When I was a child, a million dollars was a lot of money. Back then, someone with a million dollars would be rich. A million dollars would earn $50,000 a year at 5% interest, which once could easily live on since the median family income of $6,900. I don't think we knew anyone that was a millionaire, i.e. someone that had a net worth of a million dollars.
Due to inflation, a million dollars isn't worth as much today. A million dollars earns only $10,000 at 1% interest, compared to the 2012 median family income of $50,500. Today, housing prices are much higher than when I was a child. For example, the house my parents owned when I was a child cost $28,000. That same house has an estimated value of $333,000 according to Zillow.com. So accumulating a million dollars in net worth is more achievable nowadays. Finally, I know lots everyday people who I estimate have over a million dollars in net worth.
Perhaps, the new benchmark for being wealthy is having 10, 50 or 100 million dollars. While I know some company executives that may have 10 million dollars in net worth, it is not likely I know anyone with 50 or 100 million dollars in net worth, which would make those values equivalent to being a millionaire when I was a child.
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This is not financial or wealth advice. Please consult a professional advisor.
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1 comment:
I think what has happened today - there is a place where one can go and live relatively happy on a smaller amount of money than $50,000.
For example Philippines - I colleague of mine for $200 a month has god a cook. She comes to his condo every morning and does the breakfast...
While inflation affected many aspects - i.e. housing, education...many luxuries became more affordable -TV, cars, fruits and vegetables, traveling, etc...
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