At what net worth are you considered wealthy ?

[Anonymous]

Anonymous wrote:People are confusing near-term liquid net worth with net worth. The most common DMV $5M net worth is:

* $2.5M home with $1.5M mortgage ($1M)
* $2M retirement funds
* $500K 529
$ $1.5M brokerage

Only the $1.5M is accessible. Risk-free that throws off $60K per year. The mortgage payment on the above is $110K per year. This means you need an income of $300K to live, minimum. That's not wealthy. At $10M, you're throwing off $260K / year. Now you're wealthy.

+1. Above is a good example.

[Anonymous]

Anonymous wrote:

Anonymous wrote:People are confusing near-term liquid net worth with net worth. The most common DMV $5M net worth is:

* $2.5M home with $1.5M mortgage ($1M)
* $2M retirement funds
* $500K 529
$ $1.5M brokerage

Only the $1.5M is accessible. Risk-free that throws off $60K per year. The mortgage payment on the above is $110K per year. This means you need an income of $300K to live, minimum. That's not wealthy. At $10M, you're throwing off $260K / year. Now you're wealthy.

According to this, I’m wealthy and then some.

[Anonymous]

Anonymous wrote:I think the debate between NW versus cash flow depends on where you are in your working career. The closer you get to the end of your career, cash flow becomes the chief concern, not building NW.

I am late 50s, and it’s all I think about. I have no pension, so actively selling no/low yield stocks( including tech) to buy individual bonds/CDs, to lock-in some income. My younger self would not be doing this. I don’t even consider my house in NW, b/c I am going to live in for likely another 10 years, so it’s really an expense to me.

Why would you not stay in equities?

[Anonymous]

Anonymous wrote:$10M Liquid

you could generate 300 - 500k in income fairly easily off that

If you have large pensions then I could argue 3-5M, assuming you wouldn't need to tap into your liquid assets

What if you have $7 million ? We sold our middle class home after 30 years and have no interest in buying another. We have zero debt. We are 55 and the kids have no student loans and each have about $1.5 million We have a kind of a large pension. It’s kind of like a guessing game on how much to spend.

[Anonymous]

Well Steve Jobs net worth went up way more after he died than was alive. His wife lives in the most expensive home in California currently.

So investing can start at anytime. My 22 year old staff member I had years ago was pretty rich. His great grandfather at height of Great Depression and Stock market sell off bought JP Morgan Stock as he thought it was impossible to fail and at time he was already old. He gave instructions to his kids to never sell and upon his kids death split it up among grandkids the stock certificates and tell them to not to sell. This was way back and my staff had the certificate in his vault and got huge dividend checks each quarter. For fun I remember he inherited it in 1985 and stock is up (1,907.37%) since 1985 and he has collected 160 dividend checks since then (well not checks anymore) but you get it.

His great grandfather invested as an old man.

He is dead but his investment lives on.

[Anonymous]

Anonymous wrote:

Anonymous wrote:I think the debate between NW versus cash flow depends on where you are in your working career. The closer you get to the end of your career, cash flow becomes the chief concern, not building NW.

I am late 50s, and it’s all I think about. I have no pension, so actively selling no/low yield stocks( including tech) to buy individual bonds/CDs, to lock-in some income. My younger self would not be doing this. I don’t even consider my house in NW, b/c I am going to live in for likely another 10 years, so it’s really an expense to me.

Why would you not stay in equities?

Are you serious ? Bonds are safer and generally have a higher yield, and I will need cash flow.

I am not totally out of stocks, but trimming high flyers.

[Anonymous]

Anonymous wrote:

Anonymous wrote:$10M Liquid

you could generate 300 - 500k in income fairly easily off that

If you have large pensions then I could argue 3-5M, assuming you wouldn't need to tap into your liquid assets

What if you have $7 million ? We sold our middle class home after 30 years and have no interest in buying another. We have zero debt. We are 55 and the kids have no student loans and each have about $1.5 million We have a kind of a large pension. It’s kind of like a guessing game on how much to spend.

