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Dad, Are We Rich?

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Re: Dad, Are We Rich?

#21

Post by Spooky23 »

g_sch wrote: post #9

I think the author is a bit too narrow in their definition of "political clout". They seem to define it as the ability to personally influence federal policy. However, as a class, people with $4M in wealth or more have an immense amount of political clout. Most contemporary US local, state, and even federal policies are geared toward attracting and retaining these people. Think property tax caps, mortgage interest de…

Remember the audience is doctors. Doctors make bank but work hard and don't have the time to participate in the political process.

A small/mid time real estate guy with a similar net worth will have much more political clout because he has the time to do political events and interact with that strata of people.

Re: Dad, Are We Rich?

#22

Post by didip »

Being rich is a measure of assets generating income relative to future expenses.

Once your passive income can cover your monthly expenses, you are already veering into rich territory.

Re: Dad, Are We Rich?

#23

Post by scoutt »

I think the questions following 'are we rich' can be harder to answer, because the answer may produce a different (bad/good) lesson in a child. Like...

why are we rich? / why are we not rich?

or maybe...

if we are rich, what are we doing for those who are not?

etc...

Re: Dad, Are We Rich?

#24

Post by pranjalv123 »

g_sch wrote: post #9

I think the author is a bit too narrow in their definition of "political clout". They seem to define it as the ability to personally influence federal policy. However, as a class, people with $4M in wealth or more have an immense amount of political clout. Most contemporary US local, state, and even federal policies are geared toward attracting and retaining these people. Think property tax caps, mortgage interest de…

$4M in wealth is certainly enough to get a lawmaker to pass a "pet law" - some minor change to a zoning code or regulatory infrastructure that matters for your business. At least, if there's no concerted opposition to your pet law.

Re: Dad, Are We Rich?

#25

Post by ikeyany »

bob33212 wrote: post #11
simonh wrote: post #2

Some wealthy trust fund babies were asked how much wealth they thought they would need to really feel financially secure long term. They had inherited wealth ranging from tens, up to hundreds of millions. Almost all of them named a figure about double their personal net worth, regardless of what that net worth was.

Humans naturally anchor to their social network. If those people grew up in rural West Virginia with coal miner family income they would tell you that 250k/year is wealthy. You have to actively resist this anchoring behavior. You have to remind yourself that just because your neighbor has a 50k car, it doesn't mean that your 10k car is not a good fit for you.

I know you mean well, but people tend to want to fit in with their milieu.

Re: Dad, Are We Rich?

#26

Post by ryandrake »

simonh wrote: post #2

Some wealthy trust fund babies were asked how much wealth they thought they would need to really feel financially secure long term. They had inherited wealth ranging from tens, up to hundreds of millions. Almost all of them named a figure about double their personal net worth, regardless of what that net worth was.

I don’t think that mentality is limited to rich people. If you went back in time to each of the last 20 years and asked me how much savings I think I’m going to need in order to retire, the answer I’d give you (regardless of my current savings in that year) would have been “about 10X what I already have saved.”

At this point I’ve admitted to myself that I will need to work until I die!

Re: Dad, Are We Rich?

#27

Post by jedberg »

Zaak wrote: post #20
jedberg wrote: post #7

My measure of rich is "Can I live my current lifestyle without regular income from a job?". If the answer is yes, then you are rich. The trick here is to make sure to keep your lifestyle costs in line with your salary when you first start out, so that as your income grows you can save. So yeah, if you want a big house and nice cars and nice vacations, you wouldn't consider yourself rich compared to people who don't h…

I agree with you. For example, if I had 100 times my current yearly income in savings/investments/etc, I could live my current lifestyle indefinitely (barring eg, a market crash) because even with zero interest, the money would last 100 years, and with minimal effort (ie index funds) the money would grow over the long term at a rate greater than 1%. Of course, that would require persisting in my current lifestyle in…

> Of course, that would require persisting in my current lifestyle in the face of a massive increase in wealth, which takes nontrivial self-discipline.

And you must maintain that self-discipline in a world where you are constantly bombarded with messages to "spoil yourself" because "you're worth it" and "you can afford it". It's not easy.

Re: Dad, Are We Rich?

#28

Post by rootusrootus »

docker_up wrote: post #6

My kids asked me this and I said we are "comfortable". We are easily 1%-ers in terms of income level but we don't consider ourselves rich. I consider someone rich who has the luxury of not working and still maintaining a very good lifestyle. In Silicon Valley you can't do that without substantial net worth. The reason why we don't consider ourselves rich is because both my wife and I have to work very hard. We love o…

The way I look at it is that there is a significant difference between being 1%-er by income, and 1%-er by net worth. The former is not terribly uncommon in the tech industry, but the latter is what counts as real wealth.

Re: Dad, Are We Rich?

#29

Post by dgabriel »

bob33212 wrote: post #11
simonh wrote: post #2

Some wealthy trust fund babies were asked how much wealth they thought they would need to really feel financially secure long term. They had inherited wealth ranging from tens, up to hundreds of millions. Almost all of them named a figure about double their personal net worth, regardless of what that net worth was.

Humans naturally anchor to their social network. If those people grew up in rural West Virginia with coal miner family income they would tell you that 250k/year is wealthy. You have to actively resist this anchoring behavior. You have to remind yourself that just because your neighbor has a 50k car, it doesn't mean that your 10k car is not a good fit for you.

I grew up with an engineer's family income, and 250k still seems pretty wealthy. That puts you in the top 5% of US earners.

Re: Dad, Are We Rich?

#30

Post by lotsofpulp »

Spooky23 wrote: post #13
war1025 wrote: post #4

Earlier quoted context omitted.

Having kids is the wrench in the gears for many people I'd guess. There's a reason for the term DINK (Dual income, no kids). Edit: Also to clarify, I absolutely agree with the living frugally thing, and think most people would be in general better off if they focused less on spending every penny they make.

The costs of having children are dramatically over-costed on internet forums. People going the DINK route are mostly prioritizing careers over life. It's a vicious cycle for many, who end up changing their mind and spending alot of money and opportunity cost trying to make up for it.

It's not the cost of birthing/feeding/clothing/daycaring. It's the cost of having a house in the best school district you can afford, sending your kids on ski trips or international vacations with their friends who also have higher income parents, and various other activities that are involved with being in the "up and coming" social group.
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