Monetarily speaking, what is your definition of rich, wealthy?

Discussion in 'Politics, Religion, Social Issues' started by Hieveryone, Sep 7, 2014.

  1. Hieveryone macrumors 68030

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    #1
    This is a topic that has always intrigued me because there can be so much variation in people's definition.

    Sometimes people say if you can get the loan for a big house and lease for a BMW, you must be rich.

    Others say, if you can afford a nice vacation, big house, and a nice car with little debt you are rich, even if you spend everything you have.

    Some people believe there's a difference between rich and wealthy, where wealthy is actually owning assets and having little to no debt. For example, owning property, stocks, bonds, maybe a picasso, etc

    What do you consider rich?

    Do you believe being rich is an image? Or a person who's loaded can live like a regular guy, wearing normal clothes and driving a Camry.

    Feel free to make any and all view points. I'd be happy to read them!
     
  2. LIVEFRMNYC macrumors 603

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    #2
    For me, being rich means not being dependent on a job/career and having your money make money for you. When you can take a 7 month vacation without any real financial consequences, that's rich. Rich is basically freedom. If you don't feel completely free, your probably not rich.

    Now to put an actual dollar amount on what rich is, that's relative. I consider myself pretty well off. My net worth is 6 figures rounding amount to half of 7 figures. That's rich by many people's standards, but I definitely can't live the life of the wealthy. I don't live in a multi million dollar home, nor do I have the luxury of owning a Bugatti Veyron.

    Most of my net worth can be wasted very fast and easily if I don't have self control. Although I do waste money on superficial stuff, it's because I can. But I could never spend money frivolously. I think you would need to be truly rich to do that. Truly rich probably means you can get tired of shopping/buying stuff. If your not rich, your money will run out before you get tired.
     
  3. Hieveryone thread starter macrumors 68030

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    Wow, I don't think anyone will be able to post a better answer than this. You NAILED it in my opinion.

    I guess in dollar terms, in order to have total freedom to basically do whatever you wanted (minus the Bugatti or Sutton Place New York lol) you would need about 240K a year in passive income.

    That's 20K a month. I think that's plenty for most people especially if you spent all of it. You could have the best suits, a nice Mercedes, and even if you had a mortgage, you could live in a huge house.

    So, if you could get 10% return you would need $2,400,000 cash to invest. That would equal that magical 240K number.

    The problem though is that 10% isn't always that easy since you couldn't just buy a CD and sit tight.
     
  4. Renzatic Suspended

    Renzatic

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    #4
    This depends on what your standards of living are. A couple living in one of those new micro-homes, content with the bare necessities, could get by with far, far less.
     
  5. bradl macrumors 68040

    bradl

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    #5
    Rich: Having money.

    Wealth: Having time and money.

    Most people have either one or the other: All the money in the world, but spent all of their time making it..

    Or they have all the time in the world, but no money. Most of us are in the middle, where we trade our time for money (read: a job).

    Having true wealth is having a passive income coming in that you only have to do the work for once, and the money keeps coming in. That gets you your time back to do whatever you want.

    BL.
     
  6. b3av3r macrumors regular

    b3av3r

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    #6
    When I think of the word rich, I think excessive. To me being rich means to have so much in excess it doesn't really matter any more. I have no idea what this dollar amount would be because I have no idea how money at this level is handled or managed. You wake up and you know that you can purchase or spend money as you see fit without a thought to the cost in any way. I don't think many people completely fall into this category.

    When I think of wealthy, I think of someone who makes smart decisions with their money. Of course, financial obligations are taken care of (bills, etc.), money is invested for retirement, money is budgeted for fun, and some money is kept in savings for emergencies. All of these things can be done with your monthly income and purchases aren't a major concern unless it is something significant like a new car, home, etc. I think being wealthy is living a comfortable, not excessive or glamorous, lifestyle that is attainable when close to retirement. Obviously, different people will have different amounts to reach this level.
     
  7. Eraserhead macrumors G4

    Eraserhead

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    #7
    If you own at least six figures worth of stocks and shares outside of a pension fund then you are definitely rich.

    ----------

    Plenty of people who live in large country houses make very stupid decisions about money ;).

    ----------

    a) why on earth do you need $20k/month of income?

    b) why on earth do you think you will get a 10% return on investment? Plus you need to save money to cover inflation.
     
