Showing posts with label millionaire. Show all posts
Showing posts with label millionaire. Show all posts
Saturday 14 May 2011
Thursday 24 June 2010
World's rich got richer despite recession
World's rich got richer despite recession
June 23, 2010
The rich grew richer last year, even as the world endured the worst recession in decades.
A stock market rebound helped the world's ranks of millionaires climb 17 percent to 10 million, while their collective wealth surged 19 percent to $US 39 trillion, nearly recouping losses from the financial crisis, according to the latest Merrill Lynch-Capgemini world wealth report.
Stock values rose by half, while hedge funds recovered most of their 2008 losses, in a year marked by government stimulus spending and central bank easing.
"We are already seeing distinct signs of recovery and, in some areas, a complete return to 2007 levels of wealth and growth," Bank of America Corp wealth management chief Sallie Krawcheck said.
The fastest growth in wealth took place in India, China and Brazil, some of the hardest hit markets in 2008. Wealth in Latin America and the Asia-Pacific soared to record highs.
Asia's millionaire ranks rose to 3 million, matching Europe for the first time, paced by a 4.5 percent economic expansion.
Asian millionaires' combined wealth surged 31 percent to $US 9.7 trillion, surpassing Europe's $US 9.5 trillion.
In North America, the ranks of the rich rose 17 percent and their wealth grew 18 percent to $US 10.7 trillion.
The United States was home to the most millionaires in 2009 - 2.87 million - followed by Japan with 1.65 million, Germany with 861,000, and China with 477,000.
Switzerland had the highest concentration of millionaires: nearly 35 for every 1000 adults.
Yet as portfolios bounced back, investors remained wary after a collapse that erased a decade of stock gains, fueled a contraction in the global economy and sent unemployment soaring.
The report, based on surveys with more than 1100 wealthy investors with 23 firms, found that the rich were well served by holding a broad range of investments, including commodities and real estate.
"The wealthy allocated, as opposed to concentrated, their investments," Merrill Lynch head of U.S. wealth management Lyle LaMothe said in an interview.
Millionaires poured more of their money into fixed-income investments seeking predictable returns and cash flow. The challenge ahead for brokers is convincing clients to move off the sidelines and pursue riskier, more fruitful investments.
"There is still a hesitancy," LaMothe said. "Liquidity is incredibly important and people need cash flow to preserve their lifestyle - but they want to replace that cash flow in a way that does not increase their risk profile."
The report found that investor confidence in advisers and regulators remains shaken. The rich are actively managing their investments, seeking customised advice and demanding full disclosure about the securities they buy.
There were signs that investors were shaking off their concerns. Families that kept money closer to home during the crisis began shifting money to foreign markets, particularly the developing nations.
North American and European investors are expected to increase their exposure to Asian markets, which are projected to lead the world in economic expansion. Europe's wealthy are seen increasing their US and Canadian holdings.
More wealthy clients also are taking a harder look at large companies that pay healthy dividends, as an alternative to bonds and their razor-thin yields.
"Investors are open to areas they hadn't thought about before as they try to preserve their ability to be philanthropic, to preserve their lifestyle," LaMothe said. "To me, the report underscored clients are involved and they're not inclined to stay in 1 percent savings accounts."
Reuters
June 23, 2010
The rich grew richer last year, even as the world endured the worst recession in decades.
A stock market rebound helped the world's ranks of millionaires climb 17 percent to 10 million, while their collective wealth surged 19 percent to $US 39 trillion, nearly recouping losses from the financial crisis, according to the latest Merrill Lynch-Capgemini world wealth report.
Stock values rose by half, while hedge funds recovered most of their 2008 losses, in a year marked by government stimulus spending and central bank easing.
"We are already seeing distinct signs of recovery and, in some areas, a complete return to 2007 levels of wealth and growth," Bank of America Corp wealth management chief Sallie Krawcheck said.
The fastest growth in wealth took place in India, China and Brazil, some of the hardest hit markets in 2008. Wealth in Latin America and the Asia-Pacific soared to record highs.
Asia's millionaire ranks rose to 3 million, matching Europe for the first time, paced by a 4.5 percent economic expansion.
Asian millionaires' combined wealth surged 31 percent to $US 9.7 trillion, surpassing Europe's $US 9.5 trillion.
In North America, the ranks of the rich rose 17 percent and their wealth grew 18 percent to $US 10.7 trillion.
The United States was home to the most millionaires in 2009 - 2.87 million - followed by Japan with 1.65 million, Germany with 861,000, and China with 477,000.
