How Wealthy are you?

LobsterMemory

Thought it was going to be a quiz

chucknorris

Silvertabby wrote: »

'Wealth' is not something that can be determined by statistics alone.

In our case, most of our wealth is in our (mortgage free) home and our public sector pensions. We consider ourselves to be 'very comfortable' - but another couple on exactly the same income may feel differently because they couldn't afford to go on a world cruise every year.

On the other hand, my late parents (who only had their State pensions and £120 per month occupational pension to live on) would no doubt consider us to be 'wealthy beyond all dreams'.

DB pensions (and of course property) are legitimate measures of wealth, valuing them can be a bit subjective though. For example probably the beast way to value a DB pension would be to compare it to buying an annuity with same benefits. That would give my DB pensions a multiplier of approx 34 x the income, but I don't like the tie in with an annuity, so on my wealth spreadsheet I use a multiplier of 28.5. So I would invest up to 28.5 x the income to buy that pension, and I have done so when buying additional pension in the Teachers Pension Scheme, but I did so at a multiplier of under 15.

bostonerimus

Wealth held in houses is not very liquid. You could rent out a room or do equity release, but I'd like to see figures that exclude real estate and just show how much accessible cash people have. It also obviously depend on where you live...1M in Middlesbrough is worth a lot more than 1M in Knightsbridge.

Yet_More_Puddylove

I have no property, no pension pot. There are church mice out there who feel sorry for me.

Silvertabby

chucknorris wrote: »

DB pensions (and of course property) are legitimate measures of wealth, valuing them can be a bit subjective though. For example probably the beast way to value a DB pension would be to compare it to buying an annuity with same benefits. That would give my DB pensions a multiplier of approx 34 x the income, but I don't like the tie in with an annuity, so on my wealth spreadsheet I use a multiplier of 28.5. So I would invest up to 28.5 x the income to buy that pension, and I have done so when buying additional pension in the Teachers Pension Scheme, but I did so at a multiplier of under 15.

Even more complicated with our Armed Forces pensions - we've both been in receipt of those since our 40s.

talexuser

Persoanly I was rather amazed that the top 10% threshold was as low as 671k, given the criteria. But I suppose a couple doubles that, and an older couple with adult children increases it too in family terms.

JohnRo

Linton wrote: »

I dont see why people are getting so agitated about the article. It just covers capital wealth, not happiness or how your feel about your situation. ISTM it's an interesting straight forward summary of probably reliable data. Like any good report of this type it raises as many questions as it answers.

It doesn't lend much economic support to the taliban and their impending disaster. Then again neither does anything else.

chucknorris

bostonerimus wrote: »

Wealth held in houses is not very liquid. You could rent out a room or do equity release, but I'd like to see figures that exclude real estate and just show how much accessible cash people have. It also obviously depend on where you live...1M in Middlesbrough is worth a lot more than 1M in Knightsbridge.

Less than 8% of my wealth is in cash, I don't want any more than that being liquid, the rest is tied up in investment property, equities, REIT's, individual corporate bonds and DB pension. In fact, I regret some of that 8% in cash. In April I placed £170k between 2 savings accounts paying just over 2% gross, so after tax and inflation, I will lose money. I wish that I had invested most of that £170k into an individual corporate bond that I invested in at the same time.

Although some of the above can be liquidised quite quickly, it wouldn't be wise to do so, because of CGT, and if I did that, where would I invest it instead, I am happy where it currently is, apart from the amount in property, which is why I have started the process of selling.

vacheron

I support that the survey includes housing equity and pensions in their calculations as it is far more accurate indication of how people are establishing themselves through life rather than a snapshot of their current liquid assets.

It is also commendable that it has focused on pure wealth and not tried to derive social class or financial comfort from the figures as these can be far more speculative and often utterly incorrect.

As an example someone could own a 1M property with 600k of equity but could be in severe financial hardship if their income dropped but they still needed to service the £400K of outstanding debt.

I remember the BBC's big class survey of a few years ago which did not even consider mortgage debt in the calculation but did include cash savings, so if someone paid off their mortgage with their savings they could move about 3 class groups down overnight despite having the exact same net worth, social interactions, and interests as they did the day before!

TBC15

I’ve always wanted to be filthy rich, any idea what the criteria are?