Wednesday, January 07, 2009
One of the many deleterious effects of the many recent financial market bubbles was that the meaning of the word "millionaire" was severely diminished.
The efforts of Regis Philbin and crew notwithstanding, the word had maintained the same weighty connotation early into the new century as gains in stock market wealth, while significant, were not nearly as broad based as what was to follow - housing market wealth.
A few years back, virtually any long-time homeowner in one of the housing bubble states who had also squirreled away a decent sum in their retirement savings could legitimately call themselves a millionaire, though, the value of one's primary residence is typically excluded in the official definition by those who study millionaires.
All of that has changed so much over the last two years that, today, few argue that the definition of the word should be expanded to include home equity since there is so much less of the stuff today than there was back in 2006.
Combined with the more recent plunge in equity markets, it seems that one of the few bright spots in the current downturn is that some of the cachet of the word "millionaire" is being restored.
This report in CNN/Money explains:
Millionaires? More like $700,000-airesDon't let that last part about the lifestyles of millionaires throw you.
While it may be hard to feel sympathy for America's millionaires, they're feeling the economic crunch, too - nearly a third of their assets have disappeared in the downturn, according to a consulting firm's report released Tuesday.
Spectrem Group said U.S. households worth $1 million or more - excluding their primary residence - have seen their assets decline by 30% during the financial crisis.
Almost one-fifth of the asset declines were greater than 40%, the report said.
"There's a huge amount of anger," said George Walper, president of Spectrem Group.
Nearly all the millionaires surveyed - 90% - said they "fear a prolonged economic downturn," the report said. On average, they believe it will last for another 22 months.
Maintaining their current lifestyles is also of concern, as 55% of respondents said they are worried they will not have sufficient assets to do so.
Despite what you may have been led to believe by Robin Leach and his ilk, it's not all "champagne wishes and caviar dreams".
One of the most important books out there, a book that every high school student should be required to read, is "The Millionaire Next Door". You can get the gist of the entire work simply by reading the first two pages that are conveniently reproduced below:
Ironically, this book was first published in the year 1998, the same year that the popular game show "Who Wants to be a Millionaire" debuted.