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What Is a Millionaire?

What is a millionaire? Actually, this is not a very simple question…

If you take a 1 000 000 loan are you a millionaire? You have that amount available for spending, but you owe it, too. So probably not… A similar situation is if someone has a house worth a million, but she lives there and doesn’t plan to sell it, how about that? There are three controversial definitions for a millionaire:

1. Net assets for more than a million – this means every person, for whom:

total assets  – total debt > $1 000 000

2. Net financial assets for more than a million – in this calculation your home, car, and furniture are excluded from the equation, too, as living assets:

total assets – total debt – living assets (first home, car, etc.) > $1 000 000 .

3. Net investable assets (working capital) for more than a million – to be a millionaire according to this definition, a person should have 1 000 000 of a currency to invest. This rule is used for the creation of the so-called World Wealth Report every year, by Capgemini (www.capgemini.com), which offers insights into the size, composition, geographic distribution, and investing behavior of the world’s
population of high net worth individuals (HNWIs)—those with US$1 million or more1 at their disposal for
investing. You can see the report from 2012 here: http://www.capgemini.com/resources/world-wealth-report-2012/

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For example a person with:

– a house worth $200 000
– a car for $50 000
– credit card debt for $50 000
– other debt for $500 000
– vacation home for $300 000
– liquid investments for $500 000
– a bank deposit of $600 000

1. IS a millionaire according to the first definition:

200 000 + 50 000 + 300 000 + 500 000 – 50 000 – 500 000 + 600 000 = $1 100 000

2. IS NOT a millionaire according to point 2:

500 000 + 300 000 – 200 000 – 50 000 – 500 000 – 50 000 + 600 000 = $600 000

3. IS a millionaire according to 3, because the money available for investments are:

500 000 + 500 000 + 600 000 = $1 600 000

The most widely accepted definition of a millionaire would be a person, whose net worth is more than a million – 1.

According to point 1, there were around 25 million millionaires on the planet in 2011

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According to 3, there were around 11 million millionaires in 2011

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