Switzerland had the highest concentration of millionaires: nearly 35 for every 1000 adults.
Yet as portfolios bounced back, investors remained wary after a collapse that erased a decade of stock gains, fueled a contraction in the global economy and sent unemployment soaring.
The report, based on surveys with more than 1100 wealthy investors with 23 firms, found that the rich were well served by holding a broad range of investments, including commodities and real estate.
"The wealthy allocated, as opposed to concentrated, their investments," Merrill Lynch head of U.S. wealth management Lyle LaMothe said in an interview.
Millionaires poured more of their money into fixed-income investments seeking predictable returns and cash flow. The challenge ahead for brokers is convincing clients to move off the sidelines and pursue riskier, more fruitful investments.
"There is still a hesitancy," LaMothe said. "Liquidity is incredibly important and people need cash flow to preserve their lifestyle - but they want to replace that cash flow in a way that does not increase their risk profile."
The report found that investor confidence in advisers and regulators remains shaken. The rich are actively managing their investments, seeking customised advice and demanding full disclosure about the securities they buy.
There were signs that investors were shaking off their concerns. Families that kept money closer to home during the crisis began shifting money to foreign markets, particularly the developing nations.
North American and European investors are expected to increase their exposure to Asian markets, which are projected to lead the world in economic expansion. Europe's wealthy are seen increasing their US and Canadian holdings.
More wealthy clients also are taking a harder look at large companies that pay healthy dividends, as an alternative to bonds and their razor-thin yields.
"Investors are open to areas they hadn't thought about before as they try to preserve their ability to be philanthropic, to preserve their lifestyle," LaMothe said. "To me, the report underscored clients are involved and they're not inclined to stay in 1 percent savings accounts."
Reuters
Big rise in the number of Australia's mega-rich
Big rise in the number of Australia's mega-rich
JARED LYNCH
June 24, 2010
AUSTRALIA'S mega-rich are shunning the real estate market for equities, believing property prices are too high and no longer have much bang for buck, a study shows.
The World Wealth Report, released by Capgemini and Merrill Lynch yesterday, revealed that the number of millionaires in Australia surged by 34.4 per cent last year to 174,000, with most recouping losses sustained in the financial crisis.
And the combined wealth of high-net-worth individuals in the Asia-Pacific region climbed 30.9 per cent to $9.7 trillion, overtaking Europe for the first time, which was $9.5 trillion.
The shift in rankings came because gains in Europe, while sizeable, were far less than those in the Asia-Pacific region, which saw continued robust growth in both economic and market drivers of wealth, the report said.
Merrill Lynch senior vice-president for investments Peter Opie said high-net-worth individuals, defined in the report as people holding investable assets of more than $US1 million ($A1.14 million), were putting money back into the sharemarket rather than property.
''Real estate is forecast to be a big loser,'' Mr Opie said.
''In Australia there is a concern that property valuation is too high.
''The equity markets had a big hit in 2008 and early 2009 and then people came back … because they were cheap again. Whereas perhaps with real estate you did not see as great a degree of movement down and therefore a greater degree of interest from investors.''
The report forecast that equity markets would account for 35 per cent of millionaire assets in the Asia-Pacific region by next year - an increase of 6 percentage points on last year - while real estate would drop from 18 per cent to 14 per cent.
Mr Opie said it was difficult to gauge what impact the forecast change in asset base would have on the real estate sector, particularly large-scale commercial projects.
''It's probably going to have an impact, sure,'' he said.
''But I'm probably not able to answer the question to the extent that the millionaire investors drive residential, commercial and industrial real estate. Much of that is held at the institutional level.''
The rich-list surge catapulted Australia to No. 10 for the number of millionaires after slipping to No. 11 in 2008.
The average individual worth was $2.99 million.
The US, Japan and Germany head the list, having 2.8 million, 1.65 million and 861,000 millionaires respectively.
Worldwide, the wealthy have nearly recouped the losses of 2008 and total assets are approaching levels last seen in 2007, before a US housing crisis triggered the global recession.
With AAP
JARED LYNCH
June 24, 2010
AUSTRALIA'S mega-rich are shunning the real estate market for equities, believing property prices are too high and no longer have much bang for buck, a study shows.
The World Wealth Report, released by Capgemini and Merrill Lynch yesterday, revealed that the number of millionaires in Australia surged by 34.4 per cent last year to 174,000, with most recouping losses sustained in the financial crisis.
And the combined wealth of high-net-worth individuals in the Asia-Pacific region climbed 30.9 per cent to $9.7 trillion, overtaking Europe for the first time, which was $9.5 trillion.
