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According to one estimate, wealthy couples in NYC need $190 million to keep their heads above water

http://www.businessinsider.com/how-much-money-to-be-rich-2017-11

Even rich people think wealth is elusive.

About 5% of Americans are millionaires. Most of them — about 95%, according to an estimate by WealthEngine — have between $1 million and $5 million.

And many think that’s just not enough.

“Many people believe that, along with tangible assets and services, having it all means having some wiggle room — money to cover a major splurge or setback, and more on top of that,”Norman Vanamee wrote in Town & Country magazine.

Vanamee consulted experts to estimate the “happiness number” for a hypothetical, wealthy, non-working couple in their 40s with two teenage kids in an expensive private school in New York City. They live in a parkside Fifth Avenue apartment, buy art, take private jets, donate to charity, and have a household staff — a chef, a driver, and a housekeeper — plus two vacation homes. They’re also setting aside $25 million for each child to inherit.

An analyst from US Trust cited in the Town & Country report estimated the hypothetical couple would need to have a net worth of $190 million to sustain this lifestyle.

Here are some of the costs considered in the estimate:

  • Real estate: $18 million apartment on Fifth Avenue facing Central Park, $2 million for furniture and decor, $20 million for a weekend home in the Hamptons and a vacation spot in the Caribbean.
  • Education: $1.7 million a child for a “no-expense-spared educational strategy,” which includes private school and tutors, music lessons, sports, trips abroad, and four-year Ivy League tuition.
  • Philanthropy: $25,000 annually to sit on the board of a New York City museum, plus $15,000 a table at annual charity events.
  • Staff: $190,000 annually for a driver, a chef, and a housekeeper.
  • Art: $20 million to $100 million apiece in a seven- or eight-piece collection, or about $1 million annually.
  • Health and beauty: $150,000 annually for wardrobe, grooming, trainers, and cosmetic procedures.

Other experts peg the happiness number at about $100 million.

Billionaires “view $100 million as the starting point for real money,” Richard Kirshenbaum, the New York Observer columnist who wrote the book “Isn’t That Rich? Life Among the 1%,” told Town & Country. “They call it a hundy. Like, ‘Oh, they made it, they have a hundy.’”

Kirshenbaum says the estimate isn’t his own but came from several billionaires he has interviewed. WeathEngine estimates that 0.09% of America’s millionaires are worth more than $100 million.

But Robert Frank, the wealth editor at CNBC who hosts the TV series “Secret Lives of the Super Rich,” said the number was “less relevant than how you earned it and what you’re doing with it.”

Still, having money doesn’t alleviate all anxieties — in fact, it often gives way to new worriesunique to those flush with cash.

“I still feel, to some extent, that I don’t have enough money,” Thomas Gallagher, a multimillionaire, told The New York Times. “Emotionally, I don’t come from money; I got very lucky on Wall Street. I’ve been dealing with a myriad of psychological issues since I retired. I have more money than I had ever imagined, but I still worry — do I have enough, if I live longer than I thought?”

If there’s not a formal definition for BSD, this covers it.

We’re gonna win so much, you may even get tired of winning. And you’ll say, 'Please, please. It’s too much winning. We can’t take it anymore. Mr. President, it’s too much.' And I’ll say, 'No, it isn’t!' We have to keep winning!

rofl a hundy is 100 million. a billionaire be like:

You talking bands, girl, I got it
Benjamins all in my pocket

Benjamin Franklin’s face is on the front of a $100 note. A “band” is $1,000 – Fetty mentioned this on his smash hit “Trap Queen.” The girl Fetty’s feeling out only talks to guys with money, nobody wants a scrub. Wap talks money—figuratively and according to this photo, literally.

I love my cheese. I got to have my cheddar.

“Y’all on the ‘gram holdin’ money to your ear. There’s a disconnect, we don’t call that money over here.” - Jay-Z

We’re gonna win so much, you may even get tired of winning. And you’ll say, 'Please, please. It’s too much winning. We can’t take it anymore. Mr. President, it’s too much.' And I’ll say, 'No, it isn’t!' We have to keep winning!