You really want DCUM to confirm that you're wealthy and tell you how much you're allowed to spend?

[Anonymous]

Anonymous wrote:

Anonymous wrote:People are confusing near-term liquid net worth with net worth. The most common DMV $5M net worth is:

* $2.5M home with $1.5M mortgage ($1M)
* $2M retirement funds
* $500K 529
$ $1.5M brokerage

Only the $1.5M is accessible. Risk-free that throws off $60K per year. The mortgage payment on the above is $110K per year. This means you need an income of $300K to live, minimum. That's not wealthy. At $10M, you're throwing off $260K / year. Now you're wealthy.

+1. Above is a good example.

I don't count 529 in my analysis. That's my kids' money and I plan to spend it in a certain time for a specific use. I look at it as my kids' asset.

[Anonymous]

Anonymous wrote:People are confusing near-term liquid net worth with net worth. The most common DMV $5M net worth is:

* $2.5M home with $1.5M mortgage ($1M)
* $2M retirement funds
* $500K 529
$ $1.5M brokerage

Only the $1.5M is accessible. Risk-free that throws off $60K per year. The mortgage payment on the above is $110K per year. This means you need an income of $300K to live, minimum. That's not wealthy. At $10M, you're throwing off $260K / year. Now you're wealthy.

If that same person chose to live in a $1M house with no mortgage at all, would they be wealthy? Same net worth, same liquid savings, fewer debt obligations based on personal choices.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:$10M Liquid

you could generate 300 - 500k in income fairly easily off that

If you have large pensions then I could argue 3-5M, assuming you wouldn't need to tap into your liquid assets

What if you have $7 million ? We sold our middle class home after 30 years and have no interest in buying another. We have zero debt. We are 55 and the kids have no student loans and each have about $1.5 million We have a kind of a large pension. It’s kind of like a guessing game on how much to spend.

You really want DCUM to confirm that you're wealthy and tell you how much you're allowed to spend?

No. I want the person who told the person how much he could withdraw with $10 million what the numbers would be at 7 million. Just because I have money in the bank doesn’t mean I’m all that smart. I can’t figure it out.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:$10M Liquid

you could generate 300 - 500k in income fairly easily off that

If you have large pensions then I could argue 3-5M, assuming you wouldn't need to tap into your liquid assets

What if you have $7 million ? We sold our middle class home after 30 years and have no interest in buying another. We have zero debt. We are 55 and the kids have no student loans and each have about $1.5 million We have a kind of a large pension. It’s kind of like a guessing game on how much to spend.

You really want DCUM to confirm that you're wealthy and tell you how much you're allowed to spend?

No. I want the person who told the person how much he could withdraw with $10 million what the numbers would be at 7 million. Just because I have money in the bank doesn’t mean I’m all that smart. I can’t figure it out.

Between 3 and 4%. If you can get away with less, even better. In your case, it would be between $210K and $280K. Talk to a CPA about structuring it properly so taxes are minimized.

[Anonymous]

Anonymous wrote:People are confusing near-term liquid net worth with net worth. The most common DMV $5M net worth is:

* $2.5M home with $1.5M mortgage ($1M)
* $2M retirement funds
* $500K 529
$ $1.5M brokerage

Only the $1.5M is accessible. Risk-free that throws off $60K per year. The mortgage payment on the above is $110K per year. This means you need an income of $300K to live, minimum. That's not wealthy. At $10M, you're throwing off $260K / year. Now you're wealthy.

I’m single and have nowhere near the net worths listed in this thread. But I have always agreed with the point made in the above post, that the following two things make one feel poor, regardless of one’s net worth: having a big mortgage and having a lot of your money tied up in retirement accounts.

