5M. Has a job making $300k a year. Negative net worth -$500k. Live a good life in a nice house.

I'm sure you would rather be Person 1 because they have a positive net worth. lol
Net worth isn't everything.

If your net worth can't generate cash flow, it means nothing.

This is an extreme example. Unless it's stolen bitcoin on an USB or a rare diamond/art that cannot be sold your Person 1 scenario is unrealistic. While I get that a $10M business may not generate as much cash as, say, a stock portfolio, the owner will still be able to extract some cashflow out of it to sustain themselves. It would be a pointless business otherwise and not something I've encountered.

This example isn’t as extreme as you think. Do you know that many poor people have no debt? Because they can’t even borrow money. They live in poor condition with very little. Their net worth is positive though but insignificant. Go in poor communities and you’ll see many.
Why are they poor? Because they can’t earn or generate enough income to even start building wealth net worth.
Nobody in these communities thinks that they are better off than the millionaires across the river who are living large and have a lower net worth because they aren’t saving.

This “net worth” theory no longer works when you are talking about people of very different social classes.

No one is talking about people with a net worth of $10. We're talking about people with a net worth of multiple millions, at which point your money is typically working for you (interest, dividends, rental income, business income, etc). With enough millions working for you, you don't need wage income to live a nice life.

The net worth itself is just a mean to generate money and cash flow. That's why generating money and cash flow is always the most important thing.

If you have $10m invested in low performing stocks or investments that don't generate enough return, your net worth is high.
If I have $5m invested in investments that consistently generate huge profits, my net worth half yours but I'm actually better off than you.

A high net worth means nothing if it can't generate income and cash flow. If you can continuously generate income and cash flow, your net worth doesn't matter much. It only matters if your goal is to leave a fortune to your heirs.

DP. Do you actually believe what you are saying or just being obtuse? Which idiot is capable of accumulating $10M do you know of that's sleeping on the streets or going hungry because his assets are not generating enough cashflow? Assume for a minute it's all in Amazon stock, no dividend - sure, but definitely you can sell a few shares to buy bread, can't you? The smart move would be maximize net worth over the long haul while generating just enough income/liquidating just enough equity to keep up your lifestyle. And NO. If you have $5M and I have $10, I'm better off than you. Twice as much. 5 times two = 10.

You would be surprised at the number of people that are squandering millions because they are inept at generating income.
Having assets doesn’t necessarily means they automatically generate income. Generating cash flow doesn’t happen magically. It’s a skillset. The most important one. It’s what enables you to grow your net worth. That’s why cash flow is always more important than et worth.
You inherit $10m and inherit $5m. You have double my net worth.
You are inept and make bad investments that only give you a 3% yearly ROI
I’m more savvy and make investments that give me a 20% yearly ROI
Your net worth is higher but sorry but I’m way better off that you.

It’s always your ability to generate cash flow that is more important.