There’s a really great wealth report from CS (see below).  Basically, there are very few people who have a net worth north of $50M.  It’s something like 150K people in the world.  That equates to just over 70K persons in the US or about 0.03% of the adult population.  That someone is complaining about wealth at that level has major issues on the expense side of the equation.

https://www.credit-suisse.com/corporate/en/research/research-institute/g...

I think something like $50 million sort of wealth is attainable in 3 generations, or maybe 2 generations, among people who are merely talented to a slightly above average level. For instance, if I leave $10 million, my heir compounds it at 7% for 25 years and adds their own $10 million, we can achieve that somewhat reliably in 2 generations. This is how all those old money European aristocracies became so rich, and it’s why the first son inherits everything. The fortune lasts longer than one person. 

Of course, people are rarely able to resist spending money, especially money that they did not work for themselves. Furthermore, they might say the money has no value if they cannot experience its use in their lifetimes. So this plan might be harder than I make it out to be. People do say in general that wealth disappears in three generations, rather than the opposite.

“Visit the Water Cooler forum on Analyst Forum. It is the best forum.”
- Everyone

70% of wealthy families lose their wealth by the second generation, and a stunning 90% by the third, according to the Williams Group wealth consultancy.

lol bunch of loser offsprings…

^do you have a link for that?

also i disagree with ohai. i think equal split is best method esp due to estate taxes. generation skipping also makes sense.

historically early europe actually did gavelkind, equal splitting. but that lead to civil wars by equal entities so they moved to primogeniture to ensure power is consolidated.

it doesnt make sense to give to firstborn automatically since we dont really kno who is the most capable. would you want fredo to inherit? definitely not. and once you input estate taxes, that sole person who inherits needs to generate higher returns to offset the estate costs.

I love my cheese. I got to have my cheddar.

I’m not arguing for a single inheritor system. I am saying that amassing large amounts of wealth is within reach of more people, if that was their sole objective across several generations. It would be much harder to do this with equally split inheritances, even with estate tax savings. 

If the first son is incompetent, then fine, designate another heir. That is besides the point anyway.

“Visit the Water Cooler forum on Analyst Forum. It is the best forum.”
- Everyone

Nerdyblop wrote:

^do you have a link for that?

also i disagree with ohai. i think equal split is best method esp due to estate taxes. generation skipping also makes sense.

historically early europe actually did gavelkind, equal splitting. but that lead to civil wars by equal entities so they moved to primogeniture to ensure power is consolidated.

it doesnt make sense to give to firstborn automatically since we dont really kno who is the most capable. would you want fredo to inherit? definitely not. and once you input estate taxes, that sole person who inherits needs to generate higher returns to offset the estate costs.

https://www.asia.finance/knowledge-vault/wealth-management/digging-deepe... 

  • The majority hide their wealth from their kids

A 2015 survey by the US Trust on high-net worth individuals (HNWIs) with over US$3 million in investable assets found that the majority do not disclose their wealth to their children.

According to the survey, 78% of HNWIs feel that the next generation is not financially responsible enough to handle significant wealth, and 64% admit they have disclosed little to nothing about their wealth to their children.

The survey lists various reasons for this: People were taught not to talk about money, they worry their children will become lazy and entitled, and they fear the information will be compromised.

Unfortunately, such conservative approach to money could be the reason why third-generation heirs turn out to be so ham-handed with their wealth. When rich kids receive such significant amounts of money without prior coaching on the purpose of money, they will seldom take the time or initiative to understand the values that helped accumulate the sum of the inheritance.

  • Rich kids suffer from the “affluenza” syndrome

Often, people who have struggled up the proverbial rags-to-riches path are highly motivated and even obsessive when it comes to accumulating (and preserving) wealth.

Lacking that drive, children of the super-wealthy are usually better at spending than accumulating money. Grandchildren are even bigger spendthrifts.

This is because the offspring of the super wealthy often suffer from “affluenza,” according to Tim Voorhees, tax lawyer and investment adviser from WealthCounsel. “They lack purpose, self-esteem and the ability to delay gratification,” he said.

