How much do you need to be a "Millionaire" in 2018
Updated: Sep 26, 2018
The dictionary defines a "Millionaire" as someone who has a net wealth of $1 million or more. In our heads, the term "Millionaire" typically refers to someone who is considered to be independently wealthy but how much does that require?
Back in 1970 if you had a net worth of $1 million you were considered to be independently wealthy. People would dream of being worth $1 million and living a life of luxury. However, how does this compare to 2018?
Australia, according to Credit Suisse, as of mid 2017, is home to 1.16 Million Millionaires. Let that sink in for a moment. In an average classroom in Australia, it means statistical speaking that you are likely to come across 1.9 children per classroom from a millionaire household.
If I was to gather every Millionaire in Australia for an event, let’s call it the Jonas Wealth Management Millionaires Summit and by some miracle everyone of these millionaires agreed to come along (as anyone who has ever thrown a party or an event knows not every who says they are coming actually goes). To be conservative, imagine that only half show up. In order to fit in all my Millionaires I’m going to need a stadium with a capacity nearly 6x the size of the MCG!!!
With the average house price in many of our capital cities nearing $1 million, is it any wonder that there are over 1 million millionaires in Australia? People call Australia the “Lucky Country” and when it comes to our wealth we have been incredibly lucky. From strong long term stock performance, a retirement system that is amongst the best in the world (it really is!!), an economy that was able to perform relatively well during the GFC, a strong agriculture sector
, relatively high wages and more natural resources than we could hope to dig up in a lifetime we really do have it all in the Land Down Under.
In 1970, a million dollars was worth a million dollars. Pretty simple. We all know that prices get more expensive with time, a process that is known as inflation. What is the new “Millionaire”? Is it $2 million? $10 million? $100 million? Let’s work this out.
According to the RBA, inflation in Australia averaged 5.3% from 1970 until 2017. While this is handy a little fact, what does that actually mean?
How is much the new “Millionaire”?
It means that to have the same level of purchasing power as a millionaire in 1970, today you will need to have a net wealth of $11,373,401.53. If you have a net wealth of $1 Million today, you have the approximate purchasing power of someone with $100,000 in 1970.
There we have it. The new "Millionaire" in Australia actually has at least $11 million.