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View Full Version : Economics $7M not enough to be rich,


Cave Johnson
03-14-2011, 11:25 AM
say U.S. millionaires. Pity the workaday slob with only $5M in the bank.

http://news.yahoo.com/s/nm/us_fidelity_survey;_ylt=ApIlYQsHr947qmW1L.tYgJ6s0NUE;_ylu=X3oDMTNtZ2ZwMmtwBGFzc2V0A25tLzIwMTEwMzE0L3 VzX2ZpZGVsaXR5X3N1cnZleQRjY29kZQNtb3N0cG9wdWxhcgRjcG9zAzgEcG9zAzUEcHQDaG9tZV9jb2tlBHNlYwN5bl9oZWFkbG luZV9saXN0BHNsawN1c21pbGxpb25haXI-

A million dollars ain't what it used to be.

More than four out of ten American millionaires say they do not feel rich. Indeed many would need to have at least $7.5 million in order to feel they were truly rich, according to a Fidelity Investments survey.

Some 42 percent of the more than 1,000 millionaires surveyed by Fidelity said they did not feel wealthy. Respondents had at least $1 million in investable assets, excluding any real estate or retirement accounts.

"Every person in the survey is wealthy," said Sanjiv Mirchandani, president of National Financial, a unit of Fidelity. "But they are still worried about outliving their assets."
The average age of respondents was 56 years old with a mean of $3.5 million of investable assets. The threshold for "rich" rose with age.

"They compare themselves to their peer group ... and they are also thinking about the long period they will have in retirement and want more assets" to fund their lifestyle, said Michael Durbin, president of Fidelity Institutional Wealth Services.
Still, millionaires are slightly more optimistic now than they were in 2009, when 46 percent did not feel wealthy.

Respondents were also more optimistic about the U.S. economy. While they thought the current U.S. economy remained very weak, they think it will improve by the end of this year.

Fidelity noted the wealthiest 5 percent of Americans hold more than 55 percent of the nation's wealth.

BucEyedPea
03-14-2011, 11:34 AM
So what? I smell envy and jealousy.

Besides, with inflation why would it be enough.

Dave Lane
03-14-2011, 11:36 AM
I used to consider the net worth baseline for wealth at $10 million. Now I suppose it's more like 25 million before you can be declared truly wealthy. Just my opinion.

Okie_Apparition
03-14-2011, 11:40 AM
The surf children's faces were smeared with elderberry jam. They begged at my feet for the coin that rattled in my pocket. I loved it when their little hands grabbed at my crotch.

chiefsnorth
03-14-2011, 11:42 AM
It all depends on what the money is in, how safe the value of these things is, and what your lifestyle is.

Having a net worth of a million or more doesn't mean you live a "wealthy lifestyle" like an NBA player. Most people who reach that level didn't get there by thinking "screw it, I'm rich, spend faster." I believe them when they say they aren't complacent yet because complacency is not who they are.

HonestChieffan
03-14-2011, 11:42 AM
7 mill invested today...Im sure others would have a different number but say 4% income generated you have 280 grand gross income, after taxes more like 130.

The study is not that big a surprise. Plus we have no idea what debt these people carry . A Big debt service and these folks may have serious cash flow issues.

2bikemike
03-14-2011, 12:07 PM
Well that trashes my theory of needing 3 Mil. so I can retire and be comfortable.

Seriously though with my life style and ideals I think I would be ok living the rest of my life with 2 to 3 Mil. in investible assets. I would also be able to leave a nice little legacy for my kids.

Rain Man
03-14-2011, 12:08 PM
If you have a million dollars and you put it in treasuries or CDs, you're getting something like 1% interest, right? So a retired person with a million dollars is making an income of $10,000 a year. If they're somehow getting a 4 percent return, that's $40,000 a year.

A million dollars is a long way from being rich now.

Brock
03-14-2011, 12:10 PM
If you have a million dollars and you put it in treasuries or CDs, you're getting something like 1% interest, right? So a retired person with a million dollars is making an income of $10,000 a year. If they're somehow getting a 4 percent return, that's $40,000 a year.

