Do you have above or below average wealth?

jon3001

Uncertain wrote: »

Wealth is what you have, regardless of how you came by it. Also, you might well choose to "invest" by buying a bigger house than you need with the intention of downsizing at retirement. Until recently this made a good deal of sense and is free from CGT.

That's a fine theory. Presumably you'd want to make this a leveraged investment (via a mortgage) rather than incur the opportunity costs of using your own savings?

A home is usually a non-productive asset. If this is truly an investment you'd have to make sure it's not just a expensive consumer item. You'd have to weigh up the extra overheads of the larger 'investment' house compared to one that would merely meet your housing requirements. E.g.:

• Higher mortgage interest
• Commitment of higher capital repayments that could have been actively invested.
• Higher transaction costs
• Higher insurance costs
• Higher council taxes
• Higher heating/energy bills
• Higher repair/maintenance bills
• Buying of extra toys/doo-dahs if this is in an upscale neighbourhood. (Are you happy about the old banger when your all the neighbours are driving Mercs [probably on borrowed money]?)

That should then be compared to typical gains had all this money instead been diverted into tax-sheltered investment portfolios.

The housing market is cyclic. As you've implied you're also relying on it being a good time in the market when you're ready to retire. Having large amounts of money tied up in an illiquid asset makes this more complicated and risky. Someone invested in a more traditional portfolio could more easily adjust its investment components as they approach retirement.

Uncertain wrote: »

Also you might have had a high pressure job and saved lots of money then changed to something less pressured or more worthwhile.

E.g. retirement? That's usually the endgame in wealth accumulation. People make other lifestyle adjustments like you mention. Wealth gives them that choice.

ShelleyC_2

It also seems strange the majority of us are in the really rich catergory?! I know we're on the savings and investing board but I wouldn't have considered my wealth excesive (unfortunately!)

superstar_2

I am thinking of buying a good book for myself. Any recommendation?

jon3001

superstar wrote: »

I am thinking of buying a good book for myself. Any recommendation?

Well - given this thread (wealth accumulation), the forum (savings & investments) and your position of someone graduating and entering the workforce in a few short years I'd think about developing some good early habits.

Living belows ones means and savings/investing the difference is a key trait. You can read more about them is these books:

"The Millionaire Next Door", Thomas J. Stanley, William D. Danko
"The Richest Man in Babylon", George Samuel Clason

For investment basics, maybe:
"A Random Walk Down Wall Street", Burton Gordon Malkiel
"The Four Pillars of Investing", William J. Bernstein

superstar_2

jon3001 wrote: »

Well - given this thread (wealth accumulation), the forum (savings & investments) and your position of someone graduating and entering the workforce in a few short years I'd think about developing some good early habits.

Living belows ones means and savings/investing the difference is a key trait. You can read more about them is these books:

"The Millionaire Next Door", Thomas J. Stanley, William D. Danko
"The Richest Man in Babylon", George Samuel Clason

For investment basics, maybe:
"A Random Walk Down Wall Street", Burton Gordon Malkiel
"The Four Pillars of Investing", William J. Bernstein

If you had to choose 1 or 2?

Lokolo

I bought 1 and enjoyed reading it.

Haven't bought second, I shall buy that maybe in Jan sales?

cheerfulcat

ShelleyC wrote: »

It also seems strange the majority of us are in the really rich catergory?! I know we're on the savings and investing board but I wouldn't have considered my wealth excesive (unfortunately!)

The majority of responses are actually in the average and under accumulator category! But as jon3001 says in an earlier post, this is the savings and investing forum ( and on a money saving website at that ) so I'd expect a slightly skewed result.

The other thing to say is that having above average wealth doesn't necessarily make you " really rich ". It's just that an awful lot of people spend every penny they get.

dwsjarcmcd

Personally I think it's fine in theory but for an increasing number it is irrelevant. I got divorced 6 years ago and out of income I pay maintenance and my daughters school fees - neither of which I begrudge but it makes the formula look silly.

I am lucky as I have a very good salary and reasonable savings but nowhere near what the formula says I should have

Biggles

It's crackers. This formula puts most people who've been drawing nothing but the basic state pension for a few years in the 'Average' category, that's irrespective of whether they have not a penny in savings or several million. I doubt if they feel 'averagely wealthy!

amcluesent

286 - that that good?