
For Millionaires ‘Wealthy’ Is $7.5 Million, Fidelity Says - acangiano
http://www.bloomberg.com/news/2011-03-14/comfort-level-for-some-millionaires-is-7-5-million-fidelity-survey-says.html
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elsewhen
I have heard elsewhere that people gnerally say that they would be "wealthy"
at twice their current net worth. So, I wasn't surprised to read that the
average net worth of the 1000 head's of household in the sample had a net
worth of $3.5MM.

~~~
petercooper
Though this rule falls down a bit when your net worth is negative ;-)

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sunchild
I've always put the low-end cutoff for "wealthy" at "can I comfortably live on
interest, assuming a reasonable annual return?"

~~~
splat
Unfortunately, your definition for "live comfortably" tends to change as you
accumulate more money.

~~~
DarkShikari
This leads to an interesting question that I've been wondering about lately.
But first some background.

One hacker that I work with is currently unemployed. He is _absolutely
brilliant_ and could easily land an incredibly good job at basically anywhere
he wanted. He's an expert in many widely-demanded but under-supplied
abilities, such as reverse engineering.

But he doesn't take a job. After college, he worked for a few years at a tech
company, then quit. Why? Because he could pay for his cheap apartment, food,
and internet access using interest on his investments and the periodic small
contract. To him, having a place to stay where he can play video games and
hack on cool projects was "living comfortably".

Now to me.

Over the past few years, I've gone from having practically no money (~$2000
total savings over an entire childhood) to having more than I know what to do
with -- through a combination of internships, then contract work, my current
job, and finally my startup. Now that I'm about to graduate from college, my
income will increase even more -- in large part due to no longer having to pay
for college. Of course, I'm probably still "poor" by HN standards.

But I still can't think of anything to spend it on. I haven't even considered
getting a car. I'm quite happy with my ~90 sq. ft. dorm room -- bigger just
means more work to clean it. I have a good laptop and some external hard
drives. I can afford the food I want.

If 1 million dollars were dumped on me tomorrow, I'd buy a new desktop
computer, invest a bit in my startup (on a real website, etc), stuff the rest
in my bank account, and go on with my life as normal.

But people I've worked with, even those near my age -- particularly at
startups -- _constantly_ talk about "what they'll do with the money". They'll
get a Ferrari or a BMW. They'll get that big house they always wanted. They'll
take a cruise in the Caribbean.

This sort of attitude consciously bothers me. I've experienced the same sort
of thing when visiting some mildly rich distant relatives in an expensive
country club -- I look around and see tons of money being "wasted". I know it
makes sense from _their_ perspective, but to me, it seems senseless.

... and this all makes me wonder: am I just weird? Or is there something more
to this?

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HeyLaughingBoy
No, you're not weird. Just at a different point on the Life Curve.

I've been a developer for about 20 years. When I got out of college I lived in
a crappy little apartment in a crappy neighborhood in a crappy town. And I
loved it. The job paid me to do stuff that I was already doing for free and
even though I didn't make much, I spent even less, so I was piling up more
money than I knew what to do with. Now, more stable and with a wife and
family, I couldn't imagine living like that ever again. It lost its appeal a
long time ago.

Why do we work? If we're being paid, what's wrong with spending to make
ourselves happy? You think a computer and a website are important to you, they
think Ferraris and cruises are important. Neither is "better," just different
and reflect different priorities.

Don't castigate people for spending what they can afford: it's their money to
do with as they wish. Especially don't think for a second that there is some
nobility in being poor, or thrifty. Few people are poor by choice and the
thrifty often would not be if they could afford to spend.

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daimyoyo
I'd need about $30mm. At that amount, I can have an income above the US median
off t-bills alone. Having said that, I'm sure if and or when I actually have
that kind of money, I probably wouldn't be so conservative with it, but that's
the baseline.

