The Billionaire next door
Observations by Burleson Consulting
Also see my related notes
on the Net Present
Value of undergraduate grades towards law school tuition and the
improved earnings power of a university education.
New Billionaires are
As the net present value of
wealth declines over time, more and more people will enter the ranks of "well to
do", wealthy folks who have lots of disposable income. But what is "rich"
really? Do we count the values of assets only, or is cash liquidity the
measure of a billionaire?
Below, we see that there are
currently a half-million millionaires in the USA (one out of every 200 citizens!),
and 363 billionaires in the United States.
I was watching TV the other
night and recognized the name of one of my old classmates from Highland High
School in Albuquerque. Normally, this happens when one of my classmates
has been charged with a serious felony, but I was surprised to hear that my high
school classmate Gavin Maloof (Highland
High class of 1974) is now a billionaire, and he owns the Palms casino in
Las Vegas. Here are our Highland High School yearbook pictures, and we
were both stylish in our long quaffs:
As I recall, Gavin's parents
owned one of the most lucrative businesses in the world, the Coors beer
distribution rights for the hard-drinking citizens of New Mexico.
New Mexico is listed in "The Fatal fifteen" for alcohol-related traffic deaths,
and people in New Mexico are nearly
likely to die in an alcohol-related traffic accidents).
Gavin was a class clown, and I
see that he still has a great sense of humor, as
shown here where he offers-up a $6,000 dinner at the Hardees in the Palms
casino. The $6k dinner consists of a a greasy cheeseburger served with a bottle of rare 24 year-old
French wine (fries are extra). I think that our 40th High School class reunion is going to
be a hoot. . . .
But this got me to thinking
about the dilution of the status of being a "millionaire" in America
today and how someone must be a
billionaire in order to be considered wealthy. Let's take a closer look at
the title of "millionaire" and "billionaire" in America.
The dynamics of
wealth in the USA
Back in the 1960's, being a
millionaire was a remarkable achievement, especially when you consider the prices,
back when the minimum wage was only a dollar an hour and you could buy a nice
house for $10k:
Average yearly Salary
New Home cost
Back in the 1960's, the
title of "millionaire" was way out of reach for most folks, with only
100,000 millionaires, but the
times, they are a' changin'.
shows the value of a million dollars in the past and a count of USA millionaires
by decade and the trend suggests that the number of millionaires in America will
double every decade:
Current studies show
that in 2015, one-out-of every 200 people Americans is a millionaire and it's
expected that one-out-of-10 people will be millionaires within the next decade!
J. P. Getty once said, "A billion dollars is not what it used to be",
and it's true. As we see below, it would have taken 6 million dollars in
the 1960's to equal a million dollars in 2002:
Of course, the 2015 economic
landscape is quite different than the 1960's, and inflation has helped make millionaire-hood
survey on millionaires suggests that in 2005 there were about 9 million millionaires (in
total assets, excluding their primary home value), with the bulk of millionaires
living in the USA. It's the same for
counts of billionaires:
2.7 million 371
2.8 million 196
2.4 million 140
Australia 0.4 million
America 0.3 million
0.3 million 46
0.1 million 6
With about 3 million
millionaires in the USA's population of 300 million people, that's one percent of the total U.S. population!
Statistically, almost one out
of every 100 Americans is a millionaire!
The real estate Millionaire
People is the USA are
guaranteed the "pursuit of happiness" and Americans love to compete
and show-off their prosperity with their collections of material goods.
As of 2015, the median home cost in America is over a quarter million dollars and a condo in New York city costs
well over a million dollars. I wonder, how long will it be until see see billboards
Millionaires for the next generation
Janet and I have two kids (Andy and Jenny) who are now College seniors,
planning their entry into expensive professional schools. Like many parents of
college kids, we are trying to figure-out
how to cough-up the cash for their tuition without moving into a
Ah, but is it worth it to spend a
small fortune on junior's college education? The studies say yes, but only if
junior agrees to support their parents in a lavish lifestyle.
In the article "Lifetime
Earnings Soar with Education: Masters degree worth $2.5 million income over a
lifetime" we see that a 24 year-old MBA can expert to earn about 2 million
dollars in their working life.
In my own research on the
projected earnings of newly-minted professionals, we see that those who earn
professional degrees (Medicine, Law) can expert to earn about $4.3 million
dollars during their careers.
In sum, it appears that all professionals in the mid-21st century will eventually
become millionaires, and we can expect the percentage of millionaires to
increase from 3% of the population in 2015 to about 20% of the U.S. population by the year 2050.
The Billionaire next door
As of 2015 there are over 600
billionaires, with the ranks of the super-rich growing every day.
After all, the step-up from millionaire to
billionaire is only three orders of magnitude (1,000), requiring only one thousand, million-dollar chunks.
Have you ever noticed that
foreign countries define "billion" different from the USA and the scientific
community? It's very weird that
foreign countries have a different definition of billion, and in Europe, you need to have the equivalent of a trillion
dollars to become a billionaire:
||U.S. & scientific groups
The first trillionaire?
Ever wonder when we will see the first trillionaire? With Bill Gates at
80 billion in 2006, and accounting for inflation and the time value of money, I
expect that we will see the first trillionaire in about 2038.