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What is "rich"?


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I always considered "rich" to mean that someone makes a lot in annual income, maybe in the top 5-10% of income earners. I also considered "wealthy" to mean high net worth. But that's a personal disctinction that I base on the word "wealth" having a specific meaning to me. As we see from many examples, not all high earners have a high net worth.

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I'd say the first step in wealth is having $1 million in net assets including your equity in your primary dwelling. A lot of people classify millionaires as needing $1 million in net assets excluding the primary residence as well. Certainly if you have a nice home, have it totally paid for, and have another $1 million in after-tax assets (discounting all of your 401K and IRA's for tax effects) you are doing very well. I'd say once you have $2 million plus those things you are moving up quite nicely and likely could retire at any point you so desired. What is "rich" though is all relative.

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I've always thought of 'rich' to be someone who has money. Liquid assets. Wealthy, to me, is one who has great equity. Cash flow from multiple investment sectors(wall street, real estate, asset relocation, etc...).

Wealthy>Rich>well-off>comfortable

RICH:

1. having wealth or great possessions; abundantly supplied with resources, means, or funds; wealthy: a rich man; a rich nation.

2. abounding in natural resources: a rich territory.

3. having wealth or valuable resources (usually fol. by in): a country rich in traditions.

4. abounding (usually fol. by in or with): a countryside rich in beauty; a design rich with colors.

5. of great value or worth; valuable: a rich harvest.

WEALTHY:

1. having great wealth; rich; affluent: a wealthy person; a wealthy nation.

2. characterized by, pertaining to, or suggestive of wealth: a wealthy appearance.

3. rich in character, quality, or amount; abundant or ample: a novel that is wealthy in its psychological insights.

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How you define those terms is subjective. I don't know if most people aspire to be "rich" or "wealth", however you define those things, but I think most people aspire to be financially independent. What does that mean? If you stopped working today and you have zero income the rest of your life, that you could survive and pay for all the neccessities past your projected average lifespan while accounting for projected inflation and basic cost of living. Because of the exponentially increasing costs of medical care, most people in current times will never be truly financially independent. Actual "wealth" is relative. If the world was ripped apart by a nuclear war, you could have 500 cans of chili in a fallout shelter and you would be the wealthiest guy in your town. Supermodels would line up to blow you for a can of chili. (Assuming you didn't mind that their hair was falling out while they did it) If you are in jail, if you have an extra large Chicago style deep dish pizza in your cell, you are wealthy beyond measure. If you are on a deserted island with no hope of rescue and you have a book of matches and everyone else has bupkis, then you are loaded. Many people live long enough to see their grandkids. Very few live long enough to see their great grandkids unless you have a string of preteen mothers in one family. Seeing a generation past that is probably unrealistic. Most people just don't live that long. I think if your great great grandkids can live off of your wealth and be financially independent the day they are born based on your fortune, then you can consider yourself "rich", at least in a monetary sense. I think there is a misconception that you need to be filthy dirty rich or have some off the wall prestigious career to be financially independent. That's not true. You could work at a fast food joint your whole life and be financially independent if you handled your money correctly.

:no:
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