One of the comments I receive most when I post on "how to become a millionaire" or something similar is "$1 million isn't what it used to be." No kidding. Nothing is what it used to be -- it's called inflation.
That said, I usually respond that while $1 million isn't what it used to be, it sure is more than what most people have. That argument seems to work in most cases. ;-)
Here's a piece from MSNBC titled, appropriately enough "$1 million is just not what it used to be." Some highlights:
Not that long ago, the word “millionaire” conjured up visions of chauffeured limousines and extravagant shopping trips and elegant yachts. These days, a millionaire is more likely to be the guy or gal next door who saved carefully — and perhaps benefited from the sharp run-up in housing prices — but still worries about covering the exploding costs of children’s educations, caring for aging parents and funding their own retirements.
And the fact is, $1 million doesn’t go as far these days as it used to. For one thing, it’s vulnerable to inflation — someone who bought $1 million worth of goods in 1957 would need $7.3 million to buy the same goods today, according to Federal Reserve figures.
It’s also vulnerable to longevity. Americans are living much longer than they used to, and that means they need larger nest eggs to get them through retirement.
Ok, so there's the ammunition for those who say "$1 million isn't what it used to be." You're right. It isn't.
But I'm right too. While $1 million isn't what it used to be, it's much more than what most people have:
But David Bach, author of “The Automatic Millionaire” and other financial advice books, points out that “99 percent of Americans don’t have a million dollars — and to them, a million dollars is a fortune.” To the hundreds of millions of people around the world who live on $1 a day or less, “it’s unfathomable.”
Yes, much, much more:
“Take a baby boomer who has less than $50,000 in savings — which is what the average baby boomer has — and tell them they need $1 million, you might as well give them a gun and tell them to shoot themselves,” Bach said.
The average baby boomer has $50,000? Yikes!
So while $1 million isn't what it used to be, it is still a good chunk of change. It certainly doesn't have the status it once did and it's far less than many people need to retire, but it's still kind of a "neat" goal for people to aspire to.
What about you? Does hitting a net worth of $1 million mean anything to you?
For those of you who just can't get enough of millionaire-ville, here are some past articles on the subject:
I don't think anyone would dispute either that $1MM is not what it used to be or that it is still a large sum of money (how large obviously depending on your perspective).
The key point is the one you make near the end of your post. Being a millionaire used to denote a very unusual level of finacial wealth that very very few people could either aspire to or attain but which, if attained, would enable the millionaire to live a very luxurious lifestyle (if so chosen).
These days, the exclusivity and (relative) lifestyle connotations have both fallen victim to the ravages of inflation. Being a millionaire has been reduced to a financial milestone which is realistically achievable for a growing number of people but, for many of those people, does not actually mean that their finance dependent lifestyle goals can be realised.
Posted by: traineeinvestor | March 31, 2007 at 01:40 AM
It may not denote wealthy but can represent financially independent.
Posted by: Lord | March 31, 2007 at 02:15 PM
$1 million may not be what use to be but I'm willing to bet that if I had a million right now (at my age of 33) I could live quite happily for the rest of my life off of it. Of course my plans would be to grow said $1M.
Posted by: F. D. Bryant III | March 31, 2007 at 03:52 PM
I am currently 28 years old. I have a Net Worth of over 5.5 million. The key to my success was investing in property at the age of 22 years old. Started out buying my first house at 22 for 60K. Sold for 75 K. 2nd House 169 K. Sold for 215 K. Third House 265 K -- Appreciated now to 650 K. Bought first Commercial property for my company after 1 year of business for 200 K -- Sold for 350 K. 2nd Property for 1.2 Mil -- FMV of over 3 Mil. + This calculated with the growth in the business I own have seen the strength of my portfilio. My best piece of advice for people is live within you means -- I still drive a used car and don't spent a lot of cash on toys. I now have a rule for myself that I don't purchase things unless i have the disposable cash for them. I got myself into a lot of payment trouble early on in my life by purchasing several motor cycles and having payments for 7 years. I have not yet paid off the motorcycles as a long hard lesson of when / where / how to spend money.
Please please spend your money on appreciating assetts like property. I don't spend more the 15 K on a used car because I loose money every time I drive it. I like to mitigate my losses.
Now I am in a financial position that growing from 5 Mil to 10 Mil can happen overnight depending on how I deal with my portfolio.
So to all of you that are out there please keep working hard it will come. My best move was seeking the advice of professional financial advisors. I am not good with money myself so I lock it in with them and they give me enough to live off of. It is Forced Savings.
Good luck to all.
TopGun28
Posted by: TopGun | April 24, 2007 at 07:31 PM