

What is Wealth in America? - SanjeevSharma
http://www.forbes.com/global/2011/1010/opinions-innovation-rules-wealth-america-rich-karlgaard.html

======
0x12
If you still look at the prices of the stuff you intend to buy then you're not
rich.

Once you stop looking at prices you're rich, no matter how much actual money
you've got.

~~~
tomjen3
That is an interesting notion but I don't agree with it.

You can not look at the price for stuff for a long time without having that
much money as long as you stay away from cars, houses, etc.

On the other hand even if you have $100 million (which would make you rich in
most peoples books) you can waste that in a couple of years buying homes and
planes.

If you actually have so much money you can buy planes and houses without
worrying about it for the rest of your live then you would be among the top of
the fortune 100 list.

~~~
0x12
You can get rid of any amount of money by wasting it.

But if you live a normal life with normal desires then a couple of million
will go a long long way towards realizing your every wish, except for the
absurd.

Your own plane = extravagance, multiple houses ditto.

------
bediger
Great snakes! _That's because $100 million is really a 'tweener number: You
can be Richie Rich among your upper-middle-class friends or a hanger-on in the
superrich crowd._

It takes tens of millions to be an upper-middle-class person? That would be
news to most of us, and to the IRS, I bet.

It appears that this whole article is skewed by the editorialist's particular
place in the very rich of society. I think that everything else he writes
should be examined carefully.

~~~
cellis
Yeah, I think he meant that $100 million makes you richie rich among the
_HNWI_ set, just "one of the guys" in the _UHNWI_ set, and downright poor in
the billionaire set.

I'm pretty sure being worth $100 million makes you a serious "What-are-you-
doing-here?"/"superrich" among upper middle class (folks making < $250k/yr).

------
rhymeswithcycle
_Two million bucks is the great dividing line between middle-class comfort and
worry in America right now._

Is this irony or just staggering cluelessness? A family net worth of $2
million puts you in the top few percent.

(From <http://www.federalreserve.gov/econresdata/scf/scf_2009p.htm>, it's
somewhere above the 95th percentile of family wealth in 2009)

~~~
dspeyer
I think this is assuming you don't work. If you exert any effort to support
yourself, you are by definition working class.

------
iamdev
Keep in mind that Forbes (and this author) live in a world where people make
money almost exclusively via cash investments. Given THAT world-view, the
article makes more sense, and $2M is indeed a dividing line between classes.

------
tedsuo
I like how in the end the whole article boils down to a potshot at police and
firefighters for wanting pensions. You stay classy, forbes.

~~~
scarmig
The beginning shot at "Ben Bernanke dollars" really turned me off, as
inflation is at a historical nadir now (to the detriment of the country).
Interesting article, though, if you can look past Forbes' political
Tourette's.

------
corecirculator
"A million dollars then would be about $20 million today, which is,
interestingly, $1 million a year at a 5% aftertax return."

5%?? Does anyone know what investment is he talking about?

~~~
Lightbody
5% is pretty conservative, especially if you're in it for the long haul. If
you look at any 30 year average pretty much since 1920, it tends to be 9% or
more:

[http://www.getrichslowly.org/blog/2008/12/16/how-much-
does-t...](http://www.getrichslowly.org/blog/2008/12/16/how-much-does-the-
stock-market-actually-return/)

~~~
TDL
Please, please do not use 9% as your expected investment return. The numbers
touted over the past decade & a half are mostly an artifact of the post WWII
period.

Furthermore, consider the demographic issue of boomers retiring. These boomers
are forced sellers, in other words returns will be muted for the foreseeable
future because of the larger class of people who will sell equities in order
to fund their retirements.

The equity risk premium is closer to 4% over cash, which in today's markets
means your expected returns should be between 4.25% & 5%.

Regards, TDL

~~~
Lightbody
I disagree.

If you include tricks that most working class doesn't have the ability to pull
off effectively, I believe that the returns will likely continue at that rate,
and so does my financial advisor. Stuff like tax harvesting, margin borrowing,
offsetting dividends with margin interest, carrying forward capital losses
indefinitely, etc.

The simple fact that the majority of the population can't do these things
means you get _some_ premium over "regular" investments like mutual funds,
CDs, and cash.

That said, it's perfectly fine for us to disagree on this, but no need to be
rude (or down vote :P) since really none of us will know who wins this debate
for 30 years :)

~~~
TDL
It looks as though you are taking a much more sophisticated approach to
investments. In which case, you are current to have higher expectations. I was
more reacting to the general belief among asset managers where they assume
they can average 9% by doing little work.

We actually don't disagree, as it were. As long as you are systematic in your
approach, continuously question your assumptions, & constantly look for "what
ifs".

I agree with your last statement as well.

Regards, TDL

------
dspeyer
> the chief technology officer ... of a tech startup ... might own a golf
> membership or two at fancy clubs, costing $300,000 each

Really? This strikes me as rather implausible, and makes me doubt a lot of the
other claims.

~~~
mseebach
You missed the bit where the startup was sold to Google for $2 billion.

