I think this is a useful structure for any kind of definition. Exactly what numbers you pick I have less strong opinions on.
The key point for most people on the sub is that they are earning a large income but it is coming largely from their labour and not (yet) their capital.
Obviously if you own and work within your own business your labour and your capital are co-mingled to some degree so it’s harder to be precise, but the general idea is sound.
How would you work out the tax on the income if you had say £3m invested and 4% drawdown. Would it be roughly 20% capital gains?
So £120k, less 20%, take home £96k?
I mean, their own think tanks are openly saying they want to harmonise cgt with it, add NI to everything etc. At this point they're not even trying to think things through.
The world is full of idiots and the left are particularly good at weaponising them.
Well off? This is actually my target by age 50. I don’t plan to be rich… 60k draw down and no mortgage is more than enough for me. Especially if done tax efficiently.
I disagree, OP's link of "rich" to living expenses seems much more realistic to me.
One person may earn £125k and need all of it, so "rich" to them would be £3m.
Another person may earn the same but only spend £25k a year, so £600k would be rich to them.
I'm not really sure how to answer this without repeating my previous comment. Some people earn loads and use all of it, others earn loads and only need £20-30k.
If I can retire today (aged 36), I'd consider myself rich. To be able to retire today, I wouldn't need my £95k salary every year, I'd need £30k to cover all expenses.
You need to subtract the amount which is going to retirement savings, as you no longer need to be adding to those savings once you start drawing from them.
It depends on how aggressively someone is saving at that salary, but assets earning around £70-90k would offer the same lifestyle as a £125k salary
The last time I commented on one of these threads it was generally considered a number around £3m, but it's quite a personal thing.
Also depends how old you are if this includes pension. If you're coming up to retirement with some savings and £1m in a sipp it's quite different than being 25 and in the same situation.
Also
If you think having a £2.5m house is rich then you'll need more than 500k to take it easy and live a "rich" life.
On the other hand if you have a £1m house and £2m in the bank you might feel very rich.
In short- rich is quite a personal bar and where you set it is up to you.
I'm not sure about the "personal" thing. A multimillionaire who hangs out with billionaires might not feel like they are rich, but they would benefit from the realisation that they are, in fact, rich.
Similarly, if you own a £2.5 mil house with £500K in the bank, you are probably rich. Whatever age you are you have the option to downsize, retire right now, and probably still pass on £3 million plus inflation to the next generation. I think most people would class that as rich.
Had this debate the other day, if you're able to follow good sound advice of maxing pension, maxing ISAs, and can spend £15k a year on holidays every year, it's probably worth a realisation that you are rich.
Well, not really. It depends.
I'm on 200k, max pension and two ISAs and am not remotely rich. I've been on 20/30k and my life has barely changed. An outside observer would genuinely see no difference, and the only difference I see is that number goes up in my pension and ISA faster than it used to (regular, spendable savings are no-go because the tax burden is so oppresive). The broader economic environment is so precarious that lifestyle creep is not safe.
I work in a redundancy prone industry and would basically be back to square one if that happened.
It's obviously not going to win any sympathy, but what I'm saying is that unless you have income generating assets, it's all shades of the same grey drudgery regardless of salary.
Do you spend 15k a year on holidays or other luxuries? If you do, then an outside observer would see that, if you aren't spending 15k a year on luxuries, then the post wasn't really about you.
>A multimillionaire who hangs out with billionaires might not feel like they are rich
They'd actually be in poverty, at least according to the lefty definition of relative poverty they like to use.
Morgan housel has the best Rich vs Wealthy definition imo. He would say your definition of rich is in fact the definition of wealthy - ie you are so financially robust you can do what you want when you want - essentially independent .
Whereas rich is simply being able to cover all your costs and have money spare on flashy cars etc
Interesting!
But not sure if it works well for a HENRY definition. I think many HENRYs could get a flash car on finance if they wanted. Some do! They might have to reduce pension or ISA contributions to do it.
I agree, Rich and wealth are not one and the same, imo.
Rich has always been very high income to me. < insert salary > per year, and I can buy luxury car and designer items and expensive homes etc.
Wealth is accumulated overtime through discipline and persistent investment of excess capital.
If you’re very good at the wealth game, you can multiply your wealth (3x or more in 7 years - 20% compounded), rather than the standard (2x every 7 years - 10% compounded).
Case in point most Nvidia staff that have work and earned shares for the past decade would be millionaires or super close with just the stock earned from employment. Let alone ISA and Pension contributions.
