Wealth can only be discussed in relative terms; in a vacuum it’s a virtually meaningless term. You are incredibly wealthy in Ghana if you earn $1,000 per month; here in the U.S. you are near the poverty level. If you live in Shreveport, Louisiana and earn $75,000 per year you’re relatively wealthy; here in San Diego you’re firmly entrenched in the middle class. Consequently, any discussion about wealth must include a reference point for comparison.
Personally my minimum definition of “wealthy” would be an income of $300K/year and a minimum liquid net worth (that is, stocks, bonds, cash, easily saleable real estate or business interests, excluding primary residence) of $5 million and maximum leverage of 25%.
But that’s just me.
The problem, of course, is that there are a LOT of people, particularly here in SoCal, that have a big income and big net worth but they spend almost all of that income and that big net worth is highly leveraged such that they are one recession away from extreme financial duress and bankruptcy. It’s only when the tide goes out that you find out who’s been swimming naked, and here in SoCal there are a lot of folks swimming without bathing suits… we just don’t know who they are… yet.
