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This illustrates my point. Why would you tie up $6,000,000, when someone is willing to loan you the money at 1%. Zuckerberg is no fool.
The article is talking about the pitfalls of an adjustable rate mortgage. And that is true for most people, but those pitfalls don’t apply to wealthy people. Why? Because the minute the rate becomes unprofitable you just pay off the remainder of the loan.
And by the way, I doubt he has paid off the remainder of the loan because here we are almost 8 years after the article was written, and he is still only paying 2.75% by current labor rates.
Well, there are lots of people who think there's a certain dollar amount they can't outspend. Sure, they don't say that explicitly, but just ask lottery winners if they think they'll be broke in 5 years (many, perhaps most, are) or professional athletes, where it's well documented somewhere around 80% are broke within 5 years of retiring. Yet most of them would not believe it would happen to them. Those are the more obvious examples, but I don't think it's a stretch to say that kind of thinking is prevalent throughout mainstream society.
I disagree. If someone owned a 10 million dollar home and owned several buildings worth 2 billion I certainly would not discount those.
People who own that much have ways of getting cash if needed, often at very good terms the rest of us cant get.
But the $10M dollar house is a rounding error in that instance. And as I said, I was only counting the house you live in, not rental or commercial real estate. Your example proves the point I was trying to make...really rich people don't have a huge % of their net worth tied up in the house they live in. It's true for the "middle class rich" as well as the billionaire level rich.
Is it your assertion that once you become wealthy, you suddenly stop the behaviors that made you wealthy in the first place?
We're discussing telling if someone is rich or not (and how leasing luxury cars is the #1 way to 'appear rich' or overspend among many in the middle-class) - not debating how they got there or discussions in re: 'building wealth' (though there are plenty of threads in this forum that do just that). That said, houses are investments as well (cars are not); and mortgages are a different ballgame entirely (one may tell the likelihood of someone's wealth, per the thread, by their home much more easily than a car from my perspective). That said, a high income is needed (by the majority) to finance an extremely large mortgage, especially if one doesn't wish to pull from other investments/funds. It's simply common sense re: high income likely being indicative of wealth (and comes full-circle to the point of home mortgages).
Well, there are lots of people who think there's a certain dollar amount they can't outspend. Sure, they don't say that explicitly, but just ask lottery winners if they think they'll be broke in 5 years (many, perhaps most, are) or professional athletes, where it's well documented somewhere around 80% are broke within 5 years of retiring. Yet most of them would not believe it would happen to them. Those are the more obvious examples, but I don't think it's a stretch to say that kind of thinking is prevalent throughout mainstream society.
I agree - lottery winners and people who inherit their money often have different views on spending/investments (as well as professional athletes). That said, it's no different among the middle-class; overspending occurs in all classes with people of all incomes. It's just fact, however, the higher the income (especially if part of it is portfolio income), it's less likely (or the person wouldn't have investments/portfolio income and be planning for the future in the first place).
We're discussing telling if someone is rich or not (and how leasing luxury cars is the #1 way to 'appear rich' or overspend among many in the middle-class) - not debating how they got there or discussions in re: 'building wealth' (though there are plenty of threads in this forum that do just that). That said, houses are investments as well (cars are not); and mortgages are a different ballgame entirely (one may tell the likelihood of someone's wealth, per the thread, by their home much more easily than a car from my perspective). That said, a high income is needed (by the majority) to finance an extremely large mortgage, especially if one doesn't wish to pull from other investments/funds. It's simply common sense re: high income likely being indicative of wealth (and comes full-circle to the point of home mortgages).
If you are saying that people lease luxury cars to “appear rich”, then you have no argument from me.
The only thing I am challenging is this statement of yours, “A person who is more wealthy (who has a high income consisting of portfolio, earned and/or passive) wouldn't be leasing a car (or taking a loan on one) in the first place.” This is not correct, for the reasons I mentioned. Wealthy people pay for things in whatever is the most advantageous way to pay for them. They dont leave money on the table.
If you are saying that people lease luxury cars to “appear rich”, then you have no argument from me.
The only thing I am challenging is this statement of yours, “A person who is more wealthy (who has a high income consisting of portfolio, earned and/or passive) wouldn't be leasing a car (or taking a loan on one) in the first place.” This is not correct, for the reasons I mentioned. Wealthy people pay for things in whatever is the most advantageous way to pay for them. They dont leave money on the table.
You're determined to take my statement out of context from its original intent and twist it into a discussion about 'building wealth' (over a car purchase or 1.9% interest rate on an average car). My point being - those who simply wish to appear wealthy are more likely to lease a vehicle they can't afford (or stretch a payment because of a dealer incentive such as a low interest rate and think they got a 'good deal' because of the 'great interest rate'). Often, however, you can simply take that incentive in cash and negotiate a better deal on the car as well. Bottom line, the person who is not wealthy does not have that option/upper hand (and is not open to the variables in any given situation as they must finance or lease); they fastidiously focus on the interest rate and payments (often overlooking a multitude of other factors in the process). In many cases, dealerships/sales are quite aware of their clientele (and act accordingly). A great interest rate often translates to a higher purchase price (as well as fees) in addition to the cost of the loan.
ive looked over the benefits of the black card and they definitely do not seem to justify the initiation and annual fee you pay. so its definitely paying for the prestige. you are mostly going to be impressing retail associates and friends when you split a bill on the credit cards.
i think the jp morgan reserve is a little better since you get the same benefits as the sapphire reserve plus you can also add united club access (so thats only better if united club access would be worth something to you). it costs a little more than the sapphire reserve. amex black seems to have some benefits that are very location specific so if you dont live in a place that you can use the benefit; its worthless to you.
amex black is probably more impressive to retail associates and friends since i dont think most people are at all aware of the existence of the jp morgan reserve.
Fun fact: The JP Morgan reserve card is one of the very few cards that can be used to identify the fact that someone is definitely wealthy. But like you said most people dont know about it so its a great card for someone who doesn't want announce to everyone and their mother that they have money. For a small period there was a glitch in Chase's system that allowed people with lower networth then the minimum amount (not low income) for the card to obtain it. Plus there was a small period where Chase allowed people with the "chase private client" status to get the card regardless of networth.
However besides the instance above, to get invited to have the card you must have a MINIMUM of $10 million invested with chase. Meaning almost everyone you see with that card is worth at least 8 figures. Basically seeing someone with that card is a better indicator of wealth then finding out that someone lives in a $5 million mansion. Chase claims that the median networth of their reserve cardholders is $100 million. So if you spot that card then the person is either super wealthy or one of the few people who manged to snag the card by luck. Compared to the reserve card the AMEX black card holder looks like a joke. Because you just need to spend an insane amount on your platinum card to get an invite for the black card, regardless of your networth.
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