LMCane said:
Proposition Joe said:
https://fortune.com/2024/07/29/us-millionaires-population-ubs-global-wealth-report-china-europe-americans/
One out of every 15 Americans is a millionaire
they don't define WHAT a millionaire is. I bet that is including the value of the illiquid home
most real definitions only include investable assets that are able to be accessed-
if all your wealth is tied up in a home then you need to sell the home to actually be able to support yourself.
the article you cite is showing 22 million Americans as millionaires so that is definitely including home values
In the US, the number of millionaires, excluding the value of their primary residences, is estimated to be around 15 million. This figure represents the number of households with a net worth exceeding $1 million when their home value is not included in the calculation.
Sorry LMCane - wrong, again. I used to do M&A for a living, and there is no true "right" or "wrong", here.
The simple definition is the value of all assets less all liabilities. Pure, simple, and accurate, for the most part.
I prefer a liquidation value-based valuation, which definitely includes home equity (albeit, adjusted for transaction costs, such as commissions, fees, closing costs, make-ready expenses, etc.). Same thing goes for boats, planes, artwork, cars, and all other items that have sale or exit expenses associated with them. Some investments (such as some annuities or private equity) may also have transaction costs to exit and return to realizable cash value. IMO, these should also be haircut, value-wise. Business exits are notoriously expensive re: transaction costs, but will vary based on the business itself. Most investments that are publicly traded should be easy to value, at any point in time.
I could argue that the study's measure is likely overstated due to using raw net worth, but may be arguably understated on several other factors, if you want to get deeper in the weeds. Contingent assets are likely not represented, and maybe shouldn't be (depends on your perspective). Life insurance cash surrender value should be included, but death benefits should generally not (unless you are terminal, or have a binding viatical settlement quote). Pensions, long term care, and social security should generally not be added, but there is real value there. An approximate way to value it might be to use a discounted present value of future benefit streams based on your projected life span. Tough to do, but I'd argue it's real. You could even go as far as to assess value of frequent flyer points, hotel points or free nights, or Aggie priority points if you want, but I'd suggest that's going too far.
If you use discounted cash flows of social security, I'll bet the millionaire % gets closer to half of all Americans. The bottom line here is not to argue who's a millionaire, but that
the USA is arguably the best place around for individuals to achieve this somewhat silly milestone. Norway is probably better currently, but when the North Sea oil runs out, our framework creates the most future opportunity [/stepping down off my soap box].