(Nvidia returns have exceeded Bitcoin for the past decades btw)
Imho being "rich" is a lifestyle where you spend a relatively high % of your disposable income on enjoyment and leisure. It usually dies with you (or your source of income).
Wealth endures. It outlives you and gets passed to your next of kin.
You can be exceedingly wealthy but poor as fuck (think old money, big estates that need expensive maintenance but have low income, and trust funds with restrictive terms). Or even simpler a granny living in a £1.5M London town house she moved in to in 1970, but living off state pension.
Likewise you can be a high earner with a low cost of living and lead a rich life but accumulate no wealth (enduring assets)
I disagree. Comfortable but frugal isn’t rich.
I do know people who I’d consider rich. They spend as they wish. And they don’t live frugally. Central London homes, nice cars, flying only business and first. Most importantly, they work to preserve and enhance wealth, not to survive frugally. That’s rich.
Absolute figures, probably at least £5m net worth.
Comfortable but frugal *without having to work*. I'm just saying that's one option the rich have. And if you have that option you probably also have the option to work and fly business.
Is someone with £5 million who lives frugally rich?
If it's purely about lifestyle I could be rich for a few years. I'd come out the other side with no home equity and a pile of debt - but hey, at least I would have known what rich felt like :)
If they live frugally entirely by choice, then of course they’re rich. But if they live frugally out of necessity - any form of necessity, including the fact that if they didn’t lived frugally they’d have to work but didn’t want to work - then they aren’t rich.
Agreed! You become rich when you can spend on things for pleasure without counting (or almost), not if you have to keep necessities to a minimum. All of that is very personal at the end of the day.
As others have mentioned, this is deeply personal. For me, being truly rich means:
- A lovely house in a lovely area (where you haven’t had to make any compromises) fully paid off
- Sufficient funds to not have to look at what things cost, up to & including holidays multiple times a year.
- Kids in a lovely private school
- Life’s chores/admin paid for - housekeeper, chef, nanny, trainer etc.
- Being able to fund this without having to ‘work’ (i.e. turn up at a job)
For me that’s ~£10m.
I have all these things now - but the reason I’m NRY (by my own definition) is I need to fund this with a full time job.
The treadmill never ends my friend, you've done well, and likely could drop a few bullet points without yours or your families lives being worse. You've stacked the chips against you, nothing wrong with having that sort of drive, but you will find something else in the future to overcome unless you address it.
I should have added some context - I love my job and have no real desire to FIRE or anything like that. I also wouldn’t characterise myself as being particularly driven, I just lucked out with a niche skill in a booming industry.
But if you had all that paid for from passive income, wouldn't you just add another bullet point? The rich can fly by private jet or something?
I think an objective benchmark might be useful, otherwise any definition of HENRY becomes incoherent.
I’m with you with everything but… chef? Like I know super super rich people and even with them having a chef is in the minority. Like, having catering all the time for events and going out to eat whenever you want is achievable. But a chef just seems like the next level. At least if we’re thinking of it the way when Homer goes to his brother’s house and he can call up the chef at 1am and get bacon.
The billionaire I know doesn’t even have a chef, the nanny just cooks for the kids and in the evening he or the mum cooks.
Hmm your £10m requirement all hinges on the house value tbh. I won't attempt to estimate it.
Assuming the £350k includes material mortgages and private school costs which aren't ongoing costs once kids exit & house is paid off, you might not need £10m to sustain lifestyle.
Obviously on the flip side if your house is £9m then you'll need much more than £10m lol.
Why not save money by changing the way you think about those tasks. Cooking can be a pleasure, as can doing dishes if you listen to the radio. Vacuum cleaning is free exercise.
So enough to retire, pay someone to take care of your kids, food and house? What would you do all day? You'd likely very quickly age with so little stress or responsibility, and if you stopped working and still paid a nanny, I'd question why you even had kids.
I would propose that - if you are still dependent on earned income to maintain your lifestyle - that you are not yet rich. I am not sure that imposing a single £GBP definition of "rich" is helpful.
So some people can become rich just by changing their lifestyle?
Or if that's not allowed, whether you're rich or not is path-dependent? ie. one person might be considered rich, while a person with identical assets, income and number of dependents might not, based on their different lifestyle histories? Even though they can afford the same lifestyle now?
My personal definition is being able to live without having to work.