~~~
ChuckMcM
This is perhaps the interesting bit, using the 10 year t-bill rate to compute
what it would take to make the median income. (its not $30M at the moment
though, median income is $47,127 [1] federal, state, and other employment
taxes reduce that to under $40,000 (that would be your 'take home' pay)) You
will want health care however which depending on your age will add $500 -
$2500 a month. So more like $60K). Now 10 yr bill are currently at 3.25% so
you only need $1.85 million in 10 yr T-bills to pay you that amount of income.
$30M in t-bills is about $975K / year which is way above the median.

[1]
[http://www.census.gov/newsroom/releases/archives/income_weal...](http://www.census.gov/newsroom/releases/archives/income_wealth/cb10-144.html)

~~~
daimyoyo
I was actually basing the amount off the 1 yr. Does the gov't pay interest
yearly on t-bills or only once they mature?(sorry if this sounds stupid, but
I've never had enough $ to think about buying any)

~~~
ChuckMcM
Well the US Treasury sells T-bills every quarter, folks who have T-bills and
want to convert them into cash sell them pretty much at any time.

A treasury bill has a 'face value', like $10,000 which is what the bill will
be worth, and a maturity date which is when it will be worth that. If you buy
a T-bill you buy it at an 'auction' [1] in which you (typically) pay less than
the face value and you calculate what it would be worth when it matures, which
gives you the return. If you hold it until it matures your return is
'guaranteed'.

Bonds can be re-sold, and they are, so you can hold a bond for a while and as
interest rates change the 'value' of your bond changes because it has a fixed
maturity value and maturity date. So if you are building a treasury bond
'ladder' you take your money, divide it up into 'n' equal parts, and buy bonds
that are about to mature 'momentarily' (like this quarter), in 2 quarters, in
3 quarters, in a year, Etc until with the last little bit you buy bonds that
are brand new and mature in 10, 20, or 30 years (depending on your style). Now
every quarter you have mature bonds to turn in for cash, which you then use to
buy the same face value of bonds that mature in 10, 20, or 30 years. You will
have money left over and that is your 'income' every quarter. The face value
of all your bonds is 'fixed' and your income stream comes from turning over
mature bonds into newly issued ones.

This is exactly what a 'bond fund' does, it charges you to do all the
paperwork, it might use a mix of bonds to get a better rate of return. But if
its just you making a fund for yourself, pretty much any competent financial
agent can set it up for you. And while it is very safe (because it is very low
risk) it won't pay you as much as you might want. On the plus side with
"Treasury Inflation Protected Securities" (TIPS) you won't lose money due to
inflation either, with the caveat that the same guys who are paying you
interest are the arbiter of what is and what isn't 'inflation' and as many
have pointed out this is sort of a conflict of interest.

If you have $5M and give it to a decent manager (I know I know how do you find
'decent'?) and tell them "I want an upper middle class tax free income off
this with no risk to the principal." they should be able to oblige you.

(disclaimer, I'm not a financial analyst! seriously if you had that kind of
capital it really really helps to have someone who does this all day to help
you manage it, happy to recommend mine if you contact me off list.)

[1] <http://www.treasurydirect.gov/instit/auctfund/work/work.htm>

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TimothyFitz
Here's the original source, which has the raw data with less editorializing:
[http://www.fidelity.com/inside-fidelity/individual-
investing...](http://www.fidelity.com/inside-fidelity/individual-
investing/millionaire-outlook-2011)

And here's the same survey from last year for comparison:
[http://www.fidelity.com/inside-
fidelity/corporate/fidelity-s...](http://www.fidelity.com/inside-
fidelity/corporate/fidelity-study-millionaires-take-bold-action-to-reassess-
rebuild-wealth)

~~~
Jabbles
The title was based on this paragraph. Only those that did not already feel
wealthy contributed to the $7.5M figure.

 _among those who classified themselves as not feeling wealthy, the investable
asset level needed to begin to feel wealthy is $7.5 million.

Of the 58 percent of millionaires who say they feel wealthy -- up slightly
from 54 percent in 2009 -- they began to feel so at $1.75 million in
investable assets,_

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danielayele
Interesting how close this is to the statistical value of a life (dated, but
see: [http://www.huffingtonpost.com/2008/07/10/american-life-
worth...](http://www.huffingtonpost.com/2008/07/10/american-life-worth-
less_n_112030.html)).

