Bloomberg: In an era of hyper-wealth, economy-class rich starts at $25M
bloomberg.com
bloomberg.com
The original title is: "Here’s How Much Money You Need for Bankers to Think You’re Rich"
First of all: who gives a damn what Bankers think about anyone? I entered the labor market around 2007 and since the meltdown not much of the general "Bankers Mindset" has changed. Living in London for 2 years it was quite painful listening to some young bankers on parties or other occasions. Their second question usually starts with something indicating your income. 80/20 principle applies but "character shallowness" was a widely spread phenomenon.
SV or the tech scene in general should be more forward thinking and measure a persons stance in society by "how many people does your work effectively help" with "monetary net worth" purely as the result of your actual "value added for society".
Wealth is passing, wealth is relative; once your real, true needs (not the ones you think you need) are covered, we, indeed, should be focusing on moving humanity ahead, and not on personal hoarding.
When my wifes replies to questions like what is your dream house like? as a tiny, self-sustaning house, so I don't have to do housework, she regularly meets confused looks, because "but what about space and and large space and...".
Focus on what you really need, not on what society tells you to believe.
Granted, this article is written not for the wealthy or the bankers, but as fantasy material for the huddled masses :)
I passed a million dollar net worth last year and I hardly consider myself a true millionaire. Just a working class developer.
We are not working class, full stop. Nobody here is being crippled by arthritis at the tender age of 40, nobody risks physical injury at their job, nobody is risking a permanent end to their ability to earn a living by someone pressing a button on a machine at the wrong time. Even ignoring the lack of any real danger, don't try to tell me that sitting at a desk for 8 hours a day is even a tenth as physically demanding as welding, plumbing, carpentry, or general contracting is for 10-12.
To imply the people here getting paid $180k a year plus RSUs to type is an insult to real working class people who struggle to make rent every month.
Physical injury is not a pre-requisite to doing "real work" that defines a "working class". Given how prevalent software development rolls are (it's eclipsing truck driving in many US states), a "developer" is certainly not mutually exclusive with "working class".
What we all have in common is that we must continue to work to live.
I agree with the overall feeling of your reply, but let's not fall in the opposite trap to paint a proletarian view of the working class either. The amount of iPhones out there in developed countries is a good indication that a good chunk of the working class has no problem shelling hundreds of dollars on expensive hardware on top of paying their rent.
Wealth (at least relative wealth) can be obtained, by anyone. The secret formula has been public for decades: Save a good percentage, invest it carefully, don't spend beyond your means. It works for everyone at every pay scale.
To my mind, someone in the working class should be someone who works for a living.
> When used non-academically in the United States, however, it often refers to a section of society dependent on physical labor, especially when compensated with an hourly wage.[0]
Your definition is much closer to the Marxist definition which is basically "anyone who trades time for money" which describes the vast majority of the world.
Here in the UK people will cling to being part of their class as though their life depends on it.
Middle class people had rather die than be called 'working class'. The working class hates the middle class with an intense passion, thinking they all eat kale, basically live at Starbucks and try to turn England into a communist utopia.
Class divisions just play into the hands of the one and only class that's different from the people who work for money: Those who do not have to.
If society was nicely split into "those who work for money and those who do not", I believe it would very quickly become clear who is acting in whose interest.
But so long as the veil of "working vs. middle, vs. upper middle" shrouds our collective ability to see who is truly ruining it for everyone, nothing will change.
But clarity is important. I have more in common with the business owner who could stop working but chooses not to than I do with the line cook making $10/hr, even if the financial interests of the business owner are diametrically opposed to my own (I'm not conceding that point, mind you).
I don't understand what is so problematic about understanding there are drastically different economic classes in society. Understanding where those boundaries lie and the differences between them leads to greater clarity in the issues facing all classes.
By that logic only the 0.001% is not working class. That's a little far-fetched.