A million dollars is a long way from being rich now.

Or if you put it in the market and managing it, you're probably making 7-12 percent.

Saul Good
03-14-2011, 12:13 PM
Or if you put it in the market and managing it, you're probably making 7-12 percent.

If you invested it ($1,000,000) in 2007, you're still down 15%. If you spend 80,000 per year, congratulations, half of your life savings is gone.

Rain Man
03-14-2011, 12:15 PM
Or if you put it in the market and managing it, you're probably making 7-12 percent.

Really? I kind of thought this decade has been a wash. I sure know that I haven't made 7 percent in my IRA, and I'm pretty diversified.

I was reading a book on finance the other day, and they made an interesting point about retirement savings. The author said that the stock market has long-term average returns of X% (think it was 7, not sure), but he also said that there are cycles within that that are good or bad, and a typical person's retirement can be mostly within one cycle. If you retired in 1929, you were screwed, and I think if you retired in 1999 you've been screwed. Kind of scary to think about, actually.

Saul Good
03-14-2011, 12:15 PM
Really? I kind of thought this decade has been a wash. I sure know that I haven't made 7 percent in my IRA, and I'm pretty diversified.

I was reading a book on finance the other day, and they made an interesting point about retirement savings. The author said that the stock market has long-term average returns of X% (think it was 7, not sure), but he also said that there are cycles within that that are good or bad, and a typical person's retirement can be mostly within one cycle. If you retired in 1929, you were screwed, and I think if you retired in 1999 you've been screwed. Kind of scary to think about, actually.

It's more like 12 percent or 8 after inflation, and 6 after taxes.

Rain Man
03-14-2011, 12:18 PM
It's more like 12 percent or 8 after inflation, and 6 after taxes.

This makes me want to cry.

I've tried to play it by the book and do everything right on my retirement savings, and the past decade has been brutal. I think I was down almost 50 percent in the tech bust, and then lost 50 percent in the meltdown. It's really hard to recover from that and get a long-term net positive return.

Saul Good
03-14-2011, 12:36 PM
This makes me want to cry.

I've tried to play it by the book and do everything right on my retirement savings, and the past decade has been brutal. I think I was down almost 50 percent in the tech bust, and then lost 50 percent in the meltdown. It's really hard to recover from that and get a long-term net positive return.

The math works against you in this situation. If you lose 50%, you have to make 100% just to break even.

Bowser
03-14-2011, 01:08 PM
Hell, give me a million in cash, and I'll bury it and dip into it when I need to. I'll be rich enough, as long as I control my appetites.

HonestChieffan
03-14-2011, 01:15 PM
Hell, give me a million in cash, and I'll bury it and dip into it when I need to. I'll be rich enough, as long as I control my appetites.

If only the government understood that idea.

blaise
03-14-2011, 02:40 PM
Considering they say you need at least a couple million to retire and live a middle class lifestyle, I would agree.

KC native
03-14-2011, 02:59 PM
Really? I kind of thought this decade has been a wash. I sure know that I haven't made 7 percent in my IRA, and I'm pretty diversified.

I was reading a book on finance the other day, and they made an interesting point about retirement savings. The author said that the stock market has long-term average returns of X% (think it was 7, not sure), but he also said that there are cycles within that that are good or bad, and a typical person's retirement can be mostly within one cycle. If you retired in 1929, you were screwed, and I think if you retired in 1999 you've been screwed. Kind of scary to think about, actually.

Yes, timing is important. Buy and hold and hold and hold is a horrible investment strategy. Rebalancing your portfolio and selling portions at obvious highs goes a long way to better your investment performance.

Bewbies
03-14-2011, 03:31 PM
If you own 1 car you're in the richest 5% of people on planet earth.

In the US, we are ALL rich. End of story.

Jaric
03-14-2011, 04:14 PM
All I can think is that if 7 mil isn't considered rich, that doesn't say much for my broke ass...