How do you define wealth?

marathonic

From a financial perspective, I'd say wealth is:

Financially Unstable: Holds debt (excluding mortgage debt)
Financially Stable: No debt or just mortgage debt and up to 3 months worth of living expenses saved in cash
Financially Comfortable: 3-6 months worth of living expenses saved in cash and additional investments in other assets
Wealthy: When the income from additional investments is sufficient to cover expenses, i.e. you could leave your job if you so wished

jimjames

redbuzzard wrote: »

Like a lot of things, it depends where you start from

Happy is happy. Weathy is wealthy.They can exist independently. Look at the misery the rich and famous often inflict on themselves.

Money doesn't matter unless you run out.

I've got to the stage where health feels more more important.

I visited India recently. Some of the people with absolutely nothing material and living from day to day were amongst the most friendly and apparently very happy.

As you say wealth and happiness are not necessarily linked. Most lottery winners are also proof of that.

In terms of a definition above all seem pretty good. I think the more important thing rather than being what would be classed as wealthy is to have enough money to not be constantly going into debt and to be able to do the things that you want in life. Having some money in the bank goes a way towards helping that but beyond a certain point it doesn't increase the enjoyment.

YoungBusinessman

marathonic wrote: »

From a financial perspective, I'd say wealth is:

Financially Unstable: Holds debt (excluding mortgage debt)
Financially Stable: No debt or just mortgage debt and up to 3 months worth of living expenses saved in cash
Financially Comfortable: 3-6 months worth of living expenses saved in cash and additional investments in other assets
Wealthy: When the income from additional investments is sufficient to cover expenses, i.e. you could leave your job if you so wished

This is spot on!!

bugbyte_2

jimjames wrote: »

I visited India recently. Some of the people with absolutely nothing material and living from day to day were amongst the most friendly and apparently very happy.

As you say wealth and happiness are not necessarily linked. Most lottery winners are also proof of that.

I agree with the India bit - some of the happiest kids I have ever met lived in cow dung huts in Rajasthan. I think the effect of dept on 'happiness' cannot be underplayed. If you do not have enough to pay the bills this can be very stressful to deal with for you and those around you, and can be mentally very unhealthy. If you are in a position to meet your obligations does it really make any difference if you earn a a few grand more?

kidmugsy

Student_of_£ wrote: »

How do you define wealth?

I use the customary definition: a wealthy man is someone with more money than me.

grizzly1911

Student_of_£ wrote: »

I was looking at Barclays Wealth Management site and I noticed the minimum to save/invest of ~£5,000.
What is your definition of wealth?

Think you missed a few zeros.

Barclays Wealth and Investment Management is a service tailored towards individuals with a minimum of GBP 500,000 (or currency equivalent) in investible assets in Asia or the UK & Ireland;

http://www.barclayswealth.com/private-banking.htm

marathonic

grizzly1911 wrote: »

Think you missed a few zeros.

Barclays Wealth and Investment Management is a service tailored towards individuals with a minimum of GBP 500,000 (or currency equivalent) in investible assets in Asia or the UK & Ireland;

http://www.barclayswealth.com/private-banking.htm

I was thinking something was amiss but didn't confirm on the site myself.

If it were a £5,000 minimum investment for a wealth manager, their fee alone to make it worthwhile for them would probably be 25%+ of your initial investment - and anyone who accepted such a fee is unlikely to be wealthy in the first place

CKhalvashi

marathonic wrote: »

From a financial perspective, I'd say wealth is:

Financially Unstable: Holds debt (excluding mortgage debt)
Financially Stable: No debt or just mortgage debt and up to 3 months worth of living expenses saved in cash
Financially Comfortable: 3-6 months worth of living expenses saved in cash and additional investments in other assets
Wealthy: When the income from additional investments is sufficient to cover expenses, i.e. you could leave your job if you so wished

It's not as simple as this.

We hold large amounts of short-term debt, but also fit into your definition of Comfortable and Wealthy.

Our company also holds large amounts of debt (c.£15m at present), yet is particularly comfortable and solvent, and last year, took over a financially healthy company twice its size.

Does my own company cover an investment, or an asset, as I could afford to walk out tomorrow if I so wished, but it would be highly dependent on how well it was to perform in the future without me there.

CK

innovate

marathonic wrote: »

From a financial perspective, I'd say wealth is:

Financially Unstable: Holds debt (excluding mortgage debt)
Financially Stable: No debt or just mortgage debt and up to 3 months worth of living expenses saved in cash
Financially Comfortable: 3-6 months worth of living expenses saved in cash and additional investments in other assets
Wealthy: When the income from additional investments is sufficient to cover expenses, i.e. you could leave your job if you so wished

Sorry, it is far too simplistic to say mortgage debt is a "good" debt. Of course it is, for many people. But it has been, and sadly will be, the trigger for financial ruin for people. Remember, mortgage defaults started the global financial crisis.

[Deleted User]

My view on this seems to vary over time!

I agree with much of what marathonic says but I think I'd push things a bit. I agree that if someone's ability to remain in the family home is dependent on income from a job, I don't think that they can consider themselves wealthy whether there is a mortgage or a rental agreement. If someone who is paying a mortgage is dependent on income from a job for living expenses including mortgage, I'd push the "financially comfortable" cash reserve up from 3-6 months to a full year, given the state of the economy - unless they are absolutely certain that if they lost their job, they could find new employment fast. Even then, (and I was like this when I was working) if you rely on someone else's opinion of you for your income, are you really "comfortable"? The ideal position is definitely to own your home outright.

If all necessities are met from independent income - e.g. not dependent on "work" - that's getting close to a definition of "wealthy" in my view as beyond that level it's all subjective. (I can't afford a new merc every year but that doesn't come into my consideration of "wealthy" - it might for some people!)

In our case, I took early retirement at the end of last year and Mrs Wild _Rover is planning to do the same this summer but in reaching these decisions we had to consider these issues quite carefully. Our monthly pensions will easily meet our monthly living expenses and are CPI index-linked (sorry folks, public sector - what can I say:o). My lump sum paid off the mortgage with some to spare for investment and Mrs WR's lump sum will attend to a new kitchen and redecoration with a little left over for further investments.

My medium term investment strategy will be to look at all the necessary and desirable outgoings - emergency fund, Council Tax, insurance, food, gas & elec, car, phone/TV/boadband, holidays, entertainment, charitable donations and so on and try to pay for all these - and contribute to more investments - out of the monthly pensions so that the investments we have, and will have, can be reinvested to help our kids, one of whom is likely to need financial support due to illness well into the future and probably long after we have gone.

I realise that the employment choices we made decades ago has left us in a reasonably healthy position but I'd also have to say that I make no apology for that as the decisions we made were made in the full knowledge of the terms and conditions of the pension arrangements. I found out at a school reunion a couple of years ago that some folk I was a school with - some of whom achieved much better grades than I did and who have have worked for the same time as me - or longer as they left at 16/17 - made no pension provision and now don't have a pot to p!ss in.

If you can meet all monthly and annual essential and desirable expenses and have reserves for the odd luxury, then I'd say it would be reasonable for you to consider yourself wealthy and to He1l with what anyone else thinks. If I was to outlive all my relations (not that I'm hoping I outlive my kids!), owe no man or woman a penny, and had enjoyed myself until my very last day and die with a zero bank balance, I think I would die happy.

And that's about as profound as I expect to get!

WR