For these reasons, I’ve gone in the opposite direction: I paid off my mortgage and I don’t contribute to retirement accounts at all. My net worth is $1.2 million—a paid-off $550,000 condo and $650,000 in my brokerage account.

The $650,000 in brokerage can spin off $26,000 in income. And with no mortgage, I wouldn’t need to spend more than $50-$60,000 to have a great quality of life. That means I only need to plug a gap of $2-$3,000 per month, which is easy to do with any type of job.

Because of this, I don’t really fear job losses and such. I know people rave about the tax benefits of retirement accounts and the advantages of not paying off a mortgage, but I don’t know if they fully appreciate the quality-of-life advantages that come from my approach.

[Anonymous]

Anonymous wrote:

Anonymous wrote:People are confusing near-term liquid net worth with net worth. The most common DMV $5M net worth is:

* $2.5M home with $1.5M mortgage ($1M)
* $2M retirement funds
* $500K 529
$ $1.5M brokerage

Only the $1.5M is accessible. Risk-free that throws off $60K per year. The mortgage payment on the above is $110K per year. This means you need an income of $300K to live, minimum. That's not wealthy. At $10M, you're throwing off $260K / year. Now you're wealthy.

+1. Above is a good example.

Please. You don't have to have a $2.5 mil home to be "wealthy". Maybe get a cheaper house. Then you'd be more cash wealthy, and less house rich.

[Anonymous]

Anonymous wrote:

Anonymous wrote:People are confusing near-term liquid net worth with net worth. The most common DMV $5M net worth is:

* $2.5M home with $1.5M mortgage ($1M)
* $2M retirement funds
* $500K 529
$ $1.5M brokerage

Only the $1.5M is accessible. Risk-free that throws off $60K per year. The mortgage payment on the above is $110K per year. This means you need an income of $300K to live, minimum. That's not wealthy. At $10M, you're throwing off $260K / year. Now you're wealthy.

I’m single and have nowhere near the net worths listed in this thread. But I have always agreed with the point made in the above post, that the following two things make one feel poor, regardless of one’s net worth: having a big mortgage and having a lot of your money tied up in retirement accounts.

For these reasons, I’ve gone in the opposite direction: I paid off my mortgage and I don’t contribute to retirement accounts at all. My net worth is $1.2 million—a paid-off $550,000 condo and $650,000 in my brokerage account.

The $650,000 in brokerage can spin off $26,000 in income. And with no mortgage, I wouldn’t need to spend more than $50-$60,000 to have a great quality of life. That means I only need to plug a gap of $2-$3,000 per month, which is easy to do with any type of job.

Because of this, I don’t really fear job losses and such. I know people rave about the tax benefits of retirement accounts and the advantages of not paying off a mortgage, but I don’t know if they fully appreciate the quality-of-life advantages that come from my approach.

You missed out on the tax breaks by not contributing to your retirement account. Most people don't need to tap into those accounts until they retire, which for the most part, is after 59.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I think the debate between NW versus cash flow depends on where you are in your working career. The closer you get to the end of your career, cash flow becomes the chief concern, not building NW.

I am late 50s, and it’s all I think about. I have no pension, so actively selling no/low yield stocks( including tech) to buy individual bonds/CDs, to lock-in some income. My younger self would not be doing this. I don’t even consider my house in NW, b/c I am going to live in for likely another 10 years, so it’s really an expense to me.

Why would you not stay in equities?

Are you serious ? Bonds are safer and generally have a higher yield, and I will need cash flow.

I am not totally out of stocks, but trimming high flyers.

NP. I don't think I would say that bonds are necessarily safer because you are going to get killed by inflation if your bond allocation is too high. The main purpose of bonds is to stop investors from doing something stupid when the market is volatile. They are also extremely important if you retire at the wrong time, which will only be known in hindsight. If you bond allocation is too high, your withdrawal rate and the terminal value of your portfolio will be not so great. Maybe you are becoming more risk averse as you get older, which is pretty normal.