The 1%

[Tim]

Lordosis wrote:

Most of it is tied up in their business.

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In Corporate America, "When analyzed in the aggregate, the average age for a C-suite member is 54 and the average tenure is 5.3 years. However, the numbers vary depending on title and industry." It's a struggle to maintain high earnings in business. Equity is the key even in private business. Very few can develop a "cash cow" and keep it going for an extended period of time.

[MPMD]

the last time i looked into this i noted that the presence of ultra-wealthy people and the huge numbers of people with no or zero net worth make these data sets kind of odd.

having a top 1% income (which many of us do) doesn't really mean all that much as crazy as that sounds. there are plenty of households who make that who probably have shockingly low wealth (see the mission the WCI).

to me being a millionaire is still an impressive break point, very tough to poor-mouth at that level of wealth. although many might try they obviously will not be taken very seriously.

the next point probably comes around $5M where I would say that some degree of generational comfort is essentially assured pending no terrible decisions.

over $10M to me you are really getting into next level stuff.

[Anne]

How do people know how many people they know with NW >10 million?

I know one person who I know well enough to know NW in mid-high 8 figures. If you didn't know him well or are one of the charitable organizations he is donating to you would have no idea. I know some other people who I'm guessing are above the 10 million range but I'm not about to ask and it's not like they advertise it. So I'm guessing there are other people I know but don't know well enough who have a NW in the 1% of which I'm not aware.

[q-school]

White.Beard.Doc wrote:

That is a funny question.  If I am in the 1% by income and I spend a lot, I will never make it to the 10M net worth of the 1%.

 

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unless you are born into it!

[Tim]

q-school wrote:

unless you are born into it!

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Or WBD's house keeps going through the roof! That alone could push the NW way, way up.

[Larry Ragman]

Anne wrote:

How do people know how many people they know with NW >10 million?

I know one person who I know well enough to know NW in mid-high 8 figures. If you didn’t know him well or are one of the charitable organizations he is donating to you would have no idea. I know some other people who I’m guessing are above the 10 million range but I’m not about to ask and it’s not like they advertise it. So I’m guessing there are other people I know but don’t know well enough who have a NW in the 1% of which I’m not aware.

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I don't spend a lot of time trying to figure this out, but as one example, I know from my role at work that the expected contribution for members of the board is greater than $10M. I put all those people safely in the >$10M net worth category. I have other friends in finance that I know have been the investment banking leads for taking large public enterprises private (i.e., generated the IPO). These folks typically make a one time multi-tens of millions payout. All that said, except for the near billionaires who fly around in private jets to their various estates and buy private islands, I agree with you that it is hard in the U.S. to distinguish the behavior of a well off high income person from someone truly wealthy.

[EntrepreneurMD]

Kamban wrote:

Lordosis wrote:

I think the 10M is the mean. So a few billionaires can really drag the number up. 

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I wonder what the median is

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I think the $10.3M is the entry point into the top 1%, not the mean or median. This is suggested by the article referenced here as well.

Also, this is an aggregate number. The top 1% at age 30 (by NW) have no where near the top 1% at around age 65 where net worth tends to peak. I believe earnings tend to peak around age 50.

Also, for the decamillionaire and up crowd, they have a larger percentage of their assets in their business and real estate and a significantly lower percentage in primary residence. So they agree, a residence is not the best financial investment.

[jz]

The billionaires are clustered geographically, so rarely cross paths with us.  Michael Kitces interviewed a wealth manager in my city.  When the WM acutely needed $$ for a partner buyout, he simply traveled  around his lake house neighborhood to find a lender----right in the hood.

[snowcanyon]

ZZZ wrote:

“With those numbers I’ll never be in the 1% by net worth even though I might spend 20+ years as a 1%er by income.”

It’s always amusing when doctors who think they’re ‘rich’ while earning a few hundred k a year become aware that there are peole out there who earn far more or, more interestingly, have accumulated far more. Hedge fund managers earning nine figures, beneficiaries of massive trust funds, selling a business… its a big world out there and some people are wildly successful.

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Totally. And $10 mm is not that much if you are looking at money and power; as noted, that's the entry bar for the 1%. It's an apartment in NYC plus a summer home in the Hamptons and a couple of million in savings. It's a brownstone in Manhattan. It's a house in Marin. It's not that much in terms of real wealth in America. It's not money that can buy influence or power.

Many docs seem to be first-generation affluent and, unlike the hedge fund folk, many also seem to come from regions where people think of doctors as rich, not just upper middle class. It's funny to me how many doctors think they are better off with policies that benefit the truly wealthy, when in fact docs in countries with more social welfare and reasonably high wages (Australia and Canada, even the UK in some instances) will come out ahead of the vast majority of American doctors when benefits like better public education, cheaper universities, and a more robust pension system are included in the calculation.

 

 

[Crazyroadtodublin]

Spending in the top 1pct is the surest way to exclude oneself from a net worth of 1pct. In my mind, the former precludes the latter.

I know at least a dozen doctors in the UHNW club (30 million or more.)  Without fail they were good savors and had some luck as well. Not as uncommon as one may think.

[fatlittlepig]

Crazyroadtodublin wrote:

Spending in the top 1pct is the surest way to exclude oneself from a net worth of 1pct. In my mind, the former precludes the latter.

I know at least a dozen doctors in the UHNW club (30 million or more.)  Without fail they were good savors and had some luck as well. Not as uncommon as one may think.

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How do you know their net worth.

[Crazyroadtodublin]

Not really sure how that’s germane, but some have told me,some got stock in public company’s and it’s disclosed on the 10k, once interviewed at a practice where the business manager told me the lead doc was worth over 100 million, know of several divorces where it was publicly filed, know a few with big planes and full time pilots.

[fatlittlepig]

I think it’s very germane as that is not the kind of information that is shared even amongst close friends. I remain skeptical that you know a dozen personally.

[VagabondMD]

I have two thoughts on this topic.

First, and probably most important, is that life is a single player game. Where you rank in comparison to others is mostly irrelevant, if you are living the life that you want to live. We all probably know miserable wealthy people and content middle income people. The sooner we realize this, the happier we can be. I do not care where I rank but...

The second runs counter to the first in that at some level, life is a zero sum game. There are only so many habitable beachfront properties, business class airline tickets, home contractors, landscapers, and various other items and experiences that we might enjoy. The “mass affluent” class, which is where many physicians find themselves, cannot compete with the real wealthy class when the high end resource is limited.

[CM]

Vagabond MD wrote:

I have two thoughts on this topic. First, and probably most important, is that life is a single player game. Where you rank in comparison to others is mostly irrelevant, if you are living the life that you want to live. We all probably know miserable wealthy people and content middle income people. The sooner we realize this, the happier we can be. I do not care where I rank but…

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Likewise, 2 thoughts:

1. Same. I can't relate to worrying/caring whether someone else has more money than me.

2. Not same. I had much more fun as a penniless 20-something than I do now as a fairly wealthy 60 yo. The best things in life have nothing to do with money (assuming you live in a first-world country with your basic needs satisfied), though some of them do vary with physical vitality. At least, that's been my experience.