The title of today’s controversial topic is Will you ever be rich? Unfortunately, the answer is probably not…statistically. Now hold on, before you start heaping curses at me, let me give you my narrow definition of rich, for the sake of this article.
I consider you rich if
- You do not have to work for your survival income i.e. you can survive only on passive income
- You get enough passive income where you don’t have to budget i.e. for my purposes, I think $150,000 is the magic number. If the average American had $150,000 available to spend per year, they will probably not have to worry about budgets or cutting expenses
- This income must be able to last into perpetuity.
Now that I have given you my definition of rich, what is the magical number that you need to have invested to generate this amount of passive income? That number is $5M dollars. How did I come up with this number? I used the rule of 4. The rule of 4 is a popular rule in the financial world that states that if you spend between 3-4% of your invested nest egg every year, you should never run out of money…assuming the money is invested in a very conservative and safe vehicle. So 3-4% of $5M is $150k-$200k.
What are your chances of accumulating $5M in investable assets? According to the US Trust survey calculating net worths, only 0.6% of Americans have $5M or more in investable assets. That number is so low that it takes a special person with discipline to achieve this number.
How did these multi-millionaires make their millions. 22% Inherited it. 78% created it through these five avenues.
- Business Ownership
- Senior Executives of Companies
- Financial Investments
- Real Estate
- Sale of Business.
Now I ask you again, Will You Ever Be Rich? Is what you are doing now going to take you to where you want to be? Food for thought.
Gratefully,
Victor Lofinmakin
Your realtor
Tarl Anderson Properties
832-788-1782