The shift in rankings came because gains in Europe, while sizeable, were far less than those in the Asia-Pacific region, which saw continued robust growth in both economic and market drivers of wealth, the report said.
Merrill Lynch senior vice-president for investments Peter Opie said high-net-worth individuals, defined in the report as people holding investable assets of more than $US1 million ($A1.14 million), were putting money back into the sharemarket rather than property.
''Real estate is forecast to be a big loser,'' Mr Opie said.
''In Australia there is a concern that property valuation is too high.
''The equity markets had a big hit in 2008 and early 2009 and then people came back … because they were cheap again. Whereas perhaps with real estate you did not see as great a degree of movement down and therefore a greater degree of interest from investors.''
The report forecast that equity markets would account for 35 per cent of millionaire assets in the Asia-Pacific region by next year - an increase of 6 percentage points on last year - while real estate would drop from 18 per cent to 14 per cent.
Mr Opie said it was difficult to gauge what impact the forecast change in asset base would have on the real estate sector, particularly large-scale commercial projects.
''It's probably going to have an impact, sure,'' he said.
''But I'm probably not able to answer the question to the extent that the millionaire investors drive residential, commercial and industrial real estate. Much of that is held at the institutional level.''
The rich-list surge catapulted Australia to No. 10 for the number of millionaires after slipping to No. 11 in 2008.
The average individual worth was $2.99 million.
The US, Japan and Germany head the list, having 2.8 million, 1.65 million and 861,000 millionaires respectively.
Worldwide, the wealthy have nearly recouped the losses of 2008 and total assets are approaching levels last seen in 2007, before a US housing crisis triggered the global recession.
With AAP
Thursday 3 June 2010
The New Millionaires - When a million is not enough
When a million is not enough
GEORGINA ROBINSON
May 28, 2010
In a time when a television network can afford to run a game show called Who Wants To Be a Millionaire but the average Sydney house costs $600,000, it's time to re-assess the value of $1 million dollars.
Can it still guarantee you financial freedom when whole residential blocks in Sydney are lined with homes carrying million-dollar plus price tags?
“You were generally considered to be rich if you had $1 million in the 1950s and now nobody would say you were seriously rich unless you had $10 million,” author and sociologist Michael Pusey says.
“But if you're talking about a sum of money that leaves you without economic insecurity then probably no sum will do it because expectations have risen and the multimillionaires themselves are at risk of going bankrupt and they want more and more … in order to feel safe.”
The professor of Public Ethics at Charles Sturt University, Clive Hamilton, agrees that the noughties' equivalent of a 1950s millionaire is someone with between $10 million and $20 million to burn.
And Eddie Maguire's television show is his proof.
“We now have a television program called Who Wants To Be A Millionaire, that would have been impossible 30 years ago because no television company would have been willing to stump up prize money of a million dollars, it would have sent them broke if anybody had won,” Professor Hamilton said.
The magic million may not have the same cache it once did but that will be little comfort to the many Australians who found themselves kicked out of the club during the GFC.
A study compiled by financial research company CoreData found nearly a quarter of the 1700 Australians with investment assets of more than $1 million were pushed out of the $1 million-plus bracket by the global financial crisis.
Another survey in the Boston Consulting Group's latest global wealth report, reported a 40 per cent drop in the numbers of millionaire households in Australia.
“It's about money that you could use, money is hard to use if it's tied up in your house,” wealth researcher Simon Kelly says.
Professor Kelly, working at the University of Canberra's National Centre for Social and Economic Modelling, says international benchmarks have declared US$2 million to be “the new $1 million dollars”.
“And that's excluding houses … because particularly in places like Sydney, there'd be whole suburbs where the value of each house is worth $1 million dollars and they take that out.”
A Sydney-based funds management specialist, who wanted to remain anonymous, says $10 million – split just about evenly between property and income-generating assets – would have him sleeping soundly at night.
“Enough to form a stash to generate comfortable annuity for a period of 30 years,” he says.
But Professor Pusey says it is impossible in today's economic, political and social climate to confidently predict what “enough” might look like.
“In the baby boomer times
“Today you would need vastly more than $1 million to achieve those ends for yourself.”
Professor Pusey says incomes are much more volatile these days, people enter the full-time labour market later and are often forced out earlier but live for much longer.
“The good news is you're going to live until you're 82-and-a-half, the bad news is you get pushed out of the labour market in your 50s if you can make it that long,” he says.
http://www.smh.com.au/executive-style/luxury/when-a-million-is-not-enough-20100528-wkkp.html
GEORGINA ROBINSON
May 28, 2010
In a time when a television network can afford to run a game show called Who Wants To Be a Millionaire but the average Sydney house costs $600,000, it's time to re-assess the value of $1 million dollars.
