Also, what are the ramifications of excluding one’s primary residence. I know it’s supposed to balance things out. But what if you have 500K of equity in your house and 700K in other assets. Your net worth is 700K according to the survey. Suppose tomorrow, you take out a Home Equity Loan for 300K and put it in the bank. Presto, you are a millionaire.
Consider two cases:
Joe Frugal: Joe owns his 1.3 Million personal residence, complete with 20-acres, a fallout shelter and supplies for armageddon after the housing bust. Joe also owns 350K of gold bullion, and 350K of Euro-denominated CD’s. According to the survey his net worth is 700K. (If you included his residence it would be 2 million)
Jim Upsidown: Jim bought his house in 2005 for 2 Million with a zero-down option ARM. He used what would have been his downpayment to invest in Ostrich Futures, which paid off big.
His house is now worth 1.3 Million, but he built up an ostrich nest-egg of 1.1 Million. According to the survey Jim has a net worth of 1.1 Million. He’s on of our lucky millionaires. (unofortunately, if you include his principle residence his is worth only about 400K.)