  8. jnpy!$4g3cwk macrumors 65816

    jnpy!$4g3cwk

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    I think "the 1%" works well enough-- income and ownership. If rich is (just) an image, then, there are zillions of rich people-- that is, people who are not rich but try to look and act like they are. Some of the rich drive modest cars, including Camrys. Others need to drive expensive cars for business. A few of them (the sample that I have met are all guys) spend an ordinate amount of money on lots of cars. It must mean something, but, I'm not sure what.

    Back in the previous millenium I read a book titled "The millionaire next door." Definitely still true -- there are many wealthy people who are invisible among use, who live modestly and inconspicuously. Interesting read:

    https://en.wikipedia.org/wiki/The_Millionaire_Next_Door
     
  9. bradl macrumors 68040

    bradl

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    Very good book. recommended by a lot of leadership businesses/gurus out there: Jack Welch, John Maxwell, etc.

    BL.
     
  10. satcomer macrumors 603

    satcomer

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    #10
    I see the deference is if you employ servants then you are Wealthy!
     
  11. Happybunny, Sep 8, 2014
    Last edited: Sep 8, 2014

    Happybunny macrumors 68000

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    #11
    My thoughts on this subject.

    If you CONSTANTLY think about money, talk about money, worry about money, it’s a very good indication that you are not rich, let alone wealthy.

    But you miss one of the most important aspects of wealth, OLD Money has also spent generations building a power base, in Banking, Politics and Business. This ensures that they always stay one step ahead of the game.
     
  12. VI™ macrumors 6502a

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    #12
    Rich is having lots and lots of money. There's a difference to me between being wealthy and well off. Making $100,000 a year and having little to no debt and not shelling out a lot a month in montly payments would make me well off, but certainly not rich. Being able to afford a $500,000+ home with the cars I want and not having to work more than 40 hours a week with having the money to do whatever I want whenever I wanted would start me at the bottom spectrum of being rich I think.
     
  13. Menel macrumors 603

    Menel

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    #13
    Yes.

    See this millionaire, giving a presentation in cargo pants, and a tshirt that he picked up off the floor.

    [​IMG]

    Or the plain Ford Fusion this millionare(billionare?) drives.
    [​IMG]

    It's this: nail on the head

     
  14. Arran, Sep 8, 2014
    Last edited: Sep 8, 2014

    Arran macrumors 68040

    Arran

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    #14
    Fruit cakes are rich. Who wants to be a fruitcake? :D

    Joking aside, rich is relative and mostly stays out of the limelight. Practically invisible.

    Bling, OTOH, loves the attention.
     
  15. 63dot, Sep 8, 2014
    Last edited: Sep 8, 2014

    63dot macrumors 603

    63dot

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    #15
    If you own a large house and a nice BMW, you are most likely middle class or upper middle class in SF bay area. Wealthy would mean you have multiple houses or the equivalent. A large house could be $300,000 dollars in some areas here, but in San Francisco proper that large house could be worth twenty times that and still not look like a mansion.

    But in some other areas in the USA, if you have just that one nice house and that one nice BMW, you are easily the richest person in town. In the poorer areas, if you are a doctor or lawyer then you are probably "rich" or "wealthy". But in San Francisco if you are in those fields, you merely have a career, or a small step up from a job. The truly rich I have seen in norcal don't work or if they do, they volunteer or are out spending the family fortune for the good of the area/nation. Such a family may be the underwriters of the local TV programming like KQED, or running charities or scholarships in the family's name. So in truth, from the ones I have met who many consider idle rich, are actually as busy as you or me running a foundation or out volunteering. They may not put in 80 hour weeks giving money away and stumping for causes like the royal family, but even giving away a massive fortune and running organizations with that goal can be a full time job. I was in a charity who gave away money and the paperwork and legalities, and time dotting the "i's" and crossing "t's" is a much larger undertaking than most will ever imagine.

    Now on the worldwide scale, there are plenty of people who would be considered wealthy if they had just that new BMW. Such a car can exceed the price of the house or apartment they may be living in. There's no real measuring stick for what wealthy is and it could mean you have $1,000 cash free and clear in bank account, $10,000 dollars, or a million.
     