Can it still guarantee you financial freedom when whole residential blocks in Sydney are lined with homes carrying million-dollar plus price tags?
Do you need something closer to $10 million or $20 million to attain the symbolic separation from the masses a million once bought?
“You were generally considered to be rich if you had $1 million in the 1950s and now nobody would say you were seriously rich unless you had $10 million,” author and sociologist Michael Pusey says.
“But if you're talking about a sum of money that leaves you without economic insecurity then probably no sum will do it because expectations have risen and the multimillionaires themselves are at risk of going bankrupt and they want more and more … in order to feel safe.”
The professor of Public Ethics at Charles Sturt University, Clive Hamilton, agrees that the noughties' equivalent of a 1950s millionaire is someone with between $10 million and $20 million to burn.
And Eddie Maguire's television show is his proof.
“We now have a television program called Who Wants To Be A Millionaire, that would have been impossible 30 years ago because no television company would have been willing to stump up prize money of a million dollars, it would have sent them broke if anybody had won,” Professor Hamilton said.
“So now $1 million dollars is perhaps not chicken feed … but it just doesn't have the punch that it used to have.”
The magic million may not have the same cache it once did but that will be little comfort to the many Australians who found themselves kicked out of the club during the GFC.
A study compiled by financial research company CoreData found nearly a quarter of the 1700 Australians with investment assets of more than $1 million were pushed out of the $1 million-plus bracket by the global financial crisis.
Another survey in the Boston Consulting Group's latest global wealth report, reported a 40 per cent drop in the numbers of millionaire households in Australia.
The survey excluded individuals' businesses, homes and luxury goods, a key differentiator in the wealth race.
“It's about money that you could use, money is hard to use if it's tied up in your house,” wealth researcher Simon Kelly says.
“If you talk about people having $2 million to spend that's quite a different sort of person to one that's just worth $2 million.”
Professor Kelly, working at the University of Canberra's National Centre for Social and Economic Modelling, says international benchmarks have declared US$2 million to be “the new $1 million dollars”.
“And that's excluding houses … because particularly in places like Sydney, there'd be whole suburbs where the value of each house is worth $1 million dollars and they take that out.”
A Sydney-based funds management specialist, who wanted to remain anonymous, says $10 million – split just about evenly between property and income-generating assets – would have him sleeping soundly at night.
“Enough to form a stash to generate comfortable annuity for a period of 30 years,” he says.
But Professor Pusey says it is impossible in today's economic, political and social climate to confidently predict what “enough” might look like.
“In the baby boomer times
- we assumed that we would be able to buy a house on one income;
- we assumed that we would have quality health care for nothing;
- we assumed we'd have enough education as we wanted or needed for nothing;
- we assumed that the pension with our own savings would support us in our retirement and
- we assumed that we would have the resources to set up our children with those things,” he says.
“Today you would need vastly more than $1 million to achieve those ends for yourself.”
Professor Pusey says incomes are much more volatile these days, people enter the full-time labour market later and are often forced out earlier but live for much longer.
“The good news is you're going to live until you're 82-and-a-half, the bad news is you get pushed out of the labour market in your 50s if you can make it that long,” he says.
"There is no economic security and [people] need vastly more money to get it because their incomes are insecure and because debt levels are much higher than they were."
http://www.smh.com.au/executive-style/luxury/when-a-million-is-not-enough-20100528-wkkp.html
Thursday 14 January 2010
Making a million made easy
Sunday, February 19, 2006
News article: Making a million made easy
Just came across this article in TheAge Australia and thought it would be a good article to share with you guys. For your info, Kerry Packer, the richest Australia, passed away recently. For those who have the time, it is good to read the whole lot but for those who don't, here are the quotes I would like to share.
"The stockmarket is not life changing — 9.5 per cent per annum plus dividends is not going to turn you and I into Kerry Packer. But there are plenty of people in the stockmarket that have made it. Maybe not the billions, maybe not the millions, but plenty the million."
"You need patience. If you try to rush your financial transformation you will fail. Patience is about having realistic expectations. You won't get anywhere trying to make money every day. I've seen people in the market who spend most of the time doing nothing. Just sitting watching things going by. On the lookout. They don't try to generate opportunities out of nothing, they just wait for them."
"The mistake too many people make is to pursue opportunities frantically. Let them come. They always do. If you miss one, there'll be another."
