One of my favorite bulletin boards has this thread about just what is rich for you?
Link to somersoft forums thread ‘What is your definition of rich?”
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 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