Everyone wants to be a millionaire, or at least live like one.
But is a million dollars still a considerable amount of money in today’s standards?
If the definition of a millionaire is having a net worth of more than one million dollars, latest figures suggest that there are about 1.16 million Australians who belong in this category. This is according to research by Credit Suisse.
From just over 300,000 back in 2012, the increase in millionaires jumped by as much as 387%.
Aside from that, the number of ultra-high-net-worth (UHNW) individuals – those with a net worth of USD50 million (AUD65 million) – has increased by 30%.
The appreciating value of a real estate property, especially in areas like Sydney and Melbourne, is seen as the driving force behind this jump. According to Credit Suisse, the high level of real assets and natural resources relative to the number of population enabled more individuals to gain wealth.
Australia’s average wealth per adult is a little over half a million dollars, the second highest now after Switzerland.
What it means to be a millionaire now
Amidst these figures, the big question is: will this millionaire life be achievable for most Australians?
In a recent Dollars With Sense episode Dallas Brooks spoke to Mary Degetto to discuss this very issue.
Being a millionaire in the literal sense may not necessarily mean a life of riches. For one, property is a big chunk of one’s assets. If you own a house in Brighton, Armadale, Templestowe, and other areas, you could easily be counted as a millionaire.
Pension money is a factor as well. According to Brooks, “Ninety-five percent of the population ends up in the pension and arguably some of those people are millionaires by that definition.”
He further mentions that even the government is suggesting that about AUD1.6 million is a guide “to retire comfortably” per person.
So, while there is an increase in the number of millionaires, it may not be parallel to our idea of a millionaire lifestyle. Wealth in the country is actually composed of non-financial assets.
On discussing wealth creation, Degetto mentions that there could have been opportunities missed for a lot of near-retirees.
This is because the superannuation fund only became compulsory during the early ‘90s. Degetto says, “A lot of people who will retire right now – half of their life super wasn’t compulsory.”
And with lifestyles changing—buying more gadgets, dining out, and other expenses—being the norm, many might look at their super funds and deem them insufficient for retirement.
Brooks emphasises that if individuals want to grow their wealth, it has to be approached as a part-time job. For him, whether it’s investment properties, managed funds, shares, and others, individuals should put time and attention as if that moneymaking venture is a hobby.
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