------
SanjeevSharma
Very interesting, all the comments this post has received. I posted this link
on HN because I guessed that several readers here are entrepreneurs like
myself, who would one day like to be amongst the 'rich' (or according to the
articles author 'upper middle class') and would like to know how that segment
of society lives. I had no intention of starting a discourse on class warfare
;)

On the other hand, personally I found this article to be extremely instructive
on the relationship between 'net worth' and 'income'. As someone who has
worked a job all my life, till date, I have always looked as my salary as my
measure of how well I was doing financially. This article made me take an
alternative perspective and look at 'net worth'. If and when I decide to stop
working for money (side note - someone said Steve Jobs worked so he was middle
class. He worked, yes, but I am sure it was not for money! He was Rich.) I
would like to still have cash flow coming in from my investments and other
passive sources. I believe that is what the author is getting to. If that
amount at which I can stop working for money is $100,000 per year, I need to
have $2 million in net worth; for an income of $1 million (whew!), I need to
have $20 million, and so forth...

------
Gravityloss
I was expecting a socio-philosophical analysis of why schools are being closed
down, the government and people are becoming indebted, yet supposedly the
wealth has multiplied in the recent decades etc etc.

But instead you get counting of money, like kids do when they're maybe ten:
how much money everyone's daddy and mommy have.

What is wealth in America? Having more money than others.

------
ThisIBereave
You really have to be a member of the clueless aristocrat club to write for
Forbes.

"Two million bucks is the great dividing line between middle-class comfort and
worry in America right now. That $2 million is $100,000 in income, if you base
it on an aftertax 5%."

Obviously everyone in the middle class is sitting on $2 million in wealth.

~~~
nfriedly
It took me a second to understand what he was saying: $2 million _invested_ at
a 5% return after tax means that you get ~$100,000 _per year income from the
investment_. That should be enough to live a middle-class lifestyle _without
having to work._

------
juxta
I always had this discussion with friends. Let's say you had Bill Gates money
- it would be very very very hard for him to use up all his money even if he
kept buying up things (Mind you - giving it all away is not included). Imagine
how hard it would be to use up $50 billion?

------
michaelochurch
Someone preserve this so that when TSHTF, Paris 1793 style, we can see what
conditions led to it.

 _That's because $100 million is really a 'tweener number: You can be Richie
Rich among your upper-middle-class friends or a hanger-on in the superrich
crowd._

Ok, this is stupid on so many levels. First among them is that the difference
between upper-middle-class and upper class is not, in reality, based on an
income threshold. Steve Jobs was a billionaire and solidly middle-class. He
worked too hard. Bill Gates is possibly lower-upper but he had to push himself
into the right circles to get there.

The upper class (the real one) is a well-connected, socially closed set of
parasitic people who peddle social connections and influence as a means of
sustaining their insanely expensive lifestyles. They generally have the
resources to accrue $1-2 million per year without really working, just by
selling and exploiting their social connections, but they aren't all in the
$50m+ net worth crowd. Just like us, some of them negative net worth. In their
cases, it's usually a consequence of doing seriously stupid shit.

You can separate the lower class from the middle class based on education,
income, and job prestige because the middle class's values are defined based
on an ethic of _production_ and these are taken as evidence of a productive
life. The middle-class line corresponds to an income around $100,000 per year
per adult at age 40, adjusted for cost of living and job prestige. (Yes, this
means that 50th-percentile is not "middle class"; society is pyramidal.) The
upper class, by contrast, defines itself based on an ethic of _consumption_
\-- materially speaking and in terms of social access (the ability to consume
the attention of important people). Different things entirely.

------
smallegan
It would be interesting to see Forbes 400 adjusted for local economy. For
instance, Warren Buffett who spends most of his time in Omaha certainly gets
more bang for his buck than the Billionaires that live in Silicon Valley.

~~~
wan23
Once you're at that level, differences between local economies are such a
small percentage of your net worth that it really doesn't matter.

~~~
cellis
Exactly. Billionaires are truly international citizens, shifting their wealth
to the most amenable climates (often literally, e.g. Florida), so few of them
will be truly invested enough in a certain locale for cost of living to
matter.

And if they are, well then they own the entire town, so they definitely don't
care.

------
Hitchhiker
[http://1.bp.blogspot.com/_bTbM8lbUTLU/S8dg-
BMfi_I/AAAAAAAAAD...](http://1.bp.blogspot.com/_bTbM8lbUTLU/S8dg-
BMfi_I/AAAAAAAAADU/kuY2v3az_Ws/s400/osc.JPG)

source : <http://samroweis1972-2010.blogspot.com>

~~~
Hitchhiker
Perhaps, the down-votes have a point.. I insulted Sam's memory by connecting
an incisive picture to this link from Forbes. Perhaps, I should have just left
the picture unattributed.

Sorry about that.. it was induced by strange inexplicable feelings of sadness
combined with sincere revulsion.

Interesting guidelines here ( that often seem to be ignored ) :

" Off-Topic: Most stories about politics, or crime, or sports, unless they're
evidence of some interesting new phenomenon. Videos of pratfalls or disasters,
or cute animal pictures. If they'd cover it on TV news, it's probably off-
topic. "

<http://ycombinator.com/newsguidelines.html>

I guess, there is no cure for Eternal September.