Does it not make far more sense to finally realise that there are people who work for money, in exchange for freedom (directly that. time, freedom, agency. that is what you exchange for money) and then there are people who use the work of others to ensure they never lose their own freedom? With blatant disregard for the wellbeing of those workers?
If that is where the dividing line was, things might finally change.
I'd argue that unless you live in a high COL area by choice, 1-1.5 million is all you need to live without working.
Here's hoping remote work becomes the norm someday!
Will your 1 million outpace inflation? 1 million in 2050 ain’t shit.
And I’m completely speculating here but I imagine over that much wealth and you start having some new lucrative (but perhaps ethically dubious) options available that you need a private wealth manager for. Things like being able to exert control on asset prices, getting in on deals that involve some sort of insider info or successful lobbying of the government for special favors, other transactions involving shell corporations and offshore accounts, etc. Or maybe I just watch too many movies.
Honestly that article didn't cause me any envy, if anything it caused me imaginary anxiety.
Seems like $25 million is when you start to look like a juicy target for people trying to rip you off.
The main argument is that almost anyone can become a "simple" millionaire through frugality and--most importantly--avoiding trying to emulate the consumption patterns of the "glittering rich" (e.g. decamillionaires and those described in the article).
Combine living below your means with an in-demand skill, a healthy stoic outlook (learn to love what you already have), and you'll have a great shot at financial independence.
That's the crux of their argument. It's not about being 'rich' in any social sense, and I think the article was written pretty shamelessly to imply otherwise.
- Housing. Multiple dwellings around the world. A penthouse in London, a villa on the southern coast of France, etc.
- Travel. No more sitting in an Uber or public transit on your way to economy class travel. Helicopter from nearest helipad to small private plane equipped with chef and luxurious sleeping quarters.
- Collecting. Buying (expensive) things that you like. Art, cars, horses, stamps, etc.
- Entrepreneurship/Investing. Buying up cash-flow generating assets like companies or land w/ natural resources. Investing or starting companies in potentially risky areas like spaceflight or human life extension that most people wouldn't do if their main goal was to get rich to begin with.
- Philanthropy. Support your causes of choice. Also a good way to keep the non-extremely-high-earning spouse busy in the event that they don't want to keep working.
- Politics. With super PACs unlimited money can go in to the political system. Usually this is done in tasteful amounts of a few million here or there to retain some influence but some people make this their main goal (Mercer family, Tom Steyer, Kochs, etc.)
- Legacy. Structuring trusts and other legal structures (potentially offshore) to ensure that the wealth is multigenerational. It can be possible to guarantee that your offspring 1-4 generations out will live comfortable lives.
Even undramatically, suppose a family want to have a nice house in the centre of a big popular city, have a couple of Teslas, give two children private education debt-free to graduation, go on five-star holidays for a month a year, and have pensions that enable them to maintain this lifestyle, that's probably more than half the $25m right there. And it doesn't even look all that extravagant.
Want to go on vacation? Do it. Want to take a year to pursue painting? Would you prefer to try Oils or Acrylics? Want a personal tutor to help you become that better painter? No problem. Want to see how hard it is to make another $10M? Go for it. Want to start a business? No? Buy an established business and be its CEO? Go for it.
When money doesn't matter, you can do whatever you want. All that stress you face trying to make that $25k a year is completely gone. All that brain- and willpower it takes to be frugal can be applied to whatever you want it to be applied to.
[EDIT] This is why I view UBI as a good goal. Get rid of the need to put so much brainpower into merely surviving, and let's see what comes out the other side. I feel that we're at a point in society where the struggle to survive could be put behind us for everyone, not just the ultra wealthy.
The one thing that most studies have shown is that (in today's dollars) once you get above about $80K household income, any more income doesn't make you any happier. If you think about it that makes sense, since at the level and above you can have some financial security and not be paycheck to paycheck (in most areas), have a small house and decent cars which greatly reduces your stress and leaving room for contentment. Of course, each person's goals are different and the amount of Jonesing they can control is too.