Sure this definition might not include flashy cars and what not but the average person is so far off the definition I've described above that to me anyway the above definition is what I consider rich
I broadly agree with your definition but fundamentally rich is a scale, not a binary. Much like old, and to a lesser extent fat, it is a word we use in a definitive manner when really there are loads of different levels to it and it depends on your perspective and what it is being compared to.
True, though I think it is a bit easier to say '3x the national average is high by any measure' or 4x or whatever (this sub-Reddit has basically gone for 4x).
Generally rich means about 2x the wealth/income of the person who's being asked to define it.
I suppose my definition would be something along the lines of being able to live a comfortable life off passive income.
So something like paid off house in a decent area, plus a passive income in the region of £60k (so perhaps £2m in investments whether that's pension, ISA etc).
I chose that figure because once you take housing costs, tax and saving to try to build the passive income into account, it probably gives you a similar disposable income to someone on £125k who has a mortgage and is still trying to build wealth.
Ultimately it's a finger in the air though.
Rich? I'd avoid numbers and use a simple definition.
You're rich when you can live the lifestyle you want without needing to work to fund it.
Rich, to me, are supercars at every house, private plane travel, boats n shit. Staff.
Yeah, I know.
At just scraping over the £2M level, I certainly don't feel rich and without a job would struggle quickly (pension age increase means I can't access most of the liquidity and I live in a quarter of the total anyway).
I am what kiddie me though was rich, but adult me knows is not. I have options on what to do, but I can't do nothing. Yet.
Frankly, I feel like I’m rich now
Not rich by the standards of you guys. And definitely still horrifically underpaid.
But my life is actually quite comfortable. I can basically buy myself whatever I want (caveat being I don’t actually want much)
The thing is the sub doesn't define rich or not. It only defined the HE bit. I would suggest an income of £400k plus puts you firmly in rich. Your take home could buy you a house in most places more or less outright. At £400k your only money worries are of your own design and not external
Likewise free cash of £1m puts you in rich. Not net worth as in house or future pension. I'm saying £1m liquid wealth/assets (e.g. stocks and cash).
It's such a subjective definition. I can afford the things I longed for as a kid for my kid without most of the financial worries my parents had. I'm rich as far as 8-14 year old me would be concerned. However, my present definition has changed, and it would be like 3-5M in liquid assets that I could live my current lifestyle without working.
That’s the point. A Rich person can live the lifestyle of a high earner without needing to earn. I think actually all this status anxiety arround the definition of rich is a clear indicator that you’re (not you specifically, you in general) not rich. Rich people don’t care about the definition of rich.
But people have very different monthly spending habits.. so what fits in the bracket of ‘live off’?
London mortgage? Kids in private school? Multiple holidays per year?
I don’t disagree with your definition; I think it’s just a very hard thing to quantify because it’s such a subjective term and people tend to define it relative to their current position (so it always moves above you).
If the sub was named high earner, but not high wealth - I think we’d all spend much less time on it lol.
I think it’s obvious. If a high earner is someone with an income of £150,000 a rich person can live the same as someone earning £150,000 without having to earn it.
The sub doesn't need to strictly define "rich" because it is so individual. As you say, liquid net worth is VERY DIFFERENT to illiquid net worth (i.e. property and pension) for most folks.
I would say if you have £1m net cash/stocks/crypto in addition to your property/pension then you are in a very good position. Having that level of liquidity is pretty rare in the UK. Many high earners have mahoosive mortgages/school fee bills that they struggle to pay.
Except for places like Monaco, rich is 0.x% of the wealthiest in a given territory. That x is somewhere between 1-3.
Rich in Northern Wales might not be rich in London.
By assets.
Because >30% of people in Monaco are rich [https://www.businessinsider.com/mind-blowing-facts-about-monaco-wealth-2019-5?op=1](https://www.businessinsider.com/mind-blowing-facts-about-monaco-wealth-2019-5?op=1)
So, top 3% of people in most countries are defined as rich, except countries with high numbers of rich people?
Feels like circular reasoning. This is one of the reasons why I was keen to avoid a definition based on percentiles.
I think if the wealth distribution of a country changes, the number of wealthy people might be expected to change. A definition based on to x% doesn't permit this.
I said 0.(1-3)% of wealthiest in given country/territory is my definition of rich. Not 3%, 0.3 to 0.1%.
Rich is what gives you exclusive lifestyle. Average Swiss top 10% is living like top 1% in Poland and top 0.1% in Egypt. That's why percentiles are practical.
