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GP already told you: living off ownership of capital.

by danharaj 7y ago

benj111 7y ago
That also includes pensioners, some of whom may not be that well off.
- marvin 7y ago
  Treating pensions as capital is an interesting twist. Relatively accurate in one economical sense, but it's a bit of an edge case and not accurate in others. Pensions are usually a part of the "social contract", and usually pensioners have only a few years of expected healthy life left. So in most cases, a pension is more akin to having decent savings than having enough capital to live off investment income perpetually. Also, crucially, pensions rarely pass on money to inheritors, and almost never enough that the inheritors can live indefinitely from the income.
  - benj111 7y ago
    It depends on what country you live in, in the UK at least you have a small state pension and private pensions can be saved on top. These can optionally be used to buy an annuity. 'A few years' seems an understatement for what is reasonably expected to be 20+ years, I'm not sure what difference the healthy modifier brings. But yes, an annuity wouldn't generally allow you to pass on family wealth. That isn't the dividing line that was being discussed though.
- abdullahkhalids 7y ago
  Redefine: their earning from capital investments alone are enough to put them in the top 10% of the population.
  - benj111 7y ago
    Top 10% of assets? This [1] suggests that $1,180,000 would put you in the top 10% in the US, which if you're living off (and in) it won't stretch that far. If top 10% of income earners, that's quite a movable feast. If I have $1,000,000 in shares earning 10% and taking all as income, am I rich, if I've got $10,000,000 in less risky investments, and after reinvesting to account for inflation, earning 1% the same amount of rich? One advantage of taking an income from assets is that you can choose how and when. I suspect the latter approach notionally invested in some prudent fashion would give a figure comparable to a wage, I misses out on some big differences though, no having to work, worry about getting sick, having the money there if you need is a major psychological boost, and if you want to buy a house, you can, plus you can pass on assets, which you can't do with a job. [1] https://dqydj.com/net-worth-percentile-calculator-united-states/ https://dqydj.com/net-worth-percentile-calculator-united-sta...

GP already told you: living off ownership of capital.

benj111 7y ago

That also includes pensioners, some of whom may not be that well off.

marvin 7y ago
Treating pensions as capital is an interesting twist. Relatively accurate in one economical sense, but it's a bit of an edge case and not accurate in others. Pensions are usually a part of the "social contract", and usually pensioners have only a few years of expected healthy life left. So in most cases, a pension is more akin to having decent savings than having enough capital to live off investment income perpetually. Also, crucially, pensions rarely pass on money to inheritors, and almost never enough that the inheritors can live indefinitely from the income.
- benj111 7y ago
  It depends on what country you live in, in the UK at least you have a small state pension and private pensions can be saved on top. These can optionally be used to buy an annuity. 'A few years' seems an understatement for what is reasonably expected to be 20+ years, I'm not sure what difference the healthy modifier brings. But yes, an annuity wouldn't generally allow you to pass on family wealth. That isn't the dividing line that was being discussed though.
abdullahkhalids 7y ago
Redefine: their earning from capital investments alone are enough to put them in the top 10% of the population.
- benj111 7y ago
  Top 10% of assets? This [1] suggests that $1,180,000 would put you in the top 10% in the US, which if you're living off (and in) it won't stretch that far. If top 10% of income earners, that's quite a movable feast. If I have $1,000,000 in shares earning 10% and taking all as income, am I rich, if I've got $10,000,000 in less risky investments, and after reinvesting to account for inflation, earning 1% the same amount of rich? One advantage of taking an income from assets is that you can choose how and when. I suspect the latter approach notionally invested in some prudent fashion would give a figure comparable to a wage, I misses out on some big differences though, no having to work, worry about getting sick, having the money there if you need is a major psychological boost, and if you want to buy a house, you can, plus you can pass on assets, which you can't do with a job. [1] https://dqydj.com/net-worth-percentile-calculator-united-states/ https://dqydj.com/net-worth-percentile-calculator-united-sta...