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Cannot read the article, however, we should be careful about the definition of "millionaires". If we define "millionaires" as the individual with 1M of worth a
by siscia 11y ago
Cannot read the article, however, we should be careful about the definition of "millionaires".
If we define "millionaires" as the individual with 1M of worth asset you are definitely right.
If we define "millionaires" as High-Net-Worth individual (HNWi), the people who have at least 1M in investable finance without counting the primary residence it start to get more interesting.
However, if we define "millionaires" as individual with a net profit of 1M in the last fiscal year, they DO NOT have to be frugal :)
- aptwebapps 11y agoI believe your first option is the conventional one so while the others might be interesting they aren't what the article is talking about.
- walshemj 11y agoI think you normally discount primary residence
- reagency 11y agoAnd what does "convention" say about inflation adjustments?
- aptwebapps 11y agoSomething along the lines of "Being a millionaire ain't what it used to be" I guess. Are you suggesting that we should peg it to some point in the past?
- adventured 11y agoThe last group does have to be frugal most likely. It's a very, very small number of high earners that manage to yield more than $1m in income - much less net that after taxes - and then do it multiple times. There is a very high rotation on high income earners. They tend to ride temporary booms in whatever their specialty is (eg the real estate bubble days), and also peak out at a certain age bracket (their earning power peaks for only a few years out of a long career). If you have this seven year peak earning power: $300k, $500k, $600k, $1m, $600k, $500k, $300k - you've yielded $3.8 million in earnings, paid a likely ~$1.5 million in total income related taxes, and have $2.3m left before life expenditures. You're 52 years old, and your earning power has peaked. You have $2.5 million in savings and investments. That has to last the rest of your life and retirement; you spend $10k per month in total life expenses, and have two children, and a decent house with a mortgage; your income will never be much higher than $300k again, and you're going to pay ~30% in income taxes on that. That's closer to a normal scenario for a $1m earner, than the one where they just yield $1m per year for 20 years and never have a financial care in the world.
- reagency 11y agoMortgage? The disposable income from the non-peak years can easily pay off the mortgage.