"Terrific gains come from terrific information. Information is everywhere but most people don't use it, probably because they haven't got the time. There is plenty of money to be made out of the information gap. Knowing more than anyone else, because you bothered to do the work. Investssmart: Best describe the situation in Malaysia. Investors don't bother doing any research. They just buy TIMECOM, the billion dollar company which has never made an operating profit.
"You will not make extraordinary gains without investing in volatile (small and risky) stocks. The only way to do that is to narrow your odds significantly, minimise the risk. That means knowing what the company does. Knowing where it is in its development. Knowing what's ahead. Knowing more about it than almost anyone else. Getting to know people in the company. Talking to them. Only then can you take a big slug in a small stock that might see extraordinary gains."
Investssmart: This does not necessarily work in Malaysia because of syndicates and also because people tend to lie a lot more.
"You need mates. Kerry Packer had them. You will not make a fortune in the stockmarket by shutting yourself off in a small dark room. Information comes from mates. Opportunities come from mates."
Investssmart: Can I be your mates? :)
"Patience, information and mates. Your recipe for success."
"This isn't how you become a billionaire. The only real way to make a fortune is to build a business, build assets and employ people to build them for you."
Investssmart: That is very true. Warren Buffett is not an legendary investor for nothing. Being a multi-millionaire is enough for me.
Disclaimer: This report is brought to you by Investssmart, an unlicensed investment adviser. Please exercise your own judgment or seek professional advice from your remisiers. By law, they are the experts. I am not responsible for your investment decisions.
http://investssmart.blogspot.com/2006_02_01_archive.html
News article: Making a million made easy
Just came across this article in TheAge Australia and thought it would be a good article to share with you guys. For your info, Kerry Packer, the richest Australia, passed away recently. For those who have the time, it is good to read the whole lot but for those who don't, here are the quotes I would like to share.
"The stockmarket is not life changing — 9.5 per cent per annum plus dividends is not going to turn you and I into Kerry Packer. But there are plenty of people in the stockmarket that have made it. Maybe not the billions, maybe not the millions, but plenty the million."
"You need patience. If you try to rush your financial transformation you will fail. Patience is about having realistic expectations. You won't get anywhere trying to make money every day. I've seen people in the market who spend most of the time doing nothing. Just sitting watching things going by. On the lookout. They don't try to generate opportunities out of nothing, they just wait for them."
"The mistake too many people make is to pursue opportunities frantically. Let them come. They always do. If you miss one, there'll be another."
"Terrific gains come from terrific information. Information is everywhere but most people don't use it, probably because they haven't got the time. There is plenty of money to be made out of the information gap. Knowing more than anyone else, because you bothered to do the work. Investssmart: Best describe the situation in Malaysia. Investors don't bother doing any research. They just buy TIMECOM, the billion dollar company which has never made an operating profit.
"You will not make extraordinary gains without investing in volatile (small and risky) stocks. The only way to do that is to narrow your odds significantly, minimise the risk. That means knowing what the company does. Knowing where it is in its development. Knowing what's ahead. Knowing more about it than almost anyone else. Getting to know people in the company. Talking to them. Only then can you take a big slug in a small stock that might see extraordinary gains."
Investssmart: This does not necessarily work in Malaysia because of syndicates and also because people tend to lie a lot more.
"You need mates. Kerry Packer had them. You will not make a fortune in the stockmarket by shutting yourself off in a small dark room. Information comes from mates. Opportunities come from mates."
Investssmart: Can I be your mates? :)
"Patience, information and mates. Your recipe for success."
"This isn't how you become a billionaire. The only real way to make a fortune is to build a business, build assets and employ people to build them for you."
Investssmart: That is very true. Warren Buffett is not an legendary investor for nothing. Being a multi-millionaire is enough for me.
Disclaimer: This report is brought to you by Investssmart, an unlicensed investment adviser. Please exercise your own judgment or seek professional advice from your remisiers. By law, they are the experts. I am not responsible for your investment decisions.
http://investssmart.blogspot.com/2006_02_01_archive.html
Friday 25 December 2009
If you fall into a million dollars, you probably aren't set for life
$1 Million: Does It Still Mean You're Rich?
Posted: December 22, 2009 9:32AM
by Douglas Rice
Becoming a millionaire used to mean you were on top of the world. Nowadays, it means you are climbing up the ladder. While a million dollars is completely out of reach for many people, it's just a step along the way for many others. Why? Because it doesn't go as far as it used to.
The term millionaire has been synonymous with being rich ever since we became a country. The person most often credited to be the first American millionaire, Elias Hasket Derby, made his fortune as a privateer during the American revolution. Back then a millionaire did really mean rich.