Inheritors do not understand the hard work and grit invested in accumulating the wealth. Nor do heirs – born with a silver spoon – have much motivation to develop the bias towards diligence, delayed gratification, thrift and other values required to accumulate and preserve wealth.

As problems get worse, heirs withdraw from others to avoid accountability and develop progressively more serious social disorders, Voorhees said.

  • Ineffective wealth transfer planning

If you fail to plan, you plan to fail. Unfortunately, family business founders often leave flawed estate plans that do not effectively map out who will inherit and control the family’s assets.

In the 19th century, Cornelius Vanderbilt built a massive fortune from railroads and shipping and had an inflation-adjusted estimated net worth of US$185 billion. His children and grandchildren are known for building luxurious mansions in New York City and Newport in Rhode Island.

But when 120 Vanderbilt descendants held a family reunion in the 1970s there wasn’t a single millionaire among them, CNNMoney noted.

Family members without an effective roadmap for wealth transfer commonly leave their heirs working at cross purposes. Further, when the founder of a family business fails to train the next generation of leaders to maintain relationships based on the founder’s core values, trust deteriorates.

Too often, lawyers wrangle for years and years, and dissipate much of the estate value as surviving heirs engage in bitter power struggles over inherited wealth if the business owner dies abruptly.

very interesting topic. anyways, i think it has to do with the number of heirs also. consider my buddy whose dad is worth 50m, 3 sons. due to estate tax, thats prolly 25m split between 3, thats  8m per son. so from 50m, it became 8m. if each child were to have 3 children a piece, then that’s 8/3, no more estate tax, but now each grandchild has 2.667m. anyways, i think the bottomline, is the only thing that sticks, is genetics. so ppl should focus on that.  

so my take is numbr 1 destroyer of wealth

1. number of heirs (just another sibling and you lose half right away)

2. estate tax (cuts “dynastic wealth” in half, so this is even worse than splitting with siblings, since you are splitting it with non dynastic entities)

3. then everything your article mentioned :)

i need really good reading material I can send. That sort of explains all 3 components and prolly 1 that reduces estate tax thx much

I love my cheese. I got to have my cheddar.

poor ohai

"You want a quote? Haven’t I written enough already???"

RIP

ohai wrote:

I think something like $50 million sort of wealth is attainable in 3 generations, or maybe 2 generations, among people who are merely talented to a slightly above average level. For instance, if I leave $10 million, my heir compounds it at 7% for 25 years and adds their own $10 million, we can achieve that somewhat reliably in 2 generations. This is how all those old money European aristocracies became so rich, and it’s why the first son inherits everything. The fortune lasts longer than one person. 

Of course, people are rarely able to resist spending money, especially money that they did not work for themselves. Furthermore, they might say the money has no value if they cannot experience its use in their lifetimes. So this plan might be harder than I make it out to be. People do say in general that wealth disappears in three generations, rather than the opposite.

Yeah in China there is an expression that wealth lasts three generations. It makes sense too. How often do you see a rich son/grandson heir blowing money like there’s no tomorrow with little respect for long term goals or traditional values that were needed to earn the money in the first place. 

"A theory that you can't explain to a bartender is probably no damn good."
- Ernest Rutherford

From shirtsleeves to shirtsleeves in 3 generations.

https://twitter.com/i/status/1145396784933552133

saw this article. and it just made me think how to divvy up assets upon your demise. this person is essentially saying thatyou should give based on need. so no money to smart rich person who can compound best. and the most money to the poor dumb person who will prolly waste it on meth. anyways what’s everyone thoughts on this? how would you split things with your children?

would it be better to give money to the most capable?

or to give money equally and trust  each 1’s decisions?

or to give based on need?

personally, i feel that it is better to give control to the msot capable and just give everyone an equal stipend. 

I love my cheese. I got to have my cheddar.

I think it is best to pass money to the eldest male heir, like in olden times. That way, you can establish a dynasty in 100 years. You will be able to rub shoulders with Henry Sy or the guy who founded Jollibee. 

