Sunday, May 27, 2007

How Much Money Do You Think You Need to Be Considered Rich?

Marshall Middle at How to Make a Million Dollars asks “How much money do you think you need to be considered rich?” I think this question implies that the answer is in other people’s idea of richness. And here comes another question, who are these people?

For every person in this world the expression “to be rich” has a different meaning. For a citizen of some poor African country everyone who lives in developed countries like the USA, Canada or Western Europe is really rich. In some places being rich still means having a certain number of cattle.

In my native country, Russia, one who has $1,000,000 is certainly rich. Such money may give an annual income of $100,000 that allows living in grand style in our country. But that is true only for the majority of Russians. In the circle of odious Russian oligarchs (business magnates) even those with several million dollars are considered close to poor.

In the USA, as I understand properly, having $1,000,000 is just enough to live comfortably in one’s retirement. A little bigger figures mean being well-off. Those with $50,000,000 may be considered rich. Still, I suppose that even they may think themselves to be only well-off and consider billionaires to be really rich.

So it seems that the idea of being rich varies greatly among people and it depends on a country, cultural traditions, environment and socio-economic status. It’s easy to be considered rich by a poor family in Malawi and more difficult among billionaires. The only thing a person can say for sure is what he or she personally thinks about it.

As for me, I think that $100,000 a year can be enough to live very comfortably in my city. Assuming a conservative 5% APY, I guess that $2,000,000 is cool. I may add a couple of millions for luxuries and come up with a final number of four or five million dollars in liquid assets, adjusted for inflation.

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Krystal said...

Hi Olga, great blog you have here! Thanks for linking to me. I've linked to your blog as well. :)

It's really interesting to read about your personal finance journey, especially because you're in Russia. Keep it up!

Olga said...

Hi krystal! Thank you very much for your encouraging words and linking on my blog! Yours is the first comment here!:)
You have a great blog and I enjoy reading it very much!

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