Also, we all love round numbers. We love to see 1999 become 2000, and our odometer roll over to 100,000 miles. So it's only natural we would fixate on $1,000,000. It's a milestone with a lot of zeros. It's even got an additional comma. Now that's rich – having two commas in your net worth! But what does that get you? Not as much as you would think. (Learn more in Retiring: Is $1 Million Enough?)
Housing
Housing is where most people hold their largest chunk of wealth and with real estate falling considerably in many areas, some might think that the lifestyle a million dollars would provide would be luxurious. But that depends on where you live.
There are plenty of nice places to live that don't cost very much, but according to the California Association of Realtors, the median house price in Palo Alto, Los Altos, Manhattan Beach and Cupertino is over $1 million. The median price for the entire San Francisco Bay Area tops $500,000 and Orange County is right behind at just under that. And those are just averages, not even something special. While other areas of the country aren't nearly this expensive, being a millionaire in some areas just means you paid off the mortgage.
Retirement
Another aspect of becoming a millionaire is not working. If you had a $1 million right now, could you retire and would your money last? This is a simple calculation. If you want to try to live off the interest and you invest the money in tax exempt municipal bonds that pay 4%, then you would have $40,000 a year to live on. (Learn more in What's The Minimum I Need To Retire?)
But that doesn't account for inflation going forward. If $1 million today doesn't feel like much, imagine what it will feel like in 30 years. At 3% inflation compounding for the next 30 years, $1 million dollars will have the purchasing power of $412,000 today and your $40,000 income will feel like $16,500. So retiring when you have $1 million may sound nice, but it's likely that it won't be what many people have in mind when they think of retiring a millionaire.
Instead of living on the interest, you could tap into the principal as well. Those are slightly more difficult calculations. For example, if you were 50 years old right now and wanted to plan for your money to last until you were 95, then you need money for 45 years in retirement. If you stick with the 4% return, then you could withdraw about $48,000 a year. Again this doesn't account for inflation going forward. Each year if prices rise, your standard of living would fall. In this example, you have 45 years of prices going up at 3%. So that last year will feel like $12,600 does today.
Combining Retirement and Real Estate
If we factor in a house, this gets even worse. If we take the price for a house out of the $1 million, even in a reasonable area and not San Francisco, it's going to be a big piece of your net worth and cut into your funds for retirement. For example, if you bought a nice $250,000 home, you would only have $750,000 left to live on. At 4% that would be $30,000 a year or $2,500 a month. That's before inflation takes a bit every year.
These retirement calculations show that even if your house is paid off, that living off a million dollars isn't what it's cracked up to be. And if your house isn't paid off, it's probably not even close to what you want to do.
Bottom Line
So the bad news is that even if you fall into a million dollars, you probably aren't set for life, especially if you are young. But the good news is, you'll still be a millionaire, and that's better than the alternative. (Learn how to make it happen, read 10 Steps To Retire A Millionaire.)
http://financialedge.investopedia.com/financial-edge/1209/1-Million-Does-It-Still-Mean-Youre-Rich.aspx
Posted: December 22, 2009 9:32AM
by Douglas Rice
Becoming a millionaire used to mean you were on top of the world. Nowadays, it means you are climbing up the ladder. While a million dollars is completely out of reach for many people, it's just a step along the way for many others. Why? Because it doesn't go as far as it used to.
The term millionaire has been synonymous with being rich ever since we became a country. The person most often credited to be the first American millionaire, Elias Hasket Derby, made his fortune as a privateer during the American revolution. Back then a millionaire did really mean rich.
Also, we all love round numbers. We love to see 1999 become 2000, and our odometer roll over to 100,000 miles. So it's only natural we would fixate on $1,000,000. It's a milestone with a lot of zeros. It's even got an additional comma. Now that's rich – having two commas in your net worth! But what does that get you? Not as much as you would think. (Learn more in Retiring: Is $1 Million Enough?)
Housing
Housing is where most people hold their largest chunk of wealth and with real estate falling considerably in many areas, some might think that the lifestyle a million dollars would provide would be luxurious. But that depends on where you live.
There are plenty of nice places to live that don't cost very much, but according to the California Association of Realtors, the median house price in Palo Alto, Los Altos, Manhattan Beach and Cupertino is over $1 million. The median price for the entire San Francisco Bay Area tops $500,000 and Orange County is right behind at just under that. And those are just averages, not even something special. While other areas of the country aren't nearly this expensive, being a millionaire in some areas just means you paid off the mortgage.
