I'd define it as excess buying power compared to how much one already has. The concept is way too subjective for a formula A 1st grade student would be wealthy with a few dollars. Same with somebody from Gabon. A person who makes 100 000$, yet blows 90% of it before living expenses can get by on what he has left. But he won't be as wealthy as he couldve been. BTW, you wouldn't happen to be PolluxV with a different avatar, would you? (I see some strange similarities)
Nah, I'm not a secondary persona. I'm unique. Oops, I forgot to mention that I want a way to measure individual wealth. I'm just looking for a simple mathematical model to calculate wealth that does take subjectivity into it. I'm only addressing American or British wealth systems; I could care less about Gabon. This is exactly what I'd like to address– how high income people live right up to their income. I think the current model does not adequately represent the issue. Take the assets of someone who lives up to their means, let's say they make 100k/year. First they buy a 40k car (20k down payment), but in the first year it's worth half that, then they buy a 300,000k house, and put a 40k down payment on it. Pretty soon, all their money is caught up in debt or material items that depreciate in value (high end electronics, work out stuff, vehicles, appliances, etc.). Let's say they've only saved up 20k, and have 10k left over after spending everything. 20k car + 300k house +5k in other stuff + 10k in bank = 335k in assets. Now, take their debts, which will be 280k on the house, and 20k on the car and that = 300k They have 30k wealth, quantitatively. But how to qualify it? Divide 30k by the income (100k)? What would it represent? I do think the answer will be relatively simple. One does not require complex formulae to estimate reality.
A clever wealthy person, would buy a house that needed refurbishing and extending, they would Invest 300k to purchase and 100k to extend and then, because of the rising market and the works done to the house, the property would be worth 500k! The car would be an old, rare classic model whose value could only go upwards, or, it would be an exclusive current model with a huge waiting list, which would be worth more than the book price once acquired. Then again, they may be happy sticking with their 5 year old Golf Gti, because they don't actually give a shit, even though they can afford it. The financially astute person, would make sure that most of their disposable income is invested in sound propositions (usually property) and they would never spend more than they absolutely had to on general living expenses and lifestyle, but of course, this is relative to their actual income and the costs of living in their locale. I don't know how you would create a formula to quantify wealth, but it would have to account for Investment Debt, Ordinary Debt, Asset Values, Savings and Income. Then there are the variables... children, education, old parents, health costs, meaning that up to 100% of disposable income is not disposable after all, in which case, the person would cease to be wealthy. Begin with the premise that 30% of after tax income goes on living expenses and the rest is disposable. Accounting for variables, assume that there is a surplus of at least 30% of income pa for investment. Assume also, that to be wealthy, capital growth of your investments should be on a par with your income, that is, if you make 100k pa income, then your investments should also increase in value by 100k.
Hey everybody, Really when you think of terms of wealth, you are getting ahead of yourself if you just relate your focus to amount of income, or direct asset purchasing ability. Wealth is really a measure of one's ability to consume in the market in which they participate. I'm not really sure what "wealth" the first poster was concerned in, but it economically speaking i'd offer that the best formula would be one that takes into consideration the person post-tax income, then divides that figure by the price index of the market in which they consume. In simple terms, wealth is truly defined by your ability to consume goods. Good's can be a house, car, toothbrush, steak, or whatever - it doesn't matter. So in my opinion discussion of assets is meaningless only if it fits into an accumulation of dollar terms if they were to liquidate those assets and then consume at that given time. A house may be appraised at 200,000 dollars, but it's truly only has a wealth value if you sold it at that time, and then immediately went out and spent that money in the market. Great discussion guys! -Will
There is no simple way to measure wealth, as wealth, power and influence are interchangeable, especially for insiders. Acquire influence and you can exchange it for wealth. Beats workin'.
Wealth is simply measured, it is asset values - debts. That IS wealth, if you owe more than you have, you are not wealthy, if you have a lot more than you owe other people, you are VERY wealthy. Etc. Income is not an asset, it is a liability, like anything else that doesn't work for you. To explain that simply, work takes-up time, working for a wage is a waste of your time, your assets will work for you around the clock regardless of what you are doing. You may have to put in some "effort"//"work" to do it, but it's not the wage-kind, it's the handling your finances kind.
Wealth? well how about printing your own money?..Please Register or Log in to view the hidden image! Please Register or Log in to view the hidden image! G.
What's the simplest, most comprehensive way to measure wealth? Assets – Debt = Wealth? Wouldn't that be liquid assets in relation to debt?
The noun "wealth" has 4 senses in WordNet. 1. wealth, wealthiness -- (the state of being rich and affluent; having a plentiful supply of material goods and money; "great wealth is not a sign of great intelligence") 2. wealth -- (the quality of profuse abundance; "she has a wealth of talent") 3. wealth, riches -- (an abundance of material possessions and resources) 4. wealth -- (property that has economic utility: a monetary value or an exchange value) Wealth. All material things produced by labor for the satisfaction of human desires and having exchange value. It is thus seen that wealth must have these characteristics: 1) Wealth is material. Human qualities such as skill and mental acumen are not material, hence cannot be classified as wealth. 2) Wealth is produced by labor. Land possesses all the essentials of wealth but one - it is not a product of labor, therefore it is not wealth. 3) Wealth is capable of satisfying human desire. Money is not wealth; it is a medium of exchange whereby wealth can be acquired. Nor are shares of stock, bonds or other securities classifiable as wealth. They are but the evidences of ownership. None of these satisfy desire directly. Only those things are wealth the production of which, or the destruction of which, increases or decreases the total of goods that administer to human desires. 4) Wealth has exchange value. That which will not bring its possessor in a trade, sale or other transaction, something of worth, has no exchange value and consequently is not wealth, even though human exertion may have gone into it. (Examples: whittled wood, a junked car, a snowman.)
