How Rich Do You Think You Are?

How Rich Do You Think You AreIn the land of opportunity, Americans may believe it’s harder to get rich than in the past. When asked about the likelihood of getting rich personally, however, one-third say it’s very or somewhat likely they will attain wealth because of their work, investments, inheritance or just plain good luck.

How rich do you think you are? A few years ago, Bankrate – a leading online aggregator of financial rate information – commissioned Princeton Survey Research Associates International to explore how people feel about their chances for prosperity, as well as how they define wealth and their motivations for pursuing it.

Hope springs eternal – for the young. More than half of those aged 18 to 29 (54 percent), believed they will get rich. Meanwhile, cynicism sets in with the passage of time. Only 34 percent of respondents, in the 30 to 49 age range, believed they will be rich, while one out of five (21 percent) in the 50-plus age group thought so.

What is rich, anyway, it may be a matter of semantics, rich versus wealthy? Though wealth can be defined in many different ways, most Americans tend to measure it by income. Many believe if you make $250,000 you are wealthy; if you make more than $450,000 you are rich.

To define wealth you need to focus on net worth – everything you own versus everything you owe. The “own” part of the equation includes real estate, cash, stocks, bonds, 401(k)’s, IRA’s, businesses and much more.  The “owe” part of the equation includes mortgage debt, student loan debt, car loans, credit cards, etc.  Once you subtract the liabilities from the assets, you can begin to determine your net worth and just how rich you really are.

Most people don’t equate wealth with a yacht docked in the Mediterranean and multiple houses. Only 7 percent of Bankrate’s survey respondents defined “rich” by possessions, such as houses, cars and boats.

Instead, for one-third of Americans (33 percent) rich meant having just enough money not to worry, according to the survey. That’s a subjective definition which varies with lifestyle and attitude. Another 26 percent defined rich as having enough money to quit their jobs.

Few people ever put a dollar amount on the definition of wealth. Just 17 percent said being rich means having a net worth of $1 million or more, and 11 percent said a six-figure annual income makes someone rich.

One-fifth of Americans (20 percent) believe starting your own business is the most likely way to get rich, today. History supports this assumption, as most self-made millionaires are small business owners. Choosing a high-paying job or career comes in second (19 percent) as the most likely path to getting rich.

Surprisingly, 15 percent of those surveyed said getting lucky via the lottery or an inheritance is the most likely road to riches, while 15 percent point to living frugally and saving money as best.

Statistically, only a small fraction of the population will ever be truly rich. If you want to see where you fall in the “being rich” category, check out http://www.globalrichlist.com/wealth. At the website, you enter either your income or your basic net worth and the computer calculates where you actually sit in comparison to the rest of the world.

For more information on Summit Brokerage Services, visit www.joinsummit.com or contact us at (800) 354-5528.

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