Many think the Millionaire Money Mentors (MMM) forum mentors are “just” millionaires…but many (probably most) are multi-millionaires (based on their comments and millionaire updates). It’s just that Multi-Millionaire Money Mentors doesn’t roll off the tongue as well. Hahaha.
This is why my guess is that collectively we have mentors in the forums with over $500 million (half a billion!) in net worth! It’s a pretty impressive group.
Recently we got some thoughts from those with $5 million or more by asking the following:
- Do you consider $5 million net worth as rich? What kind of lifestyle does it lend you?
- For those that aspire to earn a $5 million net worth, what do you suggest they do?
Today I’m sharing some of their responses, separated by dashed lines to highlight individual comments…
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Yes. Even with a hefty alimony, $5 million means I don’t really think much about cost when planning travel, or doing every day purchases. The only time cost is a factor in my lifestyle decisions is BIG purchases (hot tub, redoing the kitchen), and even then we still end up making them most of the time.
Earn, earn, earn. The easiest way to get to the $5 million level is earning. Become really good at something that’s in high demand. For me that was accounting. The first 15 years of my career was about obtaining specialized accounting knowledge and building a strong resume. As a result, the last 12 years of my career have been about earning serious, serious money.
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Yes. It allows a lifestyle with every creature comfort I want, including a certain amount of luxury items (e.g., vacations, expensive restaurants, two nice cars and some high end furniture). It also allows for spending extra without worry for that special occasion and paying for unexpected situations (e.g. supporting family members). Caveat: if by “rich” one means 1%er, we are not necessarily “rich” by Bay Area standards.
I defer to others on this, since our wealth came from my wife’s inheritance.
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Of course it is rich but the semantics lie between what is liquid and what is illiquid. If most of your 5 is liquid you have an abundance of choice, your purchasing decisions can focus on value rather than cost. You can engage or withdraw in many activities others feel are required. You also likely have a hobby or two where you splurge on. Its not quite lifestyles of the rich and famous, but life is pretty sweet. If most of your 5 is illiquid you are still doing great, sleeping well with the knowledge that if you have to you can make a life change to free up capital and roll with the punches.
Get out of the W-2 rat race. Take risks, provide value, solve problems (not headache causing problems but migraine inducing problems). Put excess cash to work for you so that you “earn money while you sleep”. Narrow your focus on everything. Be generous where you are able.
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I do not consider myself rich in my HCOL area. My wife does. I don’t have a butler, a chef, a boat or a plane. I’m not rich but I am very comfortable and appreciate it immensely.
Start early follow ESI principles and invest in yourself. I did it through being very good at my job and finding a company that valued me as an individual and as a professional. I think income solves all other deficiencies. You still need to spend less and save.
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Yes. $5 million allows for a comfortable lifestyle that is not encumbered by concerns about money. But it also depends upon your definition of rich. $5 million doesn’t pay for the life of the .1 % (an estate, a staff, a yacht, private air travel, etc.)
Find a career that you enjoy and excel at it. Pay yourself first and invest conservatively (do not chase investing fads or try to outsmart the pros).
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Ridiculously, ludicrously rich even by American standards, let alone the rest of the world.
On one hand we can afford the major home-improvement projects, fly in first class whenever it makes sense to us, buy the quality groceries without checking prices or coupons, and tip generously.
On the other hand we feel a bit of the burden of stewardship. We also feel responsible for ramping up our philanthropy to get our net worth back down below $5 million. Part of that feeling comes from the security of inflation-fighting annuities (military pensions and Social Security).
A high savings rate into passively-managed total stock market index funds can compound to $5 million a lot faster than expected. The high savings rate also overcomes a lot of stupid financial mistakes along the way.
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Surprisingly, I don’t feel rich in the slightest. I think it comes down to a lot of the assets being tied into real estate being so illiquid. What I do feel is a sense of peace knowing I can handle almost any financial situation. I am extremely grateful that I can sleep well at night but do constantly feel I’m treading water to stay afloat especially with inflation in my HCOL state.
For me, it was the slow and boring route. ESI. I would have to say that saving a large portion of my salary early in my career when I wasn’t earning much helped build the habit and not trying to keep up with the Joneses was key. The rest sort of worked itself out. I didn’t earn much compared to a lot of people on this forum so if I can do it, anyone can.
