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> Having lots of assets that appreciate in value and you can comfortably exchange them for money when you need to, that's where you should be trying to get to.

> Having lots of assets that appreciate in value and you can comfortably exchange them for money when you need to, that's where you should be trying to get to. I think it's still middle class at best if the assets have to be sold to realize the gains. Full upperclass (IMO) means the ability to leverage assets to acquire even more assets (especially in down markets) without risk of catastrophic loss while funding a lavish lifestyle. It's an important distinction because short of total economic or societal collapse, productive assets held as collateral continue to generate capital. One can raise large amounts of capital almost on demand with extremely favorable terms using those assets, essentially multiplying the wealth that the upperclass has at its disposal. Once they hit a certain scale, it's almost trivially easy to make modest but consistent returns on borrowed capital because investing is a lot like farming: being a farmer and owning a single farm is really risky due to unpredictable stuff like droughts, but being Tyson and owning farms all over the world is really low risk unless the entire planet is hit by a drought simultaneously, in which case everyone will get bailed out. Imagine you own a hundred million dollars worth of Blockbuster franchises free and clear that generates a "paltry" $2 mil a year in profit. What do you do when your investment is threatened and Netflix IPOs at around a dollar in 2002? You go to the bank and get a $25 million loan to buy Netflix stock. Then in 2008 when it's at $5/share and the stores are barely generating enough money to cover the loan payments, you firesale the remaining Blockbuster assets to pay off the rest of the loan and laugh yourself to the bank after selling $125 million worth of Netflix stock for an annualized return of around 3% in a recession. That's a very contrived example but it illustrates the point: with productive assets, you can use the proceeds to pay the cost of hedging those assets. When you do that across a large, diverse portfolio, you have to try not to make money.

dbish 6y ago
I think of that as independently wealthy, since I personally have a hard time telling someone that if you’re an engineering exec making > $1mm/yr, that you’re middle class because you get paid for your time. That seems pretty upper class even if it isn’t the properly wealthy, no need to work, upper class.
- akiselev 6y ago
  I'd say the exec is upper middle class because if their employer went bankrupt and they had to pay for a bad string of unexpected medical expenses or got sued for some liability they weren't insured for, it could easily send them deep into the middle class. It's like having exactly a million dollars in net worth - are you really a millionaire if all it takes is a little depreciation to drop you back to six figures? However, entering the upper class with executive salary like that takes a lot less luck - they don't need to start a billion dollar unicorn, they just need a little bit of luck and a few decades of steady investment. The way I see it: the underclass has to work hard to move upwards, the middle class has to work hard to stay where they are, and the upper class has to work hard to move downwards.
  - dbish 6y ago
    You can’t call a top 1% person in income upper middle class imho and I think the definition of millionaire is tied to having more then a million net worth not whether you can lose it, but that’s where indepdently wealthy or similar definitions may come into play. If I have say a million or two, vs. someone who makes 50k/yr and worth maybe 100-200k, are we all middle class? What does it mean to define a middle class at this point then? It started with the middle 50% who have similar financial and social lives, but if it’s that wide, I’m unsure it’s a useful label. Everyone likes to call themselves middle class, but that seems wrong other then to say you’re a small millionaire vs. someone with real power in the > 100mm net worth category. The label does matter when we talk about the middle class being squeezed for example, and we know that’s not happening to tech execs or even software engineers in demand who start at 6 gigs, but to folks who work hard to break 6 figs in their career and see it as breaking into the upper middle class.
    - akiselev 6y ago
      > Everyone likes to call themselves middle class, but that seems wrong other then to say you’re a small millionaire vs. someone with real power in the > 100mm net worth category. The label does matter when we talk about the middle class being squeezed for example, and we know that’s not happening to tech execs or even software engineers in demand who start at 6 gigs, but to folks who work hard to break 6 figs in their career and see it as breaking into the upper middle class. Not to get too soap boxy, but that's exactly how the upperclasses have used divide and conquer to hold onto disproportional political power. It seems "wrong" to you, but imagine we went back to the tax rates set in the Revenue Act of 1942 with brackets adjusted for inflation: a family with a single tech exec or engineer making 6 or 7 figures a year can live well within their means and still have to drastically cut back on their quality of life under those tax rates. Someone with a hundred million dollars of productive assets probably wouldn't notice a change in QoL at all, unless they measure it by yacht-foot or jet-seat.

dbish 6y ago

I think of that as independently wealthy, since I personally have a hard time telling someone that if you’re an engineering exec making > $1mm/yr, that you’re middle class because you get paid for your time. That seems pretty upper class even if it isn’t the properly wealthy, no need to work, upper class.

akiselev 6y ago
I'd say the exec is upper middle class because if their employer went bankrupt and they had to pay for a bad string of unexpected medical expenses or got sued for some liability they weren't insured for, it could easily send them deep into the middle class. It's like having exactly a million dollars in net worth - are you really a millionaire if all it takes is a little depreciation to drop you back to six figures? However, entering the upper class with executive salary like that takes a lot less luck - they don't need to start a billion dollar unicorn, they just need a little bit of luck and a few decades of steady investment. The way I see it: the underclass has to work hard to move upwards, the middle class has to work hard to stay where they are, and the upper class has to work hard to move downwards.
- dbish 6y ago
  You can’t call a top 1% person in income upper middle class imho and I think the definition of millionaire is tied to having more then a million net worth not whether you can lose it, but that’s where indepdently wealthy or similar definitions may come into play. If I have say a million or two, vs. someone who makes 50k/yr and worth maybe 100-200k, are we all middle class? What does it mean to define a middle class at this point then? It started with the middle 50% who have similar financial and social lives, but if it’s that wide, I’m unsure it’s a useful label. Everyone likes to call themselves middle class, but that seems wrong other then to say you’re a small millionaire vs. someone with real power in the > 100mm net worth category. The label does matter when we talk about the middle class being squeezed for example, and we know that’s not happening to tech execs or even software engineers in demand who start at 6 gigs, but to folks who work hard to break 6 figs in their career and see it as breaking into the upper middle class.
  - akiselev 6y ago
    > Everyone likes to call themselves middle class, but that seems wrong other then to say you’re a small millionaire vs. someone with real power in the > 100mm net worth category. The label does matter when we talk about the middle class being squeezed for example, and we know that’s not happening to tech execs or even software engineers in demand who start at 6 gigs, but to folks who work hard to break 6 figs in their career and see it as breaking into the upper middle class. Not to get too soap boxy, but that's exactly how the upperclasses have used divide and conquer to hold onto disproportional political power. It seems "wrong" to you, but imagine we went back to the tax rates set in the Revenue Act of 1942 with brackets adjusted for inflation: a family with a single tech exec or engineer making 6 or 7 figures a year can live well within their means and still have to drastically cut back on their quality of life under those tax rates. Someone with a hundred million dollars of productive assets probably wouldn't notice a change in QoL at all, unless they measure it by yacht-foot or jet-seat.