jacob wrote:
"When anyone asks about how you were able to RE, you can just say you're a millionaire."
..
I've actually tried this. I am not sure what was worse. Being questioned, or being called a liar in varied levels of politeness.
By my friends.
I lost a lot of friends.
I have specifically avoided any talk of how much money we have and I would certainly never just use the word "millionaire.' My fear is not being called a liar but having them believe me.
Once your friends and family know you are "rich," I suspect every situation involving money gets looked at differently. Why don't you want to go to that swanky restaurant? You can afford it. You won't go in on the Hawaiian vacation for Mom and Dad? Why not, you're loaded!
It is my experience that people that have no trouble spending their money have even less trouble spending yours.
This links to the why should I have children thread.
When you have high net worth, people are good to you.
A workaround to having many children is to have a high net worth but it is comparatively difficult than the former.
This way your offspring will take care of you in old age if it knows that it is the only way to inherit it. Or else you'll give it away to your fav charity/cause after death.
Assuming constant expenses, the higher your net worth is, you can tolerate a smaller percentage return on your investments. So if you're into socially conscious investing (which seems to have a lower return than the total market), it would be easier to invest your conscience if you have a high net worth.
A higher networth can also be more socially acceptable. For instance, 1-2 M is usually thrown around by run of the mill financial planners as the magic number to be financially independent. No questions asked by professionals on how you survive on a "small" portfolio of 500K. Also, if you meet someone (most westerners?) that's use to a 30-40k/yr lifestyle, you can say you can afford that too if you wanted to, but choose not to.
A higher networth can also be particularly useful if one is struck with ludicrous medical bills after, say, a tumble off a mountain or a life-threatening, long-term disease like cancer. Maybe insurance can defray these costs, but I'm not so sure anymore.
Olaz wrote:A higher networth can also be particularly useful if one is struck with ludicrous medical bills after, say, a tumble off a mountain or a life-threatening, long-term disease like cancer. Maybe insurance can defray these costs, but I'm not so sure anymore.
Or a higher net-worth means you can afford to pay higher insurance premiums. Which in turn means you can afford higher medical cost coverage.
Which means you could in effect end up spending less than the amount a mid to low net-worth person would have to pay out-of-pocket.
This reminds me of the shoe theory post on the blog which explains the mechanism of how the rich get richer...
Olaz wrote:How would you all quantify a "high net worth" anyway? IOW, what is considered a "high net worth"?
My metric is a paid for house and possessions that account for less than 10% of the total net worth. 80% invested in whatever combination/strategy that produces one's living expenses at a SWR of 3.5%. The remainder (~10%) in cash. This is with additional income (job, business, etc) that does or can readily be ramped up to meet one's expenses. Without such, I'd lower the SWR to 2.5%.
I'm conservative, but also, this is my definition of "high net worth".