Retirement
Another aspect of becoming a millionaire is not working. If you had a $1 million right now, could you retire and would your money last? This is a simple calculation. If you want to try to live off the interest and you invest the money in tax exempt municipal bonds that pay 4%, then you would have $40,000 a year to live on. (Learn more in What's The Minimum I Need To Retire?)
But that doesn't account for inflation going forward. If $1 million today doesn't feel like much, imagine what it will feel like in 30 years. At 3% inflation compounding for the next 30 years, $1 million dollars will have the purchasing power of $412,000 today and your $40,000 income will feel like $16,500. So retiring when you have $1 million may sound nice, but it's likely that it won't be what many people have in mind when they think of retiring a millionaire.
Instead of living on the interest, you could tap into the principal as well. Those are slightly more difficult calculations. For example, if you were 50 years old right now and wanted to plan for your money to last until you were 95, then you need money for 45 years in retirement. If you stick with the 4% return, then you could withdraw about $48,000 a year. Again this doesn't account for inflation going forward. Each year if prices rise, your standard of living would fall. In this example, you have 45 years of prices going up at 3%. So that last year will feel like $12,600 does today.
Combining Retirement and Real Estate
If we factor in a house, this gets even worse. If we take the price for a house out of the $1 million, even in a reasonable area and not San Francisco, it's going to be a big piece of your net worth and cut into your funds for retirement. For example, if you bought a nice $250,000 home, you would only have $750,000 left to live on. At 4% that would be $30,000 a year or $2,500 a month. That's before inflation takes a bit every year.
These retirement calculations show that even if your house is paid off, that living off a million dollars isn't what it's cracked up to be. And if your house isn't paid off, it's probably not even close to what you want to do.
Bottom Line
So the bad news is that even if you fall into a million dollars, you probably aren't set for life, especially if you are young. But the good news is, you'll still be a millionaire, and that's better than the alternative. (Learn how to make it happen, read 10 Steps To Retire A Millionaire.)
http://financialedge.investopedia.com/financial-edge/1209/1-Million-Does-It-Still-Mean-Youre-Rich.aspx
Sunday 13 September 2009
Virtually anyone can evolve into a millionaire
Mathematics also shows us that virtually anyone can evolve into a millionaire through patient, diligent investing.
An individual who socks away a few thousand dollars every year starting at the age of 21 can easily amass $1 million by retirement. The power of time and the power of compounding ensure that any individual who can save money consistently can attain a decent degree of wealth by the age of 65 or 70.
If that same individual can manage to save an extra few thousand dollars more each year, the pile of assets attained at retirement would be much larger.
If that individual manages to earn a few extra percentage points of gain each year, either through good stock-picking or wise account management, the amount of money earned at the end is many times greater.
An individual who socks away a few thousand dollars every year starting at the age of 21 can easily amass $1 million by retirement. The power of time and the power of compounding ensure that any individual who can save money consistently can attain a decent degree of wealth by the age of 65 or 70.
If that same individual can manage to save an extra few thousand dollars more each year, the pile of assets attained at retirement would be much larger.
If that individual manages to earn a few extra percentage points of gain each year, either through good stock-picking or wise account management, the amount of money earned at the end is many times greater.
Thursday 9 July 2009
How the rich are different – and becoming more so
Comment: How the rich are different – and becoming more so
It falls to Nick Carraway in F Scott Fitzgerald's novel The Great Gatsby to observe: "The rich are different from you and me." To which the sensible reply must surely be: "Yes, they have more money."
By Ian Cowie
Published: 11:55AM BST 02 Jul 2009
Another, more topical, difference is that there are far fewer of them than there were a year ago. Given the scale of the credit crisis, perhaps that is one of the less surprising conclusions of the 2009 World Wealth Report issued last week by Merrill Lynch and Capgemini.
But what caught my eye was the marked change in the geographical location of these lucky plutocrats. Far fewer of them are British. For the first time, the number of millionaires in China has overtaken those in Britain.
Merrill Lynch Global Wealth Management, an arm of America's biggest stockbroker, and Capgemini, the global consulting services firm, disdain to use such a vulgar word as "rich". Instead, they prefer to count "high net worth individuals", by which they mean people with more than $1m (£615,000) of "investable assets" – that is, excluding the value of their home.
Whatever you call them, there were 491,000 of these millionaires in Britain the last time Merrill counted them but only 362,000 this year. China also felt the credit crunch – but less so – with its headcount of millionaires falling from 413,000 to 364,000.