  16. 63dot, Sep 8, 2014
    Last edited: Sep 8, 2014

    63dot macrumors 603

    63dot

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    #16
    That book is amazing.

    Your average millionaire doesn't have a degree, nor is a doctor or lawyer. Usually, nearly 70% percent are born this way and don't need any career unless they want to do something with their time on this planet. If they do go to college, it's just an accessory and not a necessity.

    But the rest of the millionaires are usually entrepreneurs a lot of the time and may own a ranch or small diner and wear Levi's to work and make much more per year than that guy in a corner office in an Italian suit. They are more likely to only wear that nice suit to weddings or funerals and drive that Camry or simple Ford F-150 than a Mercedes.

    During the height of the popularity of the Ford F-150 before high gas prices, Paul Harvey mentioned more American millionaires drove that trusty Ford truck than a fancy European sedan or sports car.

    In a nutshell, do become a millionaire, don't be a UAW (under accumulator of wealth) which usually means spending more than you make. The most common UAWs are doctors, lawyers, and dentists because they have a high cost of living/upkeep, high tuition fees and student debt, and had a late start working/investing. Over the long haul one is much better off making way less, but having a much smaller overhead and no student debt and using what extra to invest that money. If you make $30,000 a year and have no student loans and could put away 10% percent into investment and savings, you will be far better off at age 70 than doctor who makes ten times that, but has to pay off Harvard Medical School, started earning at age 30, and has to pay for office, supplies, and staff.

    My doctor who lives in nice neighborhood is 91 and is still paying off his one house. He went to that super nice Ivy League Medical School and was delayed of course by 8 years of education but also three years of war and didn't start earning doctor's pay until he was 30. Like many doctors in town, he bought that new Mercedes/BMW a couple times a decade so he looked "successful". Some other similar docs in town got their house paid off much earlier but were still well into their 50s. Yearly salary doesn't mean anything if debts and costs of living and running business eats it all up. All this time my citrus farmer friend continues his life in Levi's but at last count has 150 homes, mostly as low income rentals. Everybody here knows stories similar to this and as the book details, you can either make money or live a lifestyle that makes you look like you make money and the two rarely meet.
     
  17. Hieveryone thread starter macrumors 68030

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    #17
    20K a month in the US can be blown in no time. Add a hot girlfriend to your life and you'll feel pretty strapped for cash!

    I average 7% but only because I'm risk averse. People who know how to invest can make those kind of returns with relative ease.
     
  18. Renzatic Suspended

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    #18
    And this is why you'll never be rich, Hi.
     
  19. Tomorrow macrumors 604

    Tomorrow

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    Very well said.

    I think it was on the Cosby Show where I heard it put so succinctly: "Rich is when your money works for you, instead of you working for your money."
     
  20. Hieveryone thread starter macrumors 68030

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    #20
    I'm actually wealthy. My bonus last year earns me more than your average doctor just off capital gains and interest income. I don't plan on ever touching it unless I needed the cash for something.

    ----------

    I would even take it a step further, I would say wealthy is when your money works for you.

    A lot of doctors are rich as someone said on here, because they have a nice house, a Mercedes, but don't look at their net worth!
     
  21. bradl macrumors 68040

    bradl

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    #21
    Do you work? Have a job? If I recall from another thread, you stated your age is in the mid-20s.

    BL.
     
  22. Hieveryone thread starter macrumors 68030

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    That's true unless you work in finance.

    Then it's all you pretty much think of, but that's because it's your job!
     
  23. Happybunny macrumors 68000

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    #23
    But that is the subtle difference, you are handling other peoples money.

    If you talk money in your free time, then you are just a person who has no private life, and again you are talking about other peoples money.:p
     
  24. Mousse macrumors 68000

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    #24
    Rich: Having lots and lots of money. Professional athletes, movie stars, business owners and so on.

    Wealthy: Having more than enough money. Bill Gates, Warren Buffet and Dobri Dobrev.:eek:.
     
  25. Renzatic Suspended

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    #25
    We live in a world where multi-millionaires can go bankrupt in a year, you spend money like a fish drinks water, and you work in a high pressure business where one screwup is all it takes to be shown the door.

    If everything you've said is true, then you're living in a bubble, and don't realize it. Honestly, I'm wondering how you have the time to spend $20,000 in a month.
     

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