Comments on: How Wealthy Are You? http://investorjunkie.com/2597/how-wealthy-are-you/ My Business and Financial Freedom Journey Sat, 19 May 2012 08:21:06 +0000 hourly 1 http://wordpress.org/?v=3.3.2 By: Investor Junkie http://investorjunkie.com/2597/how-wealthy-are-you/#comment-18459 Investor Junkie Tue, 11 Jan 2011 16:18:27 +0000 http://investorjunkie.com/?p=2597#comment-18459 "you can draw from it forever without taking any risk (e.g., 100% treasury bonds)." You assume treasury bonds are 100% risk free. They are not. All investments have risk including things people consider "risk free". Sometimes the risks are not as obvious or well defined. Treasury bonds have inflation risk (even TIPS). Sure you'll get your money back (assuming the govt does not default), but in terms of real dollars after inflation are you making money or losing it? “you can draw from it forever without taking any risk (e.g., 100% treasury bonds).”

You assume treasury bonds are 100% risk free. They are not. All investments have risk including things people consider “risk free”. Sometimes the risks are not as obvious or well defined.

Treasury bonds have inflation risk (even TIPS). Sure you’ll get your money back (assuming the govt does not default), but in terms of real dollars after inflation are you making money or losing it?

]]> By: Investor Junkie http://investorjunkie.com/2597/how-wealthy-are-you/#comment-2634 Investor Junkie Sun, 11 Jul 2010 03:07:08 +0000 http://investorjunkie.com/?p=2597#comment-2634 I meant economic term that economists call it. :-) I meant economic term that economists call it. :-)

]]> By: Macs http://investorjunkie.com/2597/how-wealthy-are-you/#comment-2633 Macs Sun, 11 Jul 2010 02:45:48 +0000 http://investorjunkie.com/?p=2597#comment-2633 "We finished the basement which cost $30k, but also had to buy a new TV ($4k) and couch ($2k). Another example is my wife just purchased an iPhone. So with the iPhone she'll need to purchase a case, she'll more than likely buy apps and so on and so on. There is a term for this, but the name of it escapes me at the moment. " Would the name be 'flagrant consumerism', by any chance? My version of wealthy includes not frittering it away on nonsense buys like this, but each to his own ;-) "We finished the basement which cost $30k, but also had to buy a new TV ($4k) and couch ($2k). Another example is my wife just purchased an iPhone. So with the iPhone she'll need to purchase a case, she'll more than likely buy apps and so on and so on. There is a term for this, but the name of it escapes me at the moment. "

Would the name be 'flagrant consumerism', by any chance? My version of wealthy includes not frittering it away on nonsense buys like this, but each to his own ;-)

]]> By: Weekend reading: House prices still over-valued http://investorjunkie.com/2597/how-wealthy-are-you/#comment-2608 Weekend reading: House prices still over-valued Sat, 10 Jul 2010 10:47:52 +0000 http://investorjunkie.com/?p=2597#comment-2608 [...] How wealthy are you? – Investor Junkie [...] [...] How wealthy are you? – Investor Junkie [...]

]]> By: Weekend Reading: Return of the Russian Cold War Spy Game Edition http://investorjunkie.com/2597/how-wealthy-are-you/#comment-2594 Weekend Reading: Return of the Russian Cold War Spy Game Edition Sat, 10 Jul 2010 01:51:02 +0000 http://investorjunkie.com/?p=2597#comment-2594 [...] Investor Junkie asks How Wealthy Are You? [...] [...] Investor Junkie asks How Wealthy Are You? [...]

]]> By: Financial Samurai http://investorjunkie.com/2597/how-wealthy-are-you/#comment-2555 Financial Samurai Fri, 09 Jul 2010 01:34:34 +0000 http://investorjunkie.com/?p=2597#comment-2555 Good definition strictly from a monetary point of view. I agree. Pretty straight forward and simple. Good definition strictly from a monetary point of view. I agree.

Pretty straight forward and simple.

]]> By: micromillion http://investorjunkie.com/2597/how-wealthy-are-you/#comment-2553 micromillion Fri, 09 Jul 2010 00:47:33 +0000 http://investorjunkie.com/?p=2597#comment-2553 Junkie, wealthy means never having to work anymore and having enough cash such that you can draw from it forever without taking any risk (e.g., 100% treasury bonds). Or, you are have so much cash that your full time job is to give money away because you can't spend it. Merely well off future retirees (like me for now), can expect to live comfortably without working but with a need to take market risk either through dividends, real estate investments, etc. Mike Junkie, wealthy means never having to work anymore and having enough cash such that you can draw from it forever without taking any risk (e.g., 100% treasury bonds). Or, you are have so much cash that your full time job is to give money away because you can't spend it.
Merely well off future retirees (like me for now), can expect to live comfortably without working but with a need to take market risk either through dividends, real estate investments, etc.

