A bank asked rich American investors to define want they thought it meant to be wealthy and the answer was not really what was expected.
Rather than put a figure on wealthy, the bank customers said the really wealthy are people who can live their lives without any financial restrictions.
They explained that this did not mean achieving a certain personal financial level, but in general terms depended on your personal aspirations and where you lived.
When pressured, Americans reckon they could only buy their financial freedom if they had $5 million in unfettered cash.
The report, by Swiss bank UBS, also revealed that seven out of 10 investors with a $1 million or more in cash to invest do not think of themselves as wealthy.
What the wealthy think about money
Instead, wealth was defined as having no financial constraints (50%), not working again (10%) or having the resources to fund a luxury lifestyle (9%).
High net worth investors also indulge in a high degree of philanthropy.
- 80% give money to their adult children, grandchildren or retired parents – and explained that this was the most enjoyment they gained from being wealthy
- 42% pay for school and university fees
- 18% share their home with relatives
- 20% stand guarantor for relatives who want to borrow money
- 18% pay for big-ticket purchases
- 14% were worried about the potential to outlive their assets
“Wealth is not about how much money you have, but what you can do with your time when you have money,” said Emily Pachuta, of UBS Wealth Management Americas.
The wealthy have the same concerns about their future as the less well-off.
Many are worried about paying for long-term care costs in their old age. Only a third had money set aside, while another third said they had not even considered long-term care.
The wealthy also have the security of a cash reserve of around 23% of their net worth that is not only available in a financial emergency, but provides money for short-term, high-risk investment.
“High net worth individuals have peace of mind from holding cash because they know they have the money to deal with an emergency or to get involved in an investment opportunity that may come along,” said Pachuta.
“This gives them financial confidence and a belief in the long-term prospects of the economy, because they know short term ups and downs do not really affect them too much.”