“Visit the Water Cooler forum on Analyst Forum. It is the best forum.”
- Everyone

my family already has rubbed shoulders with him. haha you’ll get a kick out of this. my family owned a ton of property all across the philippines and we sold him some of our land for about $6m usd in the 90s. my grandparents met him and his major business partner at the time. my dad told me we got about 1m. very sad, at the market rate, taht would be worth about 16m dollars today. how sad!

I love my cheese. I got to have my cheddar.

^I’m confused.  Did you sell it for $6m or $1m?

And if you invested it in the S&P 500  (or a REIT index) since the 90’s, what would it be worth today?  

82 > 87
Simple math.

sold for 6m. but it is split. his cut was about 1m. worth about 16m. total return was roughly 10%/year form 1990 to now.

I love my cheese. I got to have my cheddar.

I bet if we add up the net worth of everyone who posted on AF today, excluding ohai, the number wouldnt be close to $190mm

We’re gonna win so much, you may even get tired of winning. And you’ll say, 'Please, please. It’s too much winning. We can’t take it anymore. Mr. President, it’s too much.' And I’ll say, 'No, it isn’t!' We have to keep winning!

But Nery, your grandpa still had cash money $1 million 20+ years ago. He could have bought any risk asset - stocks or whatever - and achieved something comparable to 10% returns. How much of that did he retain and how much did he spend?

“Visit the Water Cooler forum on Analyst Forum. It is the best forum.”
- Everyone

never happened

"You want a quote? Haven’t I written enough already???"

RIP

they started a lot of businesses. i think at the time my grandparents were already retired, and they were in their 50s. grandpa was the head city dr. and grandma was a pharmacist. some that i remember was a barbershop/hair salon, a trucking co, a water filter co and a taxi service. i think the taxi service was the most expensive money loser as we had over 10 taxis. anyways long story short, they all failed. we also owned a lot of of mc mansions lol. 

for our 1m. my dad was in cosntruction business where there was plenty of corruption. we literally built some of the schools in our city. anyhow i think my dad was cheated by a partner. his name is almost comical, santander. no idea how much $$ was lost there. by the time we came to the us  in 2000, my parents had maybe 100k at the time and of our buildings just burned down. by 2009, our fam net worth was prolly 0. enter 2019, where we are all earning and our fam core net worth prolly 1.8m. 

anyways my family didnt believe in the stock market or bond market for that matter. they lost a lot of money in some ****ing energy company. too many swindlers back in the day as well. also to date, if you buy a stock, your commission is 1 %. crazy expensive i know.  also they wanted something tangible like real estate or a business. but unfortunately they were not businessmen. even in 2009, my mom’s 50k  in her 401k was mostly in cash, underused and used as a piggy bank. i cahnged all that though, and now she sits on about 500k. 

I love my cheese. I got to have my cheddar.

Never happe…

Er, I mean. Wow, Nery. What a truly uplifting story. Hard working and motivated people with all backgrounds like you are what make America such a great country. From your example, I am inspired to do my best to help those around me and society in general. 

“Visit the Water Cooler forum on Analyst Forum. It is the best forum.”
- Everyone

Normally I would feel jealous of these people being so rich, but by chance, I just got an email from the prince of Nigeria offering me several billion dollars!

Seriously though, I find it interesting how people always manage to see themselves as poor, even if they are rich compared to everyone else. Even many Westerners on the poorer side are still far, far richer than most of the people in the world today.

true… 

KEY TAKEAWAYS

  • An income of $32,400 per year would allow someone to be among the top 1% of income earners in the world.
  • To reach the top 1 percent worldwide in terms of wealth—not just income but all you own—you’d have to possess $770,000 in net worth.
  • The bar to enter the top 1 percent wouldn’t be this low were it not for the extreme poverty that so much of the globe endures.

I love my cheese. I got to have my cheddar.

ohai wrote:

I think something like $50 million sort of wealth is attainable in 3 generations, or maybe 2 generations, among people who are merely talented to a slightly above average level. For instance, if I leave $10 million, my heir compounds it at 7% for 25 years and adds their own $10 million, we can achieve that somewhat reliably in 2 generations. This is how all those old money European aristocracies became so rich, and it’s why the first son inherits everything. The fortune lasts longer than one person. 

