IMANE KURDI If you had $5 million in investable assets would you consider yourself rich? How about $1 million? It seems like a stupid question and yet the answer from those who do have those kinds of assets in the bank is not what you'd expect. Quite the contrary, the majority of millionaires do not consider themselves rich. This is according to a report published by the Bank UBS. They conducted a survey of almost 4,450 Americans aged over 25 who had at least $250,000 in investable assets. What they found was that 72 percent of those with $1-5 million did not consider themselves rich. Only when you crossed the $5 million threshold did a majority finally say, well hey, yes we are rich, but even then 40 percent didn't think it was quite enough to be classed as rich. Nope, and we're not talking assets but investable assets. These are not people who own a house worth a couple of million but people who own a house or two, and also have a cool million or two in liquid investments or cash. In short, these people are rich in the eyes of anyone with less than a million in the bank, in other words 99 percent of the world's population. So how much money does it take to be rich? François Hollande, now France's President, famously said back in 2007 that anyone earning a monthly salary of €4,000 or more was rich and moreover that he didn't like the rich. The figure seemed rather paltry, an annual salary of €48,000 was a long way from millionaires' row. Yet the figure is a fairly accurate reflection of the views of the French public. Six years on, a survey finds that 60 percent consider a monthly income of €5,000 enough to class you as rich, and across the population as a whole, a monthly salary of €6,500 forms the threshold between the rich and the not-so-rich. Which raises the question: what does it mean to be rich? My personal definition is that being rich means being free of financial worry. If you can pay all your bills, do all the things you like to do, and pay for it all without wondering whether you can afford it, and if after all that you have some spare left for a rainy day, then that to me is enough to think of yourself as rich. It's a rather hazy definition and I could not put a figure on it, but it's less about how much you have and more about having all you need, although need may be the wrong term. It is much like poverty; there is an absolute level based on having enough to cover your basic needs, and a relative level, calculated by how you compare to others in the population and based on a view of poverty as not on having enough to cover basic needs but on achieving a decent standard of living. When the French respondents were asked how much you needed to earn in order to be rich, they most likely replied in terms of the figure they thought they would need to earn in order to live well and without financial worries. The richer and the older the respondents, the higher the figure they came up with. The American millionaires did much the same; they did not consider themselves rich with just one million dollars because to them it was not enough to maintain their standard of living and be free of financial worries or constraints. Most importantly, it wasn't enough to ensure them the security they aspired to in order to provide for their children's future or to look after their aging parents. If you do the sums, you can see that a million dollars doesn't quite go as far as you would think if you live in those circles. Perhaps being rich is relative rather than absolute; it's not how much money you have but how that places you with respect to others. It is interesting that a monthly income of more than €5,000 is enough to put you in the top 10 percent in France, as 90 percent of salaries are less than that sum.
Or perhaps it is a question of terminology. Being "rich" is a word full of connotations, perhaps wealthy is better, or "high net worth individual" to use the jargon of the world of finance. In fact I was much amused by the terminology of the latest Cap Gemini/RBC World Wealth Report. They referred to people with $1-5 million in liquid financial assets as "millionaire next door", $5-30 million made you a "mid-tier millionaire" and $30 million or more an "ultra high net worth individual". There are, they estimate, more than 10 million "millionaires next door" in the world but only 111,000 "ultras". Euromillions, the European lottery, has a rollover this week. For the moment the jackpot is estimated at €32 million, not quite the record jackpot of €187 million that was reached last June, but enough to get people excited, and this is what I find interesting, that people rush to buy tickets as the jackpot increases when even the regular weekly jackpot would be enough to change most people's lives. Being a millionaire, it seems, is just no longer enough to be rich. Who wants to be a millionaire next door when you can be an ultra net worth individual! But isn't it a sad reflection on the world in which we live and isn't there something essentially indecent in people with more than a million dollars at their disposal refusing to see themselves as rich? – Imane Kurdi is a Saudi writer on European affairs. She can be reached at [email protected]
