At what net worth are you considered wealthy ?

[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.

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 true. I’d still have trouble sleeping if I was $2M in debt though. To me, real wealth means high net worth, solid cash flow, and little to no debt. You can’t go bankrupt if you don’t owe anyone anything.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Our NW is around 3M if you include real estate. We are 38 (me) and 42 (DH). I don't consider us wealthy because we have to keep working to maintain that and our lifestyle. In other words, our "wealth" depends on our current incomes and that to me is not true wealth.

I was walking with a friend today who has a trust fund. The trust pays for her children's private schools, their expensive home, multiple vacations, etc. She doesn't work and her husband basically doesn't either.

I asked her point blank if she will ever need to work. She basically said she lives off the interest of the trust, so no. This is multiple thousands of dollars a month of expenses we are talking about.

That to me is true wealth.

You have to keep working to maintain your current lifestyle means you are not wealthy? What makes you think your lifestyle won’t change as you accumulate more money?

Your friend has significantly more than 3M in her trust if it throws off enough money to maintain the same lifestyle you have.

That's exactly my point. She probably has 30M in her trust, generating 2M a year in interest alone. That's true wealth. Forget our 3M and still having to work.

[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.

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.

[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.

If your net worth is high enough, cash flow doesn't matter. You can draw indefinitely from your savings and investments.

Cash flow always matter. Net worth doesn't pay bill. Your assets may not be liquid.
My neighbor owns a business. The book value of the business is about 30 millions.
His net worth is high right? But his kids are starting college and he worrying about how he's gonna pay for it because they don't have enough cash on hand to cover the costs.
He doesn't want to sell his business. He may have to borrow money. That's why cash flow is important.

Of course net worth can pay the bills, your friend can easily borrow for cash flow.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Our NW is around 3M if you include real estate. We are 38 (me) and 42 (DH). I don't consider us wealthy because we have to keep working to maintain that and our lifestyle. In other words, our "wealth" depends on our current incomes and that to me is not true wealth.

I was walking with a friend today who has a trust fund. The trust pays for her children's private schools, their expensive home, multiple vacations, etc. She doesn't work and her husband basically doesn't either.

I asked her point blank if she will ever need to work. She basically said she lives off the interest of the trust, so no. This is multiple thousands of dollars a month of expenses we are talking about.

That to me is true wealth.

You have to keep working to maintain your current lifestyle means you are not wealthy? What makes you think your lifestyle won’t change as you accumulate more money?

Your friend has significantly more than 3M in her trust if it throws off enough money to maintain the same lifestyle you have.

That's exactly my point. She probably has 30M in her trust, generating 2M a year in interest alone. That's true wealth. Forget our 3M and still having to work.

So 30m is true wealth, seems reasonable. Maybe you will feel wealthy once you accumulate that much from your working income and investments.

[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.

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.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:For what its worth, I am a "younger" financial advisor and $10M is our "number." It would allow our lifestyle to remain the same even if our kids are younger, private school, etc.

Whenever we that number I am done. For me, there is no point in creating much more wealth. I do not care for multiple homes, fancy cars, etc. I just want to have the time with my wife and kids. Volunteer, Coach, etc

I could do all that on less than half that number, easily.

You can do all of this out of pocket on $150k a year? (5M @ 3% withdrawal)?

Yeah. In a L/MCOL area, though.

But the whole idea of being "wealthy" is that your not confined to a LCOL. You can do/live where you want.

$5M does not allow that

I would still live in my LCOL area if I had $100M. Wealth means different things to different people.

You don’t have the option to live anywhere though, $5M means you’re happy and live a great life..with constraints.

Dumb answer. There's no limit to what "constraints" means. For some people used to traveling in a private jet, any other method of travel - even first class on a commercial flight - would be an unacceptable constraint.

And that is why $10m is the entry point for wealthy.

$50m and you start being able to have FlexJet memberships
$100M + starts with yachts

$5M isn’t much other than a very comfortable retirement.

[Anonymous]

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.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

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.

[Anonymous]

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.

[Anonymous]

Income can stop without wealth.

With wealth, income can continue in perpetuity. You're not rich unless you have wealth.

Income can get you wealthy but only if you are smart and diligent.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

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?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:For what its worth, I am a "younger" financial advisor and $10M is our "number." It would allow our lifestyle to remain the same even if our kids are younger, private school, etc.

Whenever we that number I am done. For me, there is no point in creating much more wealth. I do not care for multiple homes, fancy cars, etc. I just want to have the time with my wife and kids. Volunteer, Coach, etc

If my financial advisor's goal is to have $10M, I would feel like I am getting screwed. You must work at one of those big box companies.

You would be surprised. Groups throw a lot of money around to get reoccurring cash flow..it's the exit strategy.

Ahh.... you sell annuities.

DP: now that rates are going up annuities can start to make sense for the first time in decades. We're looking to park perharps 15-20% of our assets there to create our own pension starting 10 years from now.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

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?

DP: To emphasize incredulity?

[Anonymous]

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.