Of course, people are rarely able to resist spending money, especially money that they did not work for themselves. Furthermore, they might say the money has no value if they cannot experience its use in their lifetimes. So this plan might be harder than I make it out to be. People do say in general that wealth disappears in three generations, rather than the opposite.

i guess this is one of those things that work in theory but not in practice. 50% of people are ”above average” and many of those try to earn significant figures, yet very few families are worth 50million, no matter how many generations of hard work and high intellectual prowess. 

If you're the first out the door, that's not called panicking

Actually my great grandfather was apparently a business man in the logging industry. He used it to buy a **** ton of land. My grandparents inherited that land but had nothing to do with business. Grandfather was a doctor for instance. Business eventually died by the time my dad was alive and they started selling of land little by little. When they got that big pay day. My dad and grandma tried to get into other businesses but failed or got cheated by people and has shifted focus to just enjoying life and squandering my inheritance. Dad is well aware of my disappointments. It’s kind of funny, like a reversal of roles. Annyways it went to 0 by the time I was in high school. And now my job is to rebuild and bring honor to my family.

I know I will easily exceed 50m. I was bred for it.

I love my cheese. I got to have my cheddar.

Nerdyblop wrote:

Actually my great grandfather was apparently a business man in the logging industry. He used it to buy a **** ton of land. My grandparents inherited that land but had nothing to do with business. Grandfather was a doctor for instance. Business eventually died by the time my dad was alive and they started selling of land little by little. When they got that big pay day. My dad and grandma tried to get into other businesses but failed or got cheated by people and has shifted focus to just enjoying life and squandering my inheritance. Dad is well aware of my disappointments. It’s kind of funny, like a reversal of roles. Annyways it went to 0 by the time I was in high school. And now my job is to rebuild and bring honor to my family.

I know I will easily exceed 50m. I was bred for it.

Yeah sure go for it. But I was talking statistics and over-generational wealth accumulation and your comment didn’t really have anything to do with that. 

If you're the first out the door, that's not called panicking

ohai wrote:

I think something like $50 million sort of wealth is attainable in 3 generations, or maybe 2 generations, among people who are merely talented to a slightly above average level. For instance, if I leave $10 million, my heir compounds it at 7% for 25 years and adds their own $10 million, we can achieve that somewhat reliably in 2 generations. This is how all those old money European aristocracies became so rich, and it’s why the first son inherits everything. The fortune lasts longer than one person. 

Of course, people are rarely able to resist spending money, especially money that they did not work for themselves. Furthermore, they might say the money has no value if they cannot experience its use in their lifetimes. So this plan might be harder than I make it out to be. People do say in general that wealth disappears in three generations, rather than the opposite.

Ohai, I think you’re great, but you said once you came from a family that already had ~($10-$20M) squirreled away from an upper crust legacy.  Even if you were unaware of this at a young age, you were being groomed to go to Standfordish type places.  You obviously have a ton of insights into things like success, but the area of being self made and what it takes to climb from a starting point anywhere near average will never be part of that repertoire.

#FreeCVM #FreeTurd #2007-2017

Nerdyblop wrote:

Actually my great grandfather was apparently a business man in the logging industry. He used it to buy a **** ton of land. My grandparents inherited that land but had nothing to do with business. Grandfather was a doctor for instance. Business eventually died by the time my dad was alive and they started selling of land little by little. When they got that big pay day. My dad and grandma tried to get into other businesses but failed or got cheated by people and has shifted focus to just enjoying life and squandering my inheritance. Dad is well aware of my disappointments. It’s kind of funny, like a reversal of roles. Annyways it went to 0 by the time I was in high school. And now my job is to rebuild and bring honor to my family.

I know I will easily exceed 50m. I was bred for it.

It sounds like you’re 1/8th good at business, bred for it the way Elizabeth Warren is Native American!

#FreeCVM #FreeTurd #2007-2017