Comments on: What does it mean to be wealthy?

By: Rachel @ Master Your Card

Rachel @ Master Your Card — Thu, 29 May 2008 10:47:47 +0000

You make a very good point. I have always assumed that I want enough passive income s that I do not have to work. But of course if I moved back in with my parents I could probably live on a very small income! I do need to start thinking about what sort of life I want to aspire to and how much I will need in order to get me there.

By: AJC

AJC — Wed, 28 May 2008 21:06:50 +0000

@ Moom – One day I wasn’t a blogger, next day I had a site up … unfortunately no ‘e-mail’ option that I can see (wordpress.com); but, if anybody knows how … ?

Also, I used 5% ‘sustainable’ withdrawal rate … 4% is better … 3.5% even better … and, I actually use 2.5% in my personal planning.

You’re an Aussie, right … travel … and, if you think ‘economy / coach’ you ain’t planning far enough ahead … there goes $50k p.a.!

Peter Spann (you know who he is?) says that Aussies need closer to AUD$500k p.a. to be considered ‘rich’ these days.

By: moom

moom — Wed, 28 May 2008 17:38:21 +0000

SP – is it possible to enable e-mailing of follow up comments to commenters on the blog who sign up for it?

By: moom

moom — Wed, 28 May 2008 17:25:08 +0000

Not sure how you’re getting $75k. Using the 4% rule, $3 million generates a sustainable income of $120,000 p.a. which at 3% inflation is in 35 years time $60,000 in today’s money. Which is OK. We live on about that now and are doing fine. We don’t have a wealthy lifestyle at all, but we are very comfortable. $150,000 would be a luxury lifestyle from our perspective. There’s no conceivable need for more for just lifestyle purposes.

By: AJC

AJC — Wed, 28 May 2008 12:57:28 +0000

@ Q – Finally somebody with a goal worth aiming for! You should apply for my 7 Millionaires … In Training! Project ( http://7m7y.com/about/ ) – soon you’ll be able to open your Laser Watch Factory and online store

By: Q

Wed, 28 May 2008 12:36:56 +0000

I hate that Millionaire Next Door formula. If you’ve ever looked at my NetworthIQ page, it’s pretty evident I’m way behind according to that formula. It wasn’t too long ago that I realized that I needed steady passive income stream that would cover all my expenses + luxuries + (inflation, market flux, etc.) They should teach this stuff in school :p

So here is my personal definition of wealth (forgive me for using a few of your words):

Having enough regular passive income to cover my ideal lifestyle, be comfortable with market fluctuations, and not have inflation or withdraws significantly impact the security of my ideal lifestyle.

(And to have enough money to build hidden lasers into watches)

By: AJC

AJC — Wed, 28 May 2008 12:23:44 +0000

@ Trainee – I like your definition of wealth:

“wealthy: have or can afford substantial assets well beyond what is needed to sustain your chosen lifestyle.”

For me, the key word is ‘chosen’ … AJC.

By: traineeinvestor

traineeinvestor — Wed, 28 May 2008 09:32:38 +0000

I agree that wealth is at least partly a function of your chosen lifestyle: http://aprivateportfolio.blogspot.com/2008/02/what-does-it-mean-to-be-wealthy-2.html

The problem with this view is lifestyle creep. As people accumulate wealth they shift their goals and set higher numbers at which they will consider themselves wealthy. Richistan has a good summary of this issue.

By: traineeinvestor

traineeinvestor — Wed, 28 May 2008 09:17:19 +0000

Good analysis. I reached pretty much the same conclusion – that wealth is a measure of ability to fund a chosen lifestyle: http://aprivateportfolio.blogspot.com/2008/02/what-does-it-mean-to-be-wealthy-2.html

The problem with this definition is lifetyle creep. There are surveys which show that whatever level of wealth people have (at least until you get to the level of the seriously rich), they always set a higher number as being the level at which they would consider themselves to be wealthy. Richistan covers this phenomina quite well.