What is your definition of rich?

[Perp]

I agree with steveadl that many people have missed the point and are talking about lifestyle, or the definition of success or happiness. I don't think anybody's suggesting that health, a good family, free time, etc, aren't important. But in this particular thread, rugrat only asked for our opinions on how much qualifies as "rich" in terms of material wealth. Just as if I ask a question about insurance policies, I wouldn't be suggesting that being an effective landlord was only about insurance.

For me, I'd need at least $200K per year in passive income (today dollars, net of debt servicing on investments etc), and at least a year's buffer (ie $200K) that can easily be converted to cash (ie sitting in an offset, or in gold or shares or something very liquid). Enough equity to maintain the above two items indefinitely.

$200K isn't a lot to us right now, because we're investing very heavily. But if you had $200K net of investments (ie just for personal use), that'd be enough, I reckon. Hopefully I'll actually be earning $Ms per year, and everything above what we use can go to worthwhile causes; my goal is to become a full-time philanthropist, travelling the world and finding worthy projects in which to make benevolent investments.

Having any passport you want for whomever you want.
Having one of your personal assistants in US or UK tell Obama or Brown you'll call back and them immediately worry about the election.
Having more than 10 in the Chinese delegation that comes to request your advice.
Being invited to Chair the Bilderberg group.

The rest of us are working class proles.

I find that sad

I don't know about "sad", but interesting that all of them seem to revolve around power, and what other people think of you. It seems a very externally-focused source of validation.

It also doesn't seem to be anything to do with "rich", necessarily. There are many very influential people, such as the Dalai Lama, who have very little in the way of material wealth.

 

[skater]

I agree with steveadl that many people have missed the point and are talking about lifestyle, or the definition of success or happiness.

This is true, however, I think that it is different depending on how you view it. To me, if I have enough wealth to sustain myself and my immediate family, which means that I can do what I want, when I want, then I am "rich". Maybe not in a purely material sense, but that means squat to me.

I am rich because I have choices.

 

[garygoodbloke]

Well, this is certainly an interesting thread. Many words being thrown around here that can be very subjective, nebulous and with many connotations and emotional associations for a great many people.

I'm basically paraphrasing a guy by the name of Dr. Paul here (not Dr. Phil) who works in the self-development field and who also focuses on unification theory.

What many people are seeking is durable fulfillment. Durable fulfillment is made up of a combination of freedom, success and happiness. Each of these terms can be defined separately from each other and in relatively objective terms. Each on their own is nice but there's something missing if you only have one or two.

Happiness is the amount of joy you regularly feel. For example, people who play a lot of sport or give their lives to playing video games feel a lot of joy but it's hardly fulfilling over a long time period.

Homeless people have a lot of freedom but this is not merely enough. so do many kids whose parents have a lot of money and give their children unlimited access to it. But many of these people (think: Paris Hilton) do not appear to have a sense of durable fulfillment.

Success is acheiving a goal that requires you to overcome obstacles using your own attributes, characteristics and drive. It is also internally (not externally) validated. The difference between these two may seem obvious, but until you look at a person's boundary mechanisms it can be hard to fully appreciate who is actually internally validated and who is not.

Now, as for richness, or the accumulation of money to a rare extent that places one in the top percentages of net worth and earning expectations, I'd have to say that for me, only, say, 1% of people can be rich and the dollar amount that marks the border is continually shifting. I'd need hard data to know.

I think richness plays into all three of success, freedom and happiness. Many people feel earning money is a key part of success, but it need not be, it depends on how you internally validate yourself. Certainly it can give you more freedom as you have access to far more resources than people with a lot less money (for the most part, for example, Obama isn't necessarily "rich" but he certainly has a lot of personal freedom, whether he chooses to exercise it or not, this is also true of many politicians and powerful people).

If you experience joy through racing ferraris in different countries, then money is certainly important to that acheivement. If you experience joy from sitting on a beach, then you need money but needn't be rich to afford it.

So for me, I'd say rich is having a net worth of $10 million+. The usefulness of a definition like this is pretty low when you apply it to an individual case.