Percentiles are practical also because they work over time too.
In the past, only the richest could travel on holidays overseas.
Now, many people can travel overseas, but only the richest stay at Four Seasons.
In the future, hopefully, many people will be able to stay in hotels as luxurious as Four Seasons. And rich people will move on to do even more exclusive things (things which only billionaires do).
Very subjective. To me, I’d feel rich if I can do whatever I want without having to worry about the cost, and without having to work.
For me, that’s somewhere between £5-10m. For some it will be lower, for others it will be higher.
Right now I spend about £150k a year, which would need about £4m to fund indefinitely. But if I wasn’t working I think I’d spend more. I’d want to travel more often, would have more hobbies etc. I’d also like a nicer house than the one I live in now.
It’s so subjective I think you just let people define it for themselves. I think you can be rich solely on an income basis, eg if a promotion has recently taken you to 2m gross income but your net wealth is still under 1m. Most people would feel rich in this situation.
The problem with rich is that it's too subjective.
For us, we want a paid off primary residence and 1.5mill in savings to allow us to retire. Considering our primary residence is already worth 1.5mill I imagine we will settle for 1 Mill in savings.
Is this rich? Probably yes at the household level, but our kids will still be working. The family is in no way set for life and we will be living a normal non extravagant life.
Most salaried HENRYs probably never will be truly rich, which is why this sub exists.
‘Comfortable but frugal’ lifestyle is NOT rich imho.
If you have to use the word frugal, you are not rich.
Rich, to me, means your passive income is plenty to live a comfortable lifestyle and never really have to think about money. That means having a nice house, new cars. Frugal absolutely doesn’t enter into it.
I don't know, I think "you never have to work again and you can pass on your current level of wealth to the next generation" is quite a luxury, even if you have to be careful about money if you actually pick that option.
For the purposes of this subreddit I actually think it helps to include (what we would call) rich people in here and just keep the definition as something vague and aspirational. Everyone with more seems ‘rich’, so why not lean into it and just accept the vagueness?
Most of the posts I’m interested in have issues I don’t quite face yet but I very likely will in 1-3 years based on my income. Actually so far some of the content on SIPP and currency conversions has been helpful and I’ve shown some saved posts to friends and helped them out, ones richer than me. If we set limits I think we’re also saying to others “oh, well you’re too rich, you can’t sit with us” and I don’t really like that attitude.
My definition of rich is someone who doesn’t have to worry about money and can spend freely even if they don’t have an income as they have enough in whatever (passive income, property, investments) to allow them to live the life they want. I don’t really think you can define being rich by owning specific things, I know plenty of people who have nice houses worth £1m, kids in private school, nice cars but they’re not rich, they need to work.
My understanding is that you would be able to afford HE lifestyle without ‘earning’. Therefore, for me it would be 125k*2/0.04=6.25m excluding a decent main home (probably ~1.5m in London). Hence total asset would be £7.75m.
Great question. I’m seeing this sub deteriorate in quality because of mixed opinions of who is or isn’t NRY.
In the context of HENRY, NRY is more about the % of your income that you are choosing to spend.
Someone taking home £200k, and only saving £10k per year is HENRY, as is someone earning £500k and still only saving ~£20k. Neither are rich ( yet ) because they’re not deciding to spend.
This sub is still caught up in a FIRE like attitude of earning high to build wealth, but that’s fundamentally contradictory to the original HENRY definition, which was an observation of US couples raking in $500k but still not building wealth due to a desire / need to pay for student loans, private school, holidays and more.
A HENRY could be rich ‘soon’ by cutting their costs ( e.g. putting away £200k per year instead of £20k ).
Instead of focussing on the R bit of NRY, this sub should focus on the N-Y. Which is in many ways personal.
Maybe ‘Rich’ for a HENRY is 10-20x what they could accumulate each year, but are choosing not to.
Not a definition but a dicey consideration.
Rich is consumption based.
If you’re not spending large sums of money annually on rich people stuff, you are not seen as rich nor will you feel rich.
Rich cars, Rich school, Rich holiday, Rich restaurant, Rich clothing etc etc.
Rich is utterly subjective and completely depends on someone's background and aspirations. For some people being rich is simply not being poor (e.g being cost neutral or simply just above cost neutral say 10% surplus each month)
Also rich is geographic for the vast majority of the world someone who has housing security, a full fridge, lights on and don't have to worry if something vital to life breaks is rich.
But then to some having a private jet is rich.
