When do you know your a millionaire?

[exstatic]

This term gets thrown around a lot lately, but it has made me think.. when are you actually a millionaire?

Is it when you have a million dollar property portfolio?
Is it when you have a million dollars worth of assets?
Is it when you have more than than a million dollars cash..?
Is it when you have access to more than a million dollars cash - i.e; equity, real cash in the bank?
Is it as easy as buying a million dollar Zimbabwe note off ebay?
Or is it something else completely?

What are your thoughts..?

 

[BlackSpider]

I always think of is as:

If you had to sell everything you own relatively quickly, and the cash is greater than 1 million dollars, then you are a millionaire.

 

[evand]

Thats pretty much it. If you sold everything you own and paid all your debts. If over $1 mill is left, you're a millionaire.

Its your net worth. Net meaning after paying your debts.

 

[grossreal]

hi all
for me you take curent net value of assets(gross value less debt) now this does not need to be ready cash nor does it need to be property.
its ant asset class and can be a mixed asset class.
technically a millionaire does not require to take out the debt if you are in asia or america hence you see milionaire streets,
well you did they are now called deserts in alot of US streets.
they have it that 999,999 no 1000,000 yes with or without debt.
but really
who cares.
oh
interesting question if a business is worth 1 mil no debt and the business is you does that make you a millionaire.

 

[BlackSpider]

If you have a business and properties, which have been valued at 1.2mil, and have had it all up for sale for 12 months and best offer received has been 800k, are you still a millionaire?
If you can't sell your assets, how can you claim full value for them?

 

[steveadl]

The generally accepted version I've read around the place is is you have net assets after debt of $1M excluding your PPOR. Not saying I agree with this one, but have heard it a fair bit.

 

[Rob Williams]

The generally accepted version I've read around the place is is you have net assets after debt of $1M excluding your PPOR. Not saying I agree with this one, but have heard it a fair bit.

Think it might have been T. Harv Eker at the Kiyosaki seminar who said a million ain't that much. H.L. Hunt (I think) said a million ain't what it used to be. Sure burst my bubble
All true, but we still fixate on that magin number. Bit like we fixate on 100,000 when it comes to cars odo readings. When I was (much) younger, 100k was regarded at changeover time. Once a car crossed that psychological barrier, it lost a ton (tonne) of value. That was when odo readings were in miles (remember them?). Then we went to km's. That's the new "barrier", even though 100,000km is way less distance travelled than 100,000 miles. Seems we just love these round numbers.
Hey Steve, when we're old enough that drawing down on our SMSF is an option, can we include the value on investments in the fund? Please?

 

[eggnog]

probably just bad memory but recall something about the 100,000 odo reading being a major and costly service benchmark so psychological barriers might have some justification.

 

[steveadl]

Hey Steve, when we're old enough that drawing down on our SMSF is an option, can we include the value on investments in the fund? Please?

I think we can allow that one Rob, for those of us who have super that is.

 

[quoll]

It's just another goal to tick off, 1mil worth of assets left after debt is taken into account, try and use council or valuer figures instead of guesstimates. But if the guesstimate is the best you can get go for a low guess.

The next goal is 10mil once you get over the 1mil.

Enjoy the ride.
Graeme

 

[Philip Thomas]

Net Worth

Net Worth is the metric I like to focus on.

If you have $250m property / assets & $250m borrowings you Net Worth is zero.

If you have $250m property / assets & $249m borrowings you Net Worth is $1m.

How simple is that.

 

[travelbug]

The generally accepted version I've read around the place is is you have net assets after debt of $1M excluding your PPOR. Not saying I agree with this one, but have heard it a fair bit.

I would use this but it wouldn't be comparing apples and apples. I might have a house worth $700K and someone else may have a house worth $1.5M. But- If you do count your PPOR, car, furniture etc it's not hard to be a millionaire.

So a couple would need $2M between them to be considered millionaires?

I will consider myself a millionaire when I have $1M in investment equity (i.e. not counting my PPOR, car etc).

 

[craigb]

When you sell up and you have 1 million cash in your pocket, officially you are a millionare,

 

[steveadl]

I would use this but it wouldn't be comparing apples and apples. I might have a house worth $700K and someone else may have a house worth $1.5M. But- If you do count your PPOR, car, furniture etc it's not hard to be a millionaire.

So a couple would need $2M between them to be considered millionaires?

I will consider myself a millionaire when I have $1M in investment equity (i.e. not counting my PPOR, car etc).

I think the vast majority of serious investors wouldn't include doodad's like cars in their net worth. PPOR I agree, it's a bit more hazey. At the moment I include my 'PPOR' because we're living in one of our IP's (ie. bought expressly for investment purposes), not sure what I'll do when we get our dream home one day...

 

[The Fence]

I agree with..."when you sell up everything and pay off debts and have $1m in cash and own your PPOR outright".....that's a proper millionaire.

You wouldn't want to be renting then next week after paying rent, fall off the millionair list would you.....lol lol

I think $10m is the new "millionaire".....

 

[Rob Williams]

probably just bad memory but recall something about the 100,000 odo reading being a major and costly service benchmark so psychological barriers might have some justification.

True, but my point is that if 2 cars leave the factory in Japan and one ships to the US and the other to Aust, then each will require the timing belt to be replaced at 100,000. One will be 100,000 miles, the other 100,000 km. BIG difference in the actual distance the car has travelled, yet each requires the same major service.
Never fully understood that one.

 

[BlackSpider]

What if you're a high salary earner, but not an investor and like to put all our money into your PPOR, continually upgrading when you can.
Say your PPOR is worth 5 mil owned outright, how could you not count it?

 

[craigb]

I agree with..."when you sell up everything and pay off debts and have $1m in cash and own your PPOR outright".....that's a proper millionaire.

You wouldn't want to be renting then next week after paying rent, fall off the millionair list would you.....lol lol

I think $10m is the new "millionaire".....

I agree with the last statement, 10m is the new millionare, lift the bar

 

[The Fence]

What if you're a high salary earner, but not an investor and like to put all our money into your PPOR, continually upgrading when you can.
Say your PPOR is worth 5 mil owned outright, how could you not count it?

Then you would be a millionaire if you sold the PPOR and bought a $4m PPOR and had the $1m in cash....

I'm thinking an adjustment to my qualification of a millionaire.......
....that $1m in cash plus PPOR if PPOR is valued under $2m....?

jeeze it's getting complicated....lol

BTW Blackspider...I'd reckon if you are putting millions into your PPOR then that qualifies as "investing" so good for you!

 

[BlackSpider]

BTW Blackspider...I'd reckon if you are putting millions into your PPOR then that qualifies as "investing" so good for you!

No way do I have 5 mil !!!!! yet....
Was just giving an example of why you should count your PPOR.