To also mention the Delai Lhama (sp?), I believe he said money is good, as you can use it to do things and bring joy to those you love.

 

[natmarie73]

Well in terms of being financially rich as opposed to health and happiness etc for me it would be having enough assets that generates enough cashflow to allow the asset base to increase even after I spend as much on living as I want and in turn the increasing asset base generates even more cashflow and so on and so forth so that eventually I couldn't possibly spend it all and didn't need the asset base to keep getting bigger.

 

[Oscar]

straight answer;

rich to me is having $10 million in equity and $1 million per year in passive income.

Happiness doesnt buy you money.

 

[joanmc]

I remember when I was on maternity leave with child 1 and interest rates went to 17%. DH's take home pay was 260 pw and he changed jobs to one where it was 300pw. We thought we were loaded! That time in our life is always in the back of my mind and it is part of what has driven us to achieve what we have so far.

So to me 100k net of my loan expenses is rich, not uber rich, or filthy rich, but rich enough for me. Am I aiming to go higher than that? Sure, but then I will be "richer"

 

[Andrew_A]

My thoughts

First there is a definition that needs to be made between dollar rich and satisfaction from inside which also might be classified as a form of riches. A common definition for rich that I’m aware of is simply the desire to have enough money that you don’t have to work for it. Often described as financial freedom it can be expressed as this:


Financial Freedom = Ongoing passive income (Income you don’t need to exert yourself for such as share dividends, rents, managed business income etc) >= Cost of living


A common rule of thumb for sustainable retirements and living off investment income is to draw down no more than 4% of your total asset pool in a year, this is quite conservative but a good place to start. So with a yearly lifestyle draw of $50,000 you will need $1,250,000 (50,000/.04) net in income producing assets to qualify as financially free. This means you can relocate to your couch and watch TV for the rest of your life and not have to worry about working without every having to worry about going bankrupt or creditors knocking on your door. Adjust these figures up and down depending on individual requirements.


Personally I think it’s important not to confuse financial freedom with other concepts like ‘rich’ and ‘happy’. If you dig down into common motivations I think a lot of people would choose waking up happy on Monday mornings and not disliking having to go to work over a less certain prospect of having heaps of dollars that might involve working at something you hate for many years, this is all about knowing what motivates you in life.
Philosophy and literature has a lot to say on the subject of being rich.

Nature didn’t tell me: “Don’t be poor”. Nor indeed: “Be rich”; but she does beg me: “Be independent”
​

– Chamfort, Maxims (1795)

“If thou wilt make a man happy, add not unto his riches, but take away his desires”
​

– Epicurus


The link between dollar rich and happy can be tenuous. A reading of the biography of billionaires Kerry Packer, James Packer and Felix Dennis will provide plenty of evidence that anybody dollar rich can be very unsatisfied.


All perhaps a little interesting and food for philosophical thought; but back to the original question and talking only in dollar terms, how much is rich for you? Well… This is the scale that Felix Dennis supplied to classify exactly how rich a person is.


Total assets (Pound sterling)

* £1m-£2m: The comfortable poor
* £2m-£5m: The comfortably off
* £5m-£15m: The comfortably wealthy
* £15m-£40m: The lesser rich
* £40m-£75m: The comfortably rich
* £75m-£100m: The rich
* £100m-£200m: The seriously rich
* £200m-£400m: The truly rich
* £400m-£999m: The filthy rich
* More than £999m: The super rich


Of course if you are a billionaire your definition of rich is going to be a bit …. inflated

 

[jaycee]

I wonder if $1-$1m AU is the comfortbly poor here.

Say a 500k house and 500k assets & off that 10% pa income, $50k pa

Comfortably live a normal lifestyle on that, keep working if you like whatever, but you would not be able to emulate the rich of monaco whenever you like.

this is wher it gets hard - for some, that is enough ! That's rich ENOUGH
for others it's obviously a decent accomplishment, but not enogh to consider as rich

I have found my own definition has chagned over the years as my eyese were opened up to all sorts of things.

 

[Y33]

Rich is knowing that I can go down to the park every morning and spend all day with my daughter and never need to know what is in the bank account or what bills need paying.