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Net worth is 60% liquid 40% real estate. I don’t consider us rich. It does give us the ability to do what we want, know l can tell my manager “here is my 2 weeks notice” at any time and as my kids start college don’t need to worry about the cost. We did save for the past 18 years though.
We followed ESI principles. We have maxed out 401k contributions for past 25 years, maxed out Roth and Coverdale contributions when eligible and maxed out tax efficient 529 contributions for past 18 years. We purchased all real estate near market lows (luck but did it with 3 properties). Worked harder and smarter than my peers and switched jobs every 4 to 7 years to increase earnings. Leveraged time in market to our benefit and lived below our means.
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No. I admit, I am weird. To me I always envisioned rich guys like the Duke brothers in the movie Trading Places. Numbers on paper may say we are technically rich but I don’t feel that way at all. Although NW is $5.6M, our average spend is around $130k per year now which is pretty modest in expensive SoCal.
The NW was accumulated by always keeping the spend low, and definitely below the levels of all of our friends and neighbors. I have never really spent a bunch or have any luxury items. Per my post recently updated 4% rule calculation with inflation increased spending and reduced NW due to market drops we still need to accumulate a bit more in order to allow us to just keep spending as we do today, which feels pretty average here.
As we have always spent way less than we make and plan to continue at least until the kids are out of college never really felt what it is like to spend big which perhaps is what gives you feeling of being rich (??). I don’t foresee any big purchase like a boat or a plane or giant house, just more average living ahead which I suppose is what makes me not feel “rich” in the traditionally sense. I am living far less “large” than my neighbors around me.
Earn, Save and Invest of course. Read all of the interviews on ESI to find lessons that apply to you that you can put into practice.
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Yes…with a twist. I look more at income than assets as 40% of our NW is in income producing real estate. $3.2M in equity in our real estate portfolio provides the same post tax income as what the 4% rule provides with a normal ETF of $7.5M. All our other traditional assets become another safety net. Rich to me means feeling safe and secure in a very comfortable lifestyle we defined. I believe one needs to define what lifestyle they want with their specific annual expenses and that is their rich life. We have our rich life because our assets income greatly exceeds those expenses.
ESI+: Earn by either finding something you are great at and excelling in the W2 world or even better owning your own business; Save: ours was one of keeping lifestyle in check and saving as we grew income (over 50% post tax saved during the last 15 high wage earning years) and Invest with an eye on income more than assets. + Lastly it is never too late. I really didn’t get started on this journey until I was 35 and 3-4 key decisions made during the decades after that accounted for 80% of the trajectory.
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I don’t feel rich. The money is mostly in the market and fluctuations recently have made me feel even more uncertain. Also I wasn’t raised “rich” and don’t like to associate myself with this label. I think if I had more certainty around assets and access to health care and health insurance, I’d feel more comfortable labeling myself as rich. That said, I’m definitely aware that to most of the US population and certainly to the vast majority of the world population I’m incredibly rich.
I suggest they first marry or partner with a like minded person – one who is interested in ESI. That will help immensely in reaching any financial (and other goal). Secondly pursue an advanced degree where there is demand / high pay. Sadly for example while there is demand for teachers – there is low pay. Find something you can be good at that most people aren’t. Keep your lifestyle level low – purchase a house you can live in on one income, buy reliable cars and household items and use them till they break. But I wouldn’t make saving money the focus of my life – that would seem like being on a perpetual diet – both unenjoyable and for most people unachievable. Build plenty of enjoyment and small happy celebrations into your life as net worth is only one aspect of it.
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My definition of “rich” is having all that I need and a lot of what I want, having enough plus some abundance. Given that, for the vast majority of people on this earth, $5 million is absolutely enough to be “rich.” It’s is not Lifestyles of the Rich and Famous level, but just following the 4% rule you would have $200,000 per year to spend, or $16,667 per month. Even in a HCOL place, that provides for enough plus some abundance.