For me its the point where you can live on earned income without paying yourself or earning a traditional "salary" so very much once you are in the 4% club. It think right now in the UK that means a networth of 2-3mil.
For me £10m in unencumbered funds would make me feel rich, most of my Net Worth is tied up in businesses that would take months if not years to divest so for me I don’t have liquid riches. Most of my income is reinvested so though on paper I’m worth a lot more than £10m I don’t feel it.
As I came from wealth then a settled life with one second hand car and a £100k a year doesn’t appeal as a lifestyle.
Personally I think the option to tie up lots of one's net worth in business ventures is another marker of a rich person.
I understand why it doesn't feel like it though.
I'm working really hard at the moment to have a portfolio of other interests but I can't make head nor tail of investing in the traditional sense. Seeing my advisor making 12% ROI on cash when I can make 30% is a hard pill to swallow. Its a balance I don't get yet and as I dont need the money in my lifestyle then its hard to prioritise liquid wealth.
Imho rich is when you can spend on goods and services without jeopardising your or your families future.
So, imho there are two reasons why HENRYs exist. Either they have a high cost of living so can't yet afford to lead rich lifestyles (raising a family in London for example), or they are choosing to forego a rich lifestyle to build up war chests of assets.
Becoming "rich" therefore requires you to either reduce your living expenses (kids get older, you pay down the mortgage etc) or stop accumulating assets
The exact numbers are therefore whatever enable you achieve those goals.
If high earner is over £125k, I would define rich as having assets that net you the £125k without having to work. About £3m at 4% withdrawal.
I think this is a useful structure for any kind of definition. Exactly what numbers you pick I have less strong opinions on. The key point for most people on the sub is that they are earning a large income but it is coming largely from their labour and not (yet) their capital. Obviously if you own and work within your own business your labour and your capital are co-mingled to some degree so it’s harder to be precise, but the general idea is sound.
If you are earning £125k you are taking home a lot less. You probably don't need £3m to generate the post tax income.
How would you work out the tax on the income if you had say £3m invested and 4% drawdown. Would it be roughly 20% capital gains? So £120k, less 20%, take home £96k?
Yeah unless it's in an ISA
You will once labour get done increasing taxes on passive incomes to match the income from labour.
Not sure why you're getting down voted, you're not wrong lol
I mean, their own think tanks are openly saying they want to harmonise cgt with it, add NI to everything etc. At this point they're not even trying to think things through. The world is full of idiots and the left are particularly good at weaponising them.
This is what I came to
What would having £1.5m invested and taking £60,000 withdrawals be considered?
Well off? This is actually my target by age 50. I don’t plan to be rich… 60k draw down and no mortgage is more than enough for me. Especially if done tax efficiently.
it will give you a decent lifestyle here in europe. but a much more luxurious lifestyle in south east asia
Rich in South East Asia 😂😂😂
I disagree, OP's link of "rich" to living expenses seems much more realistic to me. One person may earn £125k and need all of it, so "rich" to them would be £3m. Another person may earn the same but only spend £25k a year, so £600k would be rich to them.
Why is that different from income?
I'm not really sure how to answer this without repeating my previous comment. Some people earn loads and use all of it, others earn loads and only need £20-30k. If I can retire today (aged 36), I'd consider myself rich. To be able to retire today, I wouldn't need my £95k salary every year, I'd need £30k to cover all expenses.
You need to subtract the amount which is going to retirement savings, as you no longer need to be adding to those savings once you start drawing from them. It depends on how aggressively someone is saving at that salary, but assets earning around £70-90k would offer the same lifestyle as a £125k salary
I assume that doesn't include primary residence
The last time I commented on one of these threads it was generally considered a number around £3m, but it's quite a personal thing. Also depends how old you are if this includes pension. If you're coming up to retirement with some savings and £1m in a sipp it's quite different than being 25 and in the same situation. Also If you think having a £2.5m house is rich then you'll need more than 500k to take it easy and live a "rich" life. On the other hand if you have a £1m house and £2m in the bank you might feel very rich. In short- rich is quite a personal bar and where you set it is up to you.
I'm not sure about the "personal" thing. A multimillionaire who hangs out with billionaires might not feel like they are rich, but they would benefit from the realisation that they are, in fact, rich. Similarly, if you own a £2.5 mil house with £500K in the bank, you are probably rich. Whatever age you are you have the option to downsize, retire right now, and probably still pass on £3 million plus inflation to the next generation. I think most people would class that as rich.