It would be wrong to make too much of such a marginal difference, although it does dislodge Britain from its long established place as the fourth richest country in the world on the Merrill Lynch measure. America, Japan and Germany still account for 54pc of all millionaires but how long will it be before China overtakes those in third and second positions?
This largely overlooked report may remind unit and investment trust investors who are keen to gain exposure to economies that are growing rather than shrinking that the sun sets in the west but rises in the east.
http://www.telegraph.co.uk/finance/personalfinance/comment/iancowie/5682336/Comment-How-the-rich-are-different---and-becoming-more-so.html
It falls to Nick Carraway in F Scott Fitzgerald's novel The Great Gatsby to observe: "The rich are different from you and me." To which the sensible reply must surely be: "Yes, they have more money."
By Ian Cowie
Published: 11:55AM BST 02 Jul 2009
Another, more topical, difference is that there are far fewer of them than there were a year ago. Given the scale of the credit crisis, perhaps that is one of the less surprising conclusions of the 2009 World Wealth Report issued last week by Merrill Lynch and Capgemini.
But what caught my eye was the marked change in the geographical location of these lucky plutocrats. Far fewer of them are British. For the first time, the number of millionaires in China has overtaken those in Britain.
Merrill Lynch Global Wealth Management, an arm of America's biggest stockbroker, and Capgemini, the global consulting services firm, disdain to use such a vulgar word as "rich". Instead, they prefer to count "high net worth individuals", by which they mean people with more than $1m (£615,000) of "investable assets" – that is, excluding the value of their home.
Whatever you call them, there were 491,000 of these millionaires in Britain the last time Merrill counted them but only 362,000 this year. China also felt the credit crunch – but less so – with its headcount of millionaires falling from 413,000 to 364,000.
It would be wrong to make too much of such a marginal difference, although it does dislodge Britain from its long established place as the fourth richest country in the world on the Merrill Lynch measure. America, Japan and Germany still account for 54pc of all millionaires but how long will it be before China overtakes those in third and second positions?
This largely overlooked report may remind unit and investment trust investors who are keen to gain exposure to economies that are growing rather than shrinking that the sun sets in the west but rises in the east.
http://www.telegraph.co.uk/finance/personalfinance/comment/iancowie/5682336/Comment-How-the-rich-are-different---and-becoming-more-so.html
Monday 12 January 2009
How long will it take to become a millionaire?
How long will it take to become a millionaire?(Comment: Make a $1,000 per day for 1000 days. 1000 x 1000 = 1 million)
The movie Slumdog Millionaire will reignite our dreams to become super-rich but the reality is that few of us will be one question away from winning the quiz Who Wants to be a Millionaire?. If you had to save, how long would it take you to save £1m?
By Paul Farrow Last Updated: 4:59PM GMT 09 Jan 2009
How long will it take to become a millionaire? Photo: BBC
Go on, admit it. You have dreamed that one day you will become a millionaire. More than two-thirds of the 23m people who have bought National Savings & Investments' Premium Bonds have done so in the hope of becoming a millionaire.
However, the odds are stacked against you and the chances of winning the Premium Bond jackpot are 1.6m to one if you have £1,000 worth of bonds.
Tens of thousands play the National Lottery each week in the hoping of becoming a millionaire. Most of us only win a tenner every now and then by matching three numbers. Matching six numbers is an entirely different ball game. With six numbers drawn at random from the set of integers between 1 and 49, the jackpot odds are 1 in 13,983,816 – or approximately 1 in 14m.
Del Boy Trotter from TV's Only Fools and Horses always dreamed of becoming a millionaire. But the odds are also firmly stacked against you finding an antique watch worth £1m in your garage – as Del Boy did to finally fulfil his lifelong dream.
For most of us, all we can do is graft away and put what money we have going spare by to build up a tidy nest egg. You are likely to be far short of a £1m – but just in case you are interested, our new calculator will show you how much you will need and how long it will take for various rates of return.
Millionaire calculator
Related Content
More on Consumer Tips
Premium Bond payouts halved in a year
Premium Bonds are looking a better bet than Isas
How long to earn £1m?
Coincidence? 13 really is the unlucky number
How likely are your numbers to come up?
Against all the odds, lottery players chase their dream
Editor's commentary
Alternative uses for £7,000
More on Consumer Tips
Premium Bond payouts halved in a year
Premium Bonds are looking a better bet than Isas
How long to earn £1m?
Coincidence? 13 really is the unlucky number
How likely are your numbers to come up?
Against all the odds, lottery players chase their dream
Editor's commentary
Alternative uses for £7,000
Subscribe to:
Posts (Atom)