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Yes they absolutely are. $1.2M in assets can easily be a normal home in a high CoL area. $20M in assets is either a few luxury homes in a high CoL area or dozen

Yes they absolutely are. $1.2M in assets can easily be a normal home in a high CoL area. $20M in assets is either a few luxury homes in a high CoL area or dozens of regular homes. Someone with $1.2M might not even be a accredited investor if most of that is tied up in their primary residence so they don't even have access to many investment options that the $20M person/household has. A person with $20M assets at 8% earns $1.6M per year. A 20x difference in assets is essentially an entire generation of wealth accumulation..

JadeNB 5y ago
> A person with $20M assets at 8% earns $1.6M per year. A 20x difference in assets is essentially an entire generation of wealth accumulation.. Indeed, imagine saying: “there's not that much difference between $50,000 in assets and $1,000,000 in assets.” Of course more money earns more money, but it's still important not to underestimate the importance of a factor of 20. One can try it the other way: “there's not much difference between $20,000,000 and $400,000,000.” Except that many of us here probably can't really grasp either, I think we wouldn't believe that.
mox1 5y ago
I completely agree. A frugal 30/40 something can have 1.2m net worth mostly locked up behind 401k and home value. Both of which do nothing for that persons daily life. Can’t unlock home equity because they need a place to live. Not unlocking 401k value because… we’ll they are frugal and that is a bad idea. While they are definitely well off, perhaps upper middle class, it is a vastly different lifestyle than 20mm net worth.
s1artibartfast 5y ago
You are making an argument about assets and income. The parent said lifestyle. Warren buffet could have the same lifestyle as someone with 1.2 M in omaha
- dlp211 5y ago
  Could, but they don't. Someone with $1.2MM has enough that they could sustain a lifestyle that ~$36k/yr* could afford them. Someone with a NW of $20MM has enough that they could sustain a lifestyle of $600k/yr. Those lifestyles are no where near being the same. *based on a conservative 3% withdrawal, but the point stands irrespective of the withdrawal percentage.
  - s1artibartfast 5y ago
    This is again an argument based on income, not assets. You could scrutinize loans based on assets to close the gap.

JadeNB 5y ago

> A person with $20M assets at 8% earns $1.6M per year. A 20x difference in assets is essentially an entire generation of wealth accumulation.. Indeed, imagine saying: “there's not that much difference between $50,000 in assets and $1,000,000 in assets.” Of course more money earns more money, but it's still important not to underestimate the importance of a factor of 20. One can try it the other way: “there's not much difference between $20,000,000 and $400,000,000.” Except that many of us here probably can't really grasp either, I think we wouldn't believe that.

mox1 5y ago

I completely agree. A frugal 30/40 something can have 1.2m net worth mostly locked up behind 401k and home value. Both of which do nothing for that persons daily life. Can’t unlock home equity because they need a place to live. Not unlocking 401k value because… we’ll they are frugal and that is a bad idea. While they are definitely well off, perhaps upper middle class, it is a vastly different lifestyle than 20mm net worth.

s1artibartfast 5y ago

You are making an argument about assets and income. The parent said lifestyle. Warren buffet could have the same lifestyle as someone with 1.2 M in omaha

dlp211 5y ago
Could, but they don't. Someone with $1.2MM has enough that they could sustain a lifestyle that ~$36k/yr* could afford them. Someone with a NW of $20MM has enough that they could sustain a lifestyle of $600k/yr. Those lifestyles are no where near being the same. *based on a conservative 3% withdrawal, but the point stands irrespective of the withdrawal percentage.
- s1artibartfast 5y ago
  This is again an argument based on income, not assets. You could scrutinize loans based on assets to close the gap.