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Old 01-20-2018, 05:45 PM
 
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So the total household wealth is 96 Trillion. And we have a population of 323 Million. Including babies, elderly, teenagers, etc. That equates to a wealth of 297K per ever person alive in America today, clearly an extremely wealthy country. But I know few people with 300K net worth. Much less babies, teenagers, or millennials with that level of wealth. Most are much lower. A few are higher, but not astronomically so. How can our country be so rich in terms of household wealth when everyone seems so poor?
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Old 01-20-2018, 06:10 PM
 
Location: The Triad (NC)
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Quote:
Originally Posted by concept_fusion View Post
How can our country be so rich in terms of household wealth when everyone seems so poor?
Arithmetic and poorly applied logic.
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Old 01-20-2018, 06:14 PM
 
24,692 posts, read 26,777,106 times
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Quote:
Originally Posted by concept_fusion View Post
So the total household wealth is 96 Trillion. And we have a population of 323 Million. Including babies, elderly, teenagers, etc. That equates to a wealth of 297K per ever person alive in America today, clearly an extremely wealthy country. But I know few people with 300K net worth. Much less babies, teenagers, or millennials with that level of wealth. Most are much lower. A few are higher, but not astronomically so. How can our country be so rich in terms of household wealth when everyone seems so poor?
A small percentage of people have a high percentage of the wealth.

Some people will attribute this to the greed of the rich. While there's some truth in that, it's not the whole truth.

In order to have wealth, you have to spend less than you earn. In order to keep what you have, you must allow your wealth to accumulate at a rate faster than you spend it.

Humans are bad at both of the above. Most people never save/invest any significant amount of money over a significant length of time (say, 15% of income consistently over a 20 year period). They're not interested. They don't want to take risk. They never learned personal finance in school They listen to their broke relatives and friends more than they listen to people who have actual wealth. And even when they get it, they tend to act as if it will never run out; yet it typically runs out faster than they believe it will--much faster. A perfect example is that 70% of lottery winners are broke or bankrupt within 5 years of winning:

http://www.cleveland.com/business/in...lottery_w.html

And even if someone is good at acquiring wealth, their kids generally won't be. So in 70% of cases, wealth is gone by the end of the 2nd generation because the kids get used to an expensive lifestyle but aren't able to maintain it with either high paying jobs and/or more frugal living. Splitting up estates among heirs also waters them down quite a bit. By the end of the 3rd generation, 90% of wealth is gone. I had a friend of a friend who inherited about 750K in municipal bonds about 20 years ago. Instead of just living off the interest from the bonds, he blew through the whole thing by buying Disney paraphernalia, spending on expensive clothes, and gambling in Reno. He was broke within 5 or 6 years. This type of behavior, unfortunately, is fairly common.

70% of Rich Families Lose Their Wealth by the Second Generation | Money

TL;DR: A small percentage of people are motivated for/good at acquiring and maintaining wealth. Most people aren't.

Last edited by mysticaltyger; 01-20-2018 at 06:23 PM..
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Old 01-20-2018, 06:24 PM
 
Location: Aurora Denveralis
2,961 posts, read 1,012,279 times
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Quote:
Originally Posted by mysticaltyger View Post
A small percentage of people have a high percentage of the wealth.

Some people will attribute this to the greed of the rich. While there's some truth in that, it's not the whole truth.

In order to have wealth, you have to spend less than you earn. In order to keep what you have, you must allow your wealth to accumulate at a rate faster than you spend it.
A bit disingenuous, I think. You're sort of implying that everyone starts out equal and only the sensible savers become wealthy. While generational wealth may or may not be "greedy," someone who starts out with a decent pile has far more flexibility to save and invest - even while being a little loose in their household and personal spending - than someone who starts with little and has only $5k a year in income that could be saved.

Certainly poor saving habits keep lower tiers from acquiring wealth, but having already-growing wealth along with income is a completely different situation.
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Old 01-20-2018, 06:30 PM
 
Location: Sonoran Desert, AZ
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Well, it seems that the rich people have all the money. (With credit to Vilfredo Pareto)


https://en.wikipedia.org/wiki/Wealth..._United_States

Last edited by Buckeye77; 01-20-2018 at 07:24 PM..
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Old 01-20-2018, 07:12 PM
 
Location: Ohio
17,986 posts, read 13,233,625 times
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Quote:
Originally Posted by concept_fusion View Post
So the total household wealth is 96 Trillion. And we have a population of 323 Million. Including babies, elderly, teenagers, etc. That equates to a wealth of 297K per ever person alive in America today, clearly an extremely wealthy country. But I know few people with 300K net worth. Much less babies, teenagers, or millennials with that level of wealth. Most are much lower. A few are higher, but not astronomically so. How can our country be so rich in terms of household wealth when everyone seems so poor?
Why would you include babies and teenagers who don't actually participate?

Maybe you don't understand that Wealth isn't necessarily liquid.
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Old 01-20-2018, 07:21 PM
 
Location: East of Seattle since 1992, originally from SF Bay Area
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Part of net worth is home equity. One need not be rich to have a lot of that if they stayed in their home a long time. For example, we bought for $190k in 1993, current value is $784k.
Without a lot of debt, that’s well over $300k net worth, not counting pensions, life insurance value and the rest.
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Old 01-20-2018, 07:28 PM
 
Location: Niceville, FL
7,275 posts, read 15,279,446 times
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A lot of that number comes from home equity and defined contribution retirement plan balances. We've got a pretty average house, but the mortgage is paid off and throw in some retirement plan contributions from current and former employers, and well, our middle-aged, middle class selves are once more pretty much at the mean here.

Course the wealth is not at all liquid in our case because we're not the types to treat our home equity like an ATM. (We do have a small HELOC balance for repairs and remodeling, but the balance is less than 10% of the home's current market value) We're not 'The Millionaire Next Door' types and there are things we do splurge on but we also have our comfort zone and try not to overspend on The Pretty unless there are many good reasons for it.
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Old 01-20-2018, 07:29 PM
 
Location: Denver CO
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I'm not sure of the basis of your claim that "A few are higher, but not astronomically so." There is lots of info out there explaining that it's in fact quite true that there are few whose wealth is astronomically higher than most everyone else.

https://inequality.org/facts/wealth-inequality/
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Old 01-20-2018, 08:32 PM
 
Location: Kirkland, WA (Metro Seattle)
3,416 posts, read 2,814,585 times
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Quote:
Originally Posted by concept_fusion View Post
So the total household wealth is 96 Trillion. And we have a population of 323 Million. Including babies, elderly, teenagers, etc. That equates to a wealth of 297K per ever person alive in America today, clearly an extremely wealthy country. But I know few people with 300K net worth.
Yeah, head smack all right. Don't know your age, but if over forty and you don't know many w/300K or more net worth, find some new friends.

That was about my net worth at 33, and I thought I was something of a bum. Bought a condo, then more, then more, then...never mind. There comes a point of critical mass where you can start making some real investments with bigger payoffs.

Yeah, bully for me.

Bully for you to associate with those planning for eventual retirement, if that is the question? They should be worth 5x that with good management and savings twenty years later, hopefully 7x or 8x at retirement age.
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