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It's actually quite remarkable how little per capita wealth meets the lower threshold of the 1%. To reach truly substantial wealth, where one does indeed become disconnected with the vicissitudes and worries of "normal" people, one must climb quite a bit further up the ladder. Maybe .1%? Putting this in historical context, the aristocracy was always small... probably also 1% of the population, maybe 0.1%... similar proportions to what we find today.
Without making any personal claim, one supposes, that the first thing that happens upon reaching $5M, is desire to double it, to $10M... and from $10M, to $20M, and so forth. How could it be otherwise? But whereas a highly compensated W2 employee might reach $5M through mix of aggressive savings and reliance on the good old S&P 500, patiently waiting for a couple of decades... to reach the next doubling, and the next, is more about investment prowess, than effectiveness at the office. Something to think about, for 1%'ers who wish to become 0.1%'ers.
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Originally Posted by COcheesehead
Once I reached critical mass I had no desire to double it. Why should I. I will likely die with more than I retired with because you hit a point where you are overfunded and can’t spend it fast enough without waste.
We donate a lot, travel a lot, have a nice house, some land, two new cars, eat and drink well. The desire for money was there all through my 20’s, 30’s, 40’s, but once I hit my 50’s. It was time to checkout. Yes, I likely left millions behind if I would have worked into my 60’s, but money can’t buy time.
The Economic Theory of Leisure covers this topic.
Vivian has 70 hours per week that she could devote either to work or to leisure, and her wage is $10/hour. The lower budget constraint in Figure 1 shows Vivian’s possible choices. The horizontal axis of this diagram measures both leisure and labor, by showing how Vivian’s time is divided between leisure and labor. Hours of leisure are measured from left to right on the horizontal axis, while hours of labor are measured from right to left. Vivian will compare choices along this budget constraint, ranging from 70 hours of leisure and no income at point S to zero hours of leisure and $700 of income at point L. She will choose the point that provides her with the highest total utility. For this example, let’s assume that Vivian’s utility-maximizing choice occurs at O, with 30 hours of leisure, 40 hours of work, and $400 in weekly income.
Figure 1. How a Rise in Wages Alters the Utility-Maximizing Choice. Vivian’s original choice is point O on the lower opportunity set. A rise in her wage causes her opportunity set to swing upward. In response to the increase in wages, Vivian can make a range of different choices available to her: a choice like D, which involves less work; and a choice like B, which involves the same amount of work but more income; or a choice like A, which involves more work and considerably more income. Vivian’s personal preferences will determine which choice she makes.
I don't think not being obsessed with the 1% is sour grapes. Even people in the 2-3% range have practically nothing in common with them. Big difference between passive financial security of a professional retiree and 5 mill of disposable income.
Vivian has 70 hours per week that she could devote either to work or to leisure, and her wage is $10/hour. The lower budget constraint in Figure 1 shows Vivian’s possible choices. The horizontal axis of this diagram measures both leisure and labor, by showing how Vivian’s time is divided between leisure and labor. Hours of leisure are measured from left to right on the horizontal axis, while hours of labor are measured from right to left. Vivian will compare choices along this budget constraint, ranging from 70 hours of leisure and no income at point S to zero hours of leisure and $700 of income at point L. She will choose the point that provides her with the highest total utility. For this example, let’s assume that Vivian’s utility-maximizing choice occurs at O, with 30 hours of leisure, 40 hours of work, and $400 in weekly income.
Figure 1. How a Rise in Wages Alters the Utility-Maximizing Choice. Vivian’s original choice is point O on the lower opportunity set. A rise in her wage causes her opportunity set to swing upward. In response to the increase in wages, Vivian can make a range of different choices available to her: a choice like D, which involves less work; and a choice like B, which involves the same amount of work but more income; or a choice like A, which involves more work and considerably more income. Vivian’s personal preferences will determine which choice she makes.
Additive to the above. With few exceptions those in the best paying fields tend to work the most hours.
The Economic Theory of Leisure covers this topic. ...
Vivian’s original choice is point O on the lower opportunity set. A rise in her wage causes her opportunity set to swing upward. In response to the increase in wages, Vivian can make a range of different choices available to her: a choice like D, which involves less work; and a choice like B, which involves the same amount of work but more income; or a choice like A, which involves more work and considerably more income. Vivian’s personal preferences will determine which choice she makes.
Presumably even at the lower threshold of the 1% level, the bulk of further growth in one's pecuniary status is about investments (return on capital) than on work (return on labor). If this Vivian had a $600K/year job in Big_Law or Big_Tech or something like that, then sure, a large part of her "capital" would be her human capital, which is to say, the likely earnings in her remaining working-life. But if she's older (say, well into her 50s, or beyond) or made her money much earlier in life, and therefore, has a large ratio of portfolio balance to annual W2 earnings, then this whole "economic theory of leisure" is in her case moot. Her working hard, or slacking off, makes little difference. Instead the question is, should she risk more of her capital try to grow her wealth aggressively, or should she settle for what she already has, coasting with less risky investments, even if that means never rising from say the bottom half of the top-1%, to the upper half.
Presumably even at the lower threshold of the 1% level, the bulk of further growth in one's pecuniary status is about investments (return on capital) than on work (return on labor). If this Vivian had a $600K/year job in Big_Law or Big_Tech or something like that, then sure, a large part of her "capital" would be her human capital, which is to say, the likely earnings in her remaining working-life. But if she's older (say, well into her 50s, or beyond) or made her money much earlier in life, and therefore, has a large ratio of portfolio balance to annual W2 earnings, then this whole "economic theory of leisure" is in her case moot. Her working hard, or slacking off, makes little difference. Instead the question is, should she risk more of her capital try to grow her wealth aggressively, or should she settle for what she already has, coasting with less risky investments, even if that means never rising from say the bottom half of the top-1%, to the upper half.
In the extreme then the trade off isn't labor hours vs. leisure hours, as all hours become leisure hours; it is consumption $ vs. savings or investment $ (S=I). Same concepts apply.
(At least you didn't pull out a dog-eared copy of Thorsten Veblen's Theory of the Leisure Class)
Personally, I can't even imagine how one should live, how one should save to accumulate such capital....
Personally, I work in an IT company and I always save most of my salary. I try to invest, buy various cryptocurrencies and still I calculated that with such a modest lifestyle I will accumulate this 5.8 million in 15 years. But I just could not stand constantly limiting myself in the joys of life, because you have to save on everything ....
The most frustrating thing is that in 15 years, the threshold to enter the top 1% will likely be even higher than it is now (taking into account high inflation...)
When these articles are written it should be noted whether the household NW is a single person or a married couple. Because 5.8 mil to a married couple isn't going to go as far as 5.8 mil for a single person.
On the other hand, if the money token system collapses, how many of those 1%-ers can survive, when there's nothing that their wealth can purchase.
As the saying goes, the man with a year's supply of food will outlive a man with a year's supply of money. A man with two years' supply of food is king.
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Assuming that the top tier own a farm or two, can they farm it themselves or would they need to "hire" others? Without money, what will they use in trade?
Perhaps they can offer lodgings, and a share of the harvest.
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IMHO, the top tier are those who are capable of supporting themselves and their families regardless of the supply and value of circulating money tokens.
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