I do agree with [another mentor] that “rich” also comes from a feeling of being financially secure in the lifestyle that you define. With that, I didn’t feel that security until I reached about $7-8M in investable assets because the lifestyle we had defined for ourselves needed about $240,000 annually, and we wanted some very conservative margins of safety as well. When we reached that point, we didn’t think much about any expenditure that was under $1,000, and we did several things per year that were bigger, mostly 2-3 big vacations, a few smaller getaways and home improvement. I also didn’t worry at all about funding education for my kids, even with private high school and wherever they chose to attend college.
I think having an equity stake in your work is a big driver of wealth creation, whether that is owning your own company/income stream or getting equity in something that will grow and either is or will become liquid. I pulled this from another post that I did on a different thread:
- Being at a company that puts a high premium on performance (and accepting the related sacrifices), and has a way to translate that performance into equity appreciation. Choose your employer well, or own the company.
- Being at a company that rewards performance at the individual level through equity or your ownership. No way I would have gotten to my level of net worth just though salary and even bonuses.
- Concentrating your professional energies in the areas that will drive outsized performance for the company – running to the biggest challenges, being the producer, and getting rewarded for that.
- Narrowing your world to only work and family for a long time…having a supportive spouse/partner and family…dumb luck. It’s hard to do it for the long time it takes without great support. And it also takes some luck, or perhaps working to be at the right place at the right time.
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We feel rich with our $5.3MM net worth, but a big part of that reason is that we are making a $1.4-$1.5MM income annually. We live in a beautiful house, own nice cars, fly business class on trips longer than 3-4 hours, and are embarking on a 3-week European vacation at the end of the month without having to worry the cost of the trip. Whether it costs us $20k or $30k is largely immaterial, based on ratios. We eat good food without needing to look at the prices on the menu. We are also able to donate generously to charitable causes that are important to us.
For those that aspire to earn a $5 million net worth, I would suggest that they invest in themselves and their education and look into the merits of starting their own business. A W2 job will allow you to make a comfortable 6-figure income, but will rarely allow you the opportunity to make a 7-figure income.
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From a numbers’ standpoint, we are considered “rich.” I honestly don’t feel rich. I struggle with this. I considered rich as being able to live a lavish lifestyle (fancy cars, boats, flying first class). If I look at the numbers, we can afford those luxuries, but emotionally it doesn’t feel realistic. Retiring 2 weeks ago in this inflationary bear market hasn’t helped. Having this large nest worth does help us sleep better at night and not worry about the small daily expenditures. It also allows us to be more generous.
Work hard, save, invest and live below your means. Marry someone with the same values (financially as well as world values, as divorce can be expensive). Delay gratification, but be sure to enjoy the journey along the way.
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Yes, I consider $5MM to be “rich.” Even if you live in a HCOLA or your assets are mainly illiquid – in other words even if you aren’t living a particularly rich lifestyle – having a $5MM net worth means you (should) know you could retire and live comfortably almost anywhere in the world. Not having to work, not having to stay in any particular situation – that freedom to me is what it means to be rich. What kind of lifestyle it can buy of course depends on where you live and how many people that wealth is supporting.
For me currently, my wealth doesn’t lend me any lifestyle. I’m living off my income and still building the pot of money I will eventually live off. If I retired today as a DINK in Dallas, $5MM would mean a nice but not luxurious paid off $750K townhome and roughly $170K a year of income using the 4% rule as a proxy. Our property taxes are $14K, health ins would be maybe $10K, and income taxes would be minimal since a lot of my assets are in rentals, Roths and taxable accounts. After utilities and basics we’d still have around $10K a month of fun money. Lots of travel and golf, a couple of paid off luxury autos, a housekeeper, a country club membership if we really wanted to, plenty to give away.
I did it in several ways: avoiding student loans (this was due to family support), going into a higher earning corporate career (banking), marrying another above average earner (and one who also views building wealth as a goal), and starting investing strategically in my early 20s. Notably, I also don’t have kids (yet?) which has allowed me to save more and also move up the career/income ladder sooner, compared to peers who have families at a younger age. I front loaded my savings specifically to have the option to retire if/when I have kids. Others have kids young and build a career later which works too, but then your money doesn’t have as much time to compound.