Obviously you still need to save and plan it, and if you're making $1 million a year you can probably spend $30k without thinking about it. But just wanted to point out that it's doable.
As for the $80k study you're mentioning I've seen numbers all over the place, from $70k up to $105k, but I've definitely noticed the satisfaction from each raise has decreased even while the raw dollar amounts have gone up. The last raise I got only served to go toward paying down debts faster, which I can attest makes me very happy.
I think that around 40k perhaps 50k per year, I would completely stop thinking about money.
A conservative safe withdrawal rate is about 3-4% per year. So that's $750,000 to $1mm per year of income in perpetuity on $25mm. On the one hand, $1mm per year is a ridiculous amount of money, and it's an order of magnitude above what any normal person would need for their lifestyle.
On the other hand, it's pretty easy to ratchet your lifestyle up to that level. Here's an easy way to spend $1mm per year: you live in a really nice place in a HCOL area, have a fancy vacation home elsewhere, employ a few staff (housekeeper, nanny, personal trainer, etc), have 2-3 kids in top private school, do several luxury vacations per year where you stay in 5-star hotels and fly international first class, etc.
That doesn't cover the kind of crazy lifestyle where you're chartering super yachts or owning a private jet or renting out Necker Island or having Beyonce perform at your birthday party. That's nine or ten figure wealth territory.
It also doesn't leave a huge pile of money left over for the really fun stuff, like philanthropy, buying and selling businesses, doing large real estate investment or development, angel / venture investing, etc.
I personally think that I'd have a harder time finding interesting things to do with anything more than $100mm, but I suspect that's due to my inexperience and lack of imagination, more than an actual dearth of opportunities that billionaires have to do interesting things :)
But I have NO IDEA of how much money is needed for that. $25mm seems so astronomically high
I googled: $145 million is the MoMA yearly budget. For a little museum in a peripheral town $25mm seems appropriate.
If people is willing to invest $25mm please contact me, I have big ideas now :P
For a university department, Duke has some good numbers: https://giving.duke.edu/ways-to-give/endowment/endowment-giv... Assuming three full professors and three assistant professors, plus some extra for the chair and one visiting professor, I'd estimate a 16mm endowment would run a department quite nicely for a while.
Spoiler: It doesn’t make them happy.
Are you happy? Do you have goals? Do you have/serve a purpose?
You know, the real questions.
As mentioned in the article itself, $25M is currently an approximate treshold where certain bankers define you as "ultra-high net worth". Which sounds reasonable to me.
That is not economy-class anything by any common definition of the term.
If it could realistically be capped at, say, $10mil or something, why not?
Nobody needs more than that. Yes, you could say the same for one million or a hundred, but you have to start somewhere. It makes me sick that this is the society we live in.
This pathetic striving for maximum wealth, in an eternal competition over who has a bigger ficitious number attached to their family emblem, no matter what the societal, ethical and global consequences, is close to the root of all evil in my opinion.
I'd also argue that capitalism is on a downward trend when it comes to lifting people out of poverty. One doesn't have to look much further than Wallmart or McDonalds to see the cracks in the "uplifting from poverty" walls (paying salaries that must be supplemented by federal aid or second/third jobs).
I guess there is this strange notion that Capitalism is this "all or nothing" system, where you either get a free market with its invisible hand or nothing. This sort of "Everything else is communism" thinking.
We all know that this is not true. Capitalist societies have all sorts of schemes that are "un-capitalistic". Take public healthcare. In some ways that's a very socialist idea. At the same time, you could argue it supports the capitalist system by taking various burdens off the workforce, enabling them to spend more time generating more money than it cost to implement the socialist health care.
My theory is that concentration of wealth is incredibly dangerous to society because it gives disproportionate power to very few individuals. The control these people exert over policy, their workers, our entire culture leaves us at their whim. This results in things like Brexit and the insane clusterfuck that's the current US government and the populist right-wing uprising in Europe.