Mike

]]> By: Investor Junkie http://investorjunkie.com/2597/how-wealthy-are-you/#comment-2551 Investor Junkie Fri, 09 Jul 2010 00:27:19 +0000 http://investorjunkie.com/?p=2597#comment-2551 Well that's not completely true. Let me use the finishing of my basement as an example. We finished the basement which cost $30k, but also had to buy a new TV ($4k) and couch ($2k). Another example is my wife just purchased an iPhone. So with the iPhone she'll need to purchase a case, she'll more than likely buy apps and so on and so on. There is a term for this, but the name of it escapes me at the moment. Well that's not completely true. Let me use the finishing of my basement as an example. We finished the basement which cost $30k, but also had to buy a new TV ($4k) and couch ($2k). Another example is my wife just purchased an iPhone. So with the iPhone she'll need to purchase a case, she'll more than likely buy apps and so on and so on. There is a term for this, but the name of it escapes me at the moment.

]]> By: ER Extreme http://investorjunkie.com/2597/how-wealthy-are-you/#comment-2550 ER Extreme Fri, 09 Jul 2010 00:14:49 +0000 http://investorjunkie.com/?p=2597#comment-2550 No income is needed to own items. Only to buy them. Once you have them, you don't need to earn more. (Unless it's high maintenance items --- stay away from those.) No income is needed to own items. Only to buy them. Once you have them, you don't need to earn more.
(Unless it's high maintenance items — stay away from those.)

]]> By: Investor Junkie http://investorjunkie.com/2597/how-wealthy-are-you/#comment-2546 Investor Junkie Thu, 08 Jul 2010 21:03:12 +0000 http://investorjunkie.com/?p=2597#comment-2546 You have a good point about being liquid, though in most cases your savings would not be generating any income. For example I no longer have emergency savings. I feel it's silly to have and want to make a blog post about this. As long as I can cash out of my investments in an orderly fashion and over a long time frame (say a few years) then why put all of it earning next to nothing? IMHO credit cards and some semi-liquid investments (ie short term bond fund) can be used. You have a good point about being liquid, though in most cases your savings would not be generating any income.

For example I no longer have emergency savings. I feel it's silly to have and want to make a blog post about this. As long as I can cash out of my investments in an orderly fashion and over a long time frame (say a few years) then why put all of it earning next to nothing? IMHO credit cards and some semi-liquid investments (ie short term bond fund) can be used.

]]> By: Evan http://investorjunkie.com/2597/how-wealthy-are-you/#comment-2521 Evan Thu, 08 Jul 2010 04:14:06 +0000 http://investorjunkie.com/?p=2597#comment-2521 I like your definition of wealthy, but I think it is too narrow. I associate the word wealthy with freedom! So maybe add the word liquid to your definition? I have no where near where I want to be! So nope not wealthy I like your definition of wealthy, but I think it is too narrow. I associate the word wealthy with freedom! So maybe add the word liquid to your definition?

I have no where near where I want to be! So nope not wealthy

]]> By: Investor Junkie http://investorjunkie.com/2597/how-wealthy-are-you/#comment-2516 Investor Junkie Thu, 08 Jul 2010 01:56:39 +0000 http://investorjunkie.com/?p=2597#comment-2516 Yup, you are considered wealthy. Congrats! Now if I could get you to increase your income for some luxury items :-) Yup, you are considered wealthy. Congrats! Now if I could get you to increase your income for some luxury items :-)

]]> By: ER Extreme http://investorjunkie.com/2597/how-wealthy-are-you/#comment-2515 ER Extreme Thu, 08 Jul 2010 01:51:57 +0000 http://investorjunkie.com/?p=2597#comment-2515 Savings divided by annual expenses is a pretty good way to estimate it. My number is currently somewhere between 35 and 40 years of savings which when invested will last forever. Of course I need far less to live on than you guys do, hence my high number. I am 34 years old. Savings divided by annual expenses is a pretty good way to estimate it. My number is currently somewhere between 35 and 40 years of savings which when invested will last forever. Of course I need far less to live on than you guys do, hence my high number. I am 34 years old.

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