Other ways to do it: Start/build a business. Marry someone with money or family money. Gambling (this includes speculative investments like early Bitcoin betters)/win the lottery. That’s pretty much it.
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5M definitely defines solid wealth especially here in the USA; and it is an achievable goal. I think for many of us, the 5M+ is not about assets that are solely for income production but can be enjoyable assets like a farm, plane, collectible cars, personal collections, or other assets that are enjoyable, but aren’t like buying ETFs or real estate for income. It also allows for significant charitable giving of where we see the most need.
I was having lunch with an investment advisor (a very good one) and we both would speculate that probably less that 10% of the adult USA population understand the power of annual compounding return, rule of 72, and other things we take for granted; so Earning, Saving, and/or Investing, or for a perfect trifecta all three is a near guarantee of success……….but you need that long-term power of compounding….so the earlier it is started, the better the results. Age 18 is Not too early to start.
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I personally only feel comfortable, though I must acknowledge my life has many amenities and niceties built in. I also know that RELATIVELY speaking, $5M+ is wealthy; the top 1% are at $10M and $5M puts one in the top ~1.5%-2%. Still, I think the “rich” and “fully secure” number for me is $10M, though the math at $5M+ is good enough.
To understand why people in HCOL areas may have less enthusiasm about $5M, see this data from the most recent Schwab Modern Wealth Survey. In the Bay area, residents agree 5.1M is the threshold for being considered wealthy. Look at what it takes in the Bay versus other areas. I would call $5M comfortable in the Bay, not rich.
The ESI principle are the guide to financial success. Beyond this:
- Only take jobs that offer equity/ownership; these propel you to freedom
- Be an aggressive high performer in your career as each level up comes with more financial rewards
- Start saving/investing early, ideally and go hard while you have it in you
- Continue to stay engaged in wealth discussion groups, resources, tools, etc. as it keep you engaged and focused on the goal
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Here are my responses…
Yes, I think $5 million is rich. How could anyone look at the averages in this country and think otherwise? Well, I guess they can looking at the responses above, but I certainly think $5 million is wealthy.
As for how to get it, what do you expect me to say? ESI, right? LOL! Of course!!!!
I hope you enjoyed these insights from some mentors.
MI 228 says
5.25 mn is my early retirement goal, on track to achieve this in 3 years or less. I wholeheartedly agree with the statement above that “narrowing life to work and family for a long time” has been key for us. Do I feel rich? No. Am I content and grateful? Yes, every day thanking God for my health and my husband’s health so we can continue to work towards our goals. He is an entrepreneur with his own business and I work for a large, global corporation. We make a good team.
K D says
Great post. We are close to the $5M mark and still feel like we live a middle/upper-middle class lifestyle. We don’t have a big house or fancy cars, though when we travel we spend for comfort and convenience. Retirement is close so we will see how things feel once that happens.
ol70 says
One caveat I’d add in there is how much of your NW is pre vs. post tax. $5M in a 401k that will be taxed as you withdraw does not have the same value as a post tax investment account with $5M.
Regardless, my definition after a decade of early retirement has been simple $240k annual burn rate x 33, so roughly $8M in investable assets. This gives you an ultra conservative 3% SWR that with a diversified portfolio has never failed with an annual spend that’s way more than enough to live an amazing life.
To me that’s the cut-off, but I still feel $5M is way more than enough as well to live a great life and not worth toiling away more years of your life to get to a bigger number.
Bernd Doss says
Very interesting reading the different responses. Insightful in many ways. I retired twice, once in 1983, and then, fully retired in 2003. My net worth was never thought of in all those years, but I adhered to the principles of ESI, and achieved a comfortable, no debt living that has carried me to my current time. Striving to achieve millions of dollars maybe be a dream to many, however, my lifetime experiences, family, educational opportunities, were very satisfying, and I never regret my station in this lifetime. Currently I am on page one of the last chapter of my life story, and wish all to be fortunate to have reached their goals. Thanks for all of your comments.
Scott H says
From the HBO show “Succession” regarding $5M:
Character Greg-“Gramps says he’ll leave me $5M”
Character Conner-“You’ll be the poorest rich man in the room”
Character Tom-“Yeah, it’s like saying you’re the tallest dwarf”