I don't care whether someone has tons of money so they can wank themselves to sleep over their financial portfolio. I do care when society as a whole, human progress, everyone's actions are filtered through the lens of a few rich people's actions and desires.
I hate this notion that the population-at-large is just a sideshow on this rich-people's playground we call earth. It is sickening. The wealth that these people amass does not trickle down and is not used for more useful things than it would be if this wealth was somehow capped and re-distributed for the benefit of society. (And believe me, I know that on the flipside this would be a breeding ground for bloated institution wasting money with their inefficiency. This would also not be a 'perfect' system by any means, but I do believe it would be better than whatever it is we are currently steering towards.)
To quickly touch on people being lifted out of poverty. I am all for it. But under what conditions? Is a Foxconn factory worker someone who was lifted out of poverty? Is a quasi-slave working on the Qatari football stadium lifted out of poverty? In exchange for what?
Is the ever-decreasing quality of life people on disability benefits in the UK, being harassed by the DWP 24/7 and stripped of all agency and freedom worth it, because they are not considered "below the red line poor"?
Would the reinvigoration of public services by capping wealth (or introducing profit sharing in companies, or 20:1 pay ratios / stock option ratios for companies) be so devastating to all of society that it would indeed be worse than the current destruction of democracy by your Murdochs, Kochs, Zuckerbergs, Bezoses, Rothchilds and whomever else super-rich acting in their own interests?
Interesting link here: http://nautil.us/issue/52/the-hive/is-there-an-ideal-amount-...
However, I have very different ideas about why it exists and how to fix it. In my opinion, over-regulation, taxes, and nanny-state-ism have caused both financial problems and culture problems. Our heavy handed government continues to further disincentivize risk-taking, a hallmark of a free society, it entrenches wealth (both private individuals and big companies) by preventing average folks from taking risks in the financial system in the name of protecting them, and by adding thousands of pages of regulations to big industries (be it cable, credit reporting, banking, and soon social media) making them inaccessible to startups without both deep pockets and connections. We also have a government that prefers an inflationary currency for the illusion of growth and questionable long-term benefits, even though the poorest are least able to translate their cash into cash-flow producing assets and the wealthiest have capital gains taxes capped at a lower rate than a relatively low-income earner's taxes, which is indeed a regressive system. Not to mention all of this is done with a nearly regressive tax system (on top of the existing inflation tax, which hits low income earners hardest).
> Is a Foxconn factory worker someone who was lifted out of poverty? Is a quasi-slave working on the Qatari football stadium lifted out of poverty? In exchange for what?
I would counter by asking whether these workers living in free market societies? Clearly not, both are working in dictatorships and are not free at all. Even the US is far from a free market system due to many points, some of which I touch on in this thread.
> Would the reinvigoration of public services by capping wealth (or introducing profit sharing in companies, or 20:1 pay ratios / stock option ratios for companies) be so devastating to all of society that it would indeed be worse than the current destruction of democracy by your Murdochs, Kochs, Zuckerbergs, Bezoses, Rothchilds and whomever else super-rich acting in their own interests?
Yes I think that's the wrong way to go about it. I don't believe in forceful, direct wealth distribution against people who committed no crimes, nor hard, arbitrary caps determined by bureaucrats. Ask questions about how it happened and how to make it better. How about we start with updated income tax brackets for the super-rich or a negative income tax? Right now the highest brackets hit people who are really not that rich (making 470k as the top bracket pays the same rate as someone who made 50m, and probably more considering higher amounts are usually capital gains), where really these brackets should be spread out way further up to 100 million, and perhaps there should be discounts for wealth factored into the income tax -- e.g. if you sold your first startup for 5 million you should pay a bit less than a CEO worth 100m who makes 5m every year. Combining that with a graduated capital gains system that is updated for the modern world (where 470k isn't considered the 'richest class') would go a long way, especially if rates are reduced for people making less than 400k in the current system.