Bloomberg Suggests You Are Not Worthy With Wealth Below $25 Million
A recent article by Bloomberg states that many banks and fund managers will turn you away if you’re a pauper with less than $25 million. It doesn’t mean that investment advice is only available for the super-rich, but you should expect an inferior service if the “big boys” don’t want to review your portfolio.
Co-Founder & Managing Partner at TwinFocus in Boston Paul Karger expects a $250,000 minimum fee from his clients. So, turning up with half a million dollars would be slashed in half before you even left the office. Note that the figure of $25 million quoted by Bloomberg is not based on net worth, rather:
“Twenty-five million dollars in investable wealth. The kind of money you could afford to see dip into the red for a quarter or three, maybe even a year or two, without breaking a sweat. With $25 million, maybe, just maybe, you’re starting to be rich.”
Time Effect of Money
As highlighted in the article, the figure of $25 million was around $3 million 25 years ago. We all know that money erodes in value over time and you might be thinking that $25 million is just keeping up with inflation.
No, using the CPI figures available from multpl suggests $3 million would now be around $5.2 million. This perhaps highlights that bankers and fund managers are overcome with gluttony or conversely they “could” be working on lower margins, you decide.
As a child, more than four decades ago, the word millionaire conjured up great wealth, akin to the references to billionaires today. Numbers were always my forte even from a very young age, so it wasn’t that I didn’t understand the “value” of a million dollars.
As the decades passed and I achieved the million-dollar net worth status, I came to realize how insignificant it was. The intervening decades between childhood and my first million had seen the relative value dimish, but it was much more than this.
Property prices had gone through the roof over the years and even though the average US property sells for $200,000 we all know that popular locations command much higher prices.
Many cities across the globe have properties starting from a million dollars, and at the extreme, Knightsbridge in London it could cost you more than $200 million. Millionaires are as common as Trump haters these days and times have moved on.
Set Yourself Higher Targets
After many years plodding along in business, I set myself a target of $1.5 million net worth within the next two years and achieved it six months ahead of schedule. Maybe I should have been a little more adventurous and gone for $10 million or perhaps $25 million so bankers and fund managers, per Bloomberg, would take me seriously.
Although I have always considered myself a hard worker, like many, the idea of retiring early has always appealed to me. However, it appears that to retire early, we need to aim for a net worth of at least $5 million if we want to retire before we’re 60. So, that’s another goal you might want to set.
Billionaire status is likely to remain a constant term of reference for the super rich even for decades to come, especially if the forecast global slump comes to pass.
As a child, my mother would often say “who do you think I am, Rothschild?” when I pushed her for the latest tech device. Do parents of today refer to Zuckerberg, Bezos, and Bloomberg or do families in the West simply go out and buy whatever their offspring desires?
I doubt that Zuckerberg set himself a target of being worth more than a billion dollars as a child but for sure children of today will be dreaming of wealth in the order of tens of millions of dollars. Dreams of millionaire status are very much dated back in the 1970’s.
Featured image from Shutterstock.