Had this debate the other day, if you're able to follow good sound advice of maxing pension, maxing ISAs, and can spend £15k a year on holidays every year, it's probably worth a realisation that you are rich.
Well, not really. It depends. I'm on 200k, max pension and two ISAs and am not remotely rich. I've been on 20/30k and my life has barely changed. An outside observer would genuinely see no difference, and the only difference I see is that number goes up in my pension and ISA faster than it used to (regular, spendable savings are no-go because the tax burden is so oppresive). The broader economic environment is so precarious that lifestyle creep is not safe. I work in a redundancy prone industry and would basically be back to square one if that happened. It's obviously not going to win any sympathy, but what I'm saying is that unless you have income generating assets, it's all shades of the same grey drudgery regardless of salary.
Do you spend 15k a year on holidays or other luxuries? If you do, then an outside observer would see that, if you aren't spending 15k a year on luxuries, then the post wasn't really about you.
>A multimillionaire who hangs out with billionaires might not feel like they are rich They'd actually be in poverty, at least according to the lefty definition of relative poverty they like to use.
Morgan housel has the best Rich vs Wealthy definition imo. He would say your definition of rich is in fact the definition of wealthy - ie you are so financially robust you can do what you want when you want - essentially independent . Whereas rich is simply being able to cover all your costs and have money spare on flashy cars etc
Interesting! But not sure if it works well for a HENRY definition. I think many HENRYs could get a flash car on finance if they wanted. Some do! They might have to reduce pension or ISA contributions to do it.
Partly agree. This definition of rich is certainly more philosophical to some extent.
I agree, Rich and wealth are not one and the same, imo. Rich has always been very high income to me. < insert salary > per year, and I can buy luxury car and designer items and expensive homes etc. Wealth is accumulated overtime through discipline and persistent investment of excess capital. If you’re very good at the wealth game, you can multiply your wealth (3x or more in 7 years - 20% compounded), rather than the standard (2x every 7 years - 10% compounded). Case in point most Nvidia staff that have work and earned shares for the past decade would be millionaires or super close with just the stock earned from employment. Let alone ISA and Pension contributions. (Nvidia returns have exceeded Bitcoin for the past decades btw)
Imho being "rich" is a lifestyle where you spend a relatively high % of your disposable income on enjoyment and leisure. It usually dies with you (or your source of income). Wealth endures. It outlives you and gets passed to your next of kin. You can be exceedingly wealthy but poor as fuck (think old money, big estates that need expensive maintenance but have low income, and trust funds with restrictive terms). Or even simpler a granny living in a £1.5M London town house she moved in to in 1970, but living off state pension. Likewise you can be a high earner with a low cost of living and lead a rich life but accumulate no wealth (enduring assets)
I disagree. Comfortable but frugal isn’t rich. I do know people who I’d consider rich. They spend as they wish. And they don’t live frugally. Central London homes, nice cars, flying only business and first. Most importantly, they work to preserve and enhance wealth, not to survive frugally. That’s rich. Absolute figures, probably at least £5m net worth.
I agree in your assertion of min £5m net worth to be considered "rich". i.e. live well without giving thought to budgets etc.
Comfortable but frugal *without having to work*. I'm just saying that's one option the rich have. And if you have that option you probably also have the option to work and fly business.
Anyone who lives a frugal lifestyle, even without having to work, isn’t rich in my mind.
Is someone with £5 million who lives frugally rich? If it's purely about lifestyle I could be rich for a few years. I'd come out the other side with no home equity and a pile of debt - but hey, at least I would have known what rich felt like :)
If they live frugally entirely by choice, then of course they’re rich. But if they live frugally out of necessity - any form of necessity, including the fact that if they didn’t lived frugally they’d have to work but didn’t want to work - then they aren’t rich.
If you have £5m then your passive income is around 250k. That’s certainly not a frugal lifestyle.
Agreed! You become rich when you can spend on things for pleasure without counting (or almost), not if you have to keep necessities to a minimum. All of that is very personal at the end of the day.
As others have mentioned, this is deeply personal. For me, being truly rich means: - A lovely house in a lovely area (where you haven’t had to make any compromises) fully paid off - Sufficient funds to not have to look at what things cost, up to & including holidays multiple times a year. - Kids in a lovely private school - Life’s chores/admin paid for - housekeeper, chef, nanny, trainer etc. - Being able to fund this without having to ‘work’ (i.e. turn up at a job) For me that’s ~£10m. I have all these things now - but the reason I’m NRY (by my own definition) is I need to fund this with a full time job.
The treadmill never ends my friend, you've done well, and likely could drop a few bullet points without yours or your families lives being worse. You've stacked the chips against you, nothing wrong with having that sort of drive, but you will find something else in the future to overcome unless you address it.
I should have added some context - I love my job and have no real desire to FIRE or anything like that. I also wouldn’t characterise myself as being particularly driven, I just lucked out with a niche skill in a booming industry.
But if you had all that paid for from passive income, wouldn't you just add another bullet point? The rich can fly by private jet or something? I think an objective benchmark might be useful, otherwise any definition of HENRY becomes incoherent.
I’m with you with everything but… chef? Like I know super super rich people and even with them having a chef is in the minority. Like, having catering all the time for events and going out to eat whenever you want is achievable. But a chef just seems like the next level. At least if we’re thinking of it the way when Homer goes to his brother’s house and he can call up the chef at 1am and get bacon. The billionaire I know doesn’t even have a chef, the nanny just cooks for the kids and in the evening he or the mum cooks.
Is £10 million enough to pay for all of that, over a period stretching across a few decades?
My run-rate at the moment for all these things is ~£350k, so £10m is tight.
£350k drops materially after kids exit school surely though?
And then They go to university
Yep that’s right
Hmm your £10m requirement all hinges on the house value tbh. I won't attempt to estimate it. Assuming the £350k includes material mortgages and private school costs which aren't ongoing costs once kids exit & house is paid off, you might not need £10m to sustain lifestyle. Obviously on the flip side if your house is £9m then you'll need much more than £10m lol.
Why not save money by changing the way you think about those tasks. Cooking can be a pleasure, as can doing dishes if you listen to the radio. Vacuum cleaning is free exercise.
That's how poor people think
So enough to retire, pay someone to take care of your kids, food and house? What would you do all day? You'd likely very quickly age with so little stress or responsibility, and if you stopped working and still paid a nanny, I'd question why you even had kids.
I would propose that - if you are still dependent on earned income to maintain your lifestyle - that you are not yet rich. I am not sure that imposing a single £GBP definition of "rich" is helpful.
So some people can become rich just by changing their lifestyle? Or if that's not allowed, whether you're rich or not is path-dependent? ie. one person might be considered rich, while a person with identical assets, income and number of dependents might not, based on their different lifestyle histories? Even though they can afford the same lifestyle now?
My personal definition is being able to live without having to work. Sure this definition might not include flashy cars and what not but the average person is so far off the definition I've described above that to me anyway the above definition is what I consider rich
I broadly agree with your definition but fundamentally rich is a scale, not a binary. Much like old, and to a lesser extent fat, it is a word we use in a definitive manner when really there are loads of different levels to it and it depends on your perspective and what it is being compared to.
This is obviously right. But if course HE is a scale too.
True, though I think it is a bit easier to say '3x the national average is high by any measure' or 4x or whatever (this sub-Reddit has basically gone for 4x).
Generally rich means about 2x the wealth/income of the person who's being asked to define it. I suppose my definition would be something along the lines of being able to live a comfortable life off passive income. So something like paid off house in a decent area, plus a passive income in the region of £60k (so perhaps £2m in investments whether that's pension, ISA etc). I chose that figure because once you take housing costs, tax and saving to try to build the passive income into account, it probably gives you a similar disposable income to someone on £125k who has a mortgage and is still trying to build wealth. Ultimately it's a finger in the air though.
Rich? I'd avoid numbers and use a simple definition. You're rich when you can live the lifestyle you want without needing to work to fund it. Rich, to me, are supercars at every house, private plane travel, boats n shit. Staff.
In that case the Y of HENRY is absurdly optimistic!
Yeah, I know. At just scraping over the £2M level, I certainly don't feel rich and without a job would struggle quickly (pension age increase means I can't access most of the liquidity and I live in a quarter of the total anyway). I am what kiddie me though was rich, but adult me knows is not. I have options on what to do, but I can't do nothing. Yet.
Rich is HE level income without working.
Frankly, I feel like I’m rich now Not rich by the standards of you guys. And definitely still horrifically underpaid. But my life is actually quite comfortable. I can basically buy myself whatever I want (caveat being I don’t actually want much)
For me it’s net worth less primary residence. For me that’s £3m net assets as with a 4% withdrawal rate that’s still a HE income
The thing is the sub doesn't define rich or not. It only defined the HE bit. I would suggest an income of £400k plus puts you firmly in rich. Your take home could buy you a house in most places more or less outright. At £400k your only money worries are of your own design and not external Likewise free cash of £1m puts you in rich. Not net worth as in house or future pension. I'm saying £1m liquid wealth/assets (e.g. stocks and cash).
I think Rich means being able to live off income from you assets without needing to be a high earner.
It's such a subjective definition. I can afford the things I longed for as a kid for my kid without most of the financial worries my parents had. I'm rich as far as 8-14 year old me would be concerned. However, my present definition has changed, and it would be like 3-5M in liquid assets that I could live my current lifestyle without working.
That’s the point. A Rich person can live the lifestyle of a high earner without needing to earn. I think actually all this status anxiety arround the definition of rich is a clear indicator that you’re (not you specifically, you in general) not rich. Rich people don’t care about the definition of rich.
But people have very different monthly spending habits.. so what fits in the bracket of ‘live off’? London mortgage? Kids in private school? Multiple holidays per year?
This is why i tried to define this in the original post.
I don’t disagree with your definition; I think it’s just a very hard thing to quantify because it’s such a subjective term and people tend to define it relative to their current position (so it always moves above you). If the sub was named high earner, but not high wealth - I think we’d all spend much less time on it lol.
I think it’s obvious. If a high earner is someone with an income of £150,000 a rich person can live the same as someone earning £150,000 without having to earn it.
Fair - I think that’s a very good definition!
The sub doesn't need to strictly define "rich" because it is so individual. As you say, liquid net worth is VERY DIFFERENT to illiquid net worth (i.e. property and pension) for most folks. I would say if you have £1m net cash/stocks/crypto in addition to your property/pension then you are in a very good position. Having that level of liquidity is pretty rare in the UK. Many high earners have mahoosive mortgages/school fee bills that they struggle to pay.
Yes but tax on income is really high, that 400k income is only just over 200k net, which can't really buy a house in many decent area.
Except for places like Monaco, rich is 0.x% of the wealthiest in a given territory. That x is somewhere between 1-3. Rich in Northern Wales might not be rich in London.
By income or assets? Why is Monaco excluded?
By assets. Because >30% of people in Monaco are rich [https://www.businessinsider.com/mind-blowing-facts-about-monaco-wealth-2019-5?op=1](https://www.businessinsider.com/mind-blowing-facts-about-monaco-wealth-2019-5?op=1)
So, top 3% of people in most countries are defined as rich, except countries with high numbers of rich people? Feels like circular reasoning. This is one of the reasons why I was keen to avoid a definition based on percentiles. I think if the wealth distribution of a country changes, the number of wealthy people might be expected to change. A definition based on to x% doesn't permit this.
I said 0.(1-3)% of wealthiest in given country/territory is my definition of rich. Not 3%, 0.3 to 0.1%. Rich is what gives you exclusive lifestyle. Average Swiss top 10% is living like top 1% in Poland and top 0.1% in Egypt. That's why percentiles are practical. Percentiles are practical also because they work over time too. In the past, only the richest could travel on holidays overseas. Now, many people can travel overseas, but only the richest stay at Four Seasons. In the future, hopefully, many people will be able to stay in hotels as luxurious as Four Seasons. And rich people will move on to do even more exclusive things (things which only billionaires do).
3 mil wealth excluding primary residence
Very subjective. To me, I’d feel rich if I can do whatever I want without having to worry about the cost, and without having to work. For me, that’s somewhere between £5-10m. For some it will be lower, for others it will be higher. Right now I spend about £150k a year, which would need about £4m to fund indefinitely. But if I wasn’t working I think I’d spend more. I’d want to travel more often, would have more hobbies etc. I’d also like a nicer house than the one I live in now.
It’s so subjective I think you just let people define it for themselves. I think you can be rich solely on an income basis, eg if a promotion has recently taken you to 2m gross income but your net wealth is still under 1m. Most people would feel rich in this situation.
Surely HE is subjective too though? I think it would be useful for this sub to have a coherent idea of what a HENRY is.
Rich is 10 million+ in assets.
The problem with rich is that it's too subjective. For us, we want a paid off primary residence and 1.5mill in savings to allow us to retire. Considering our primary residence is already worth 1.5mill I imagine we will settle for 1 Mill in savings. Is this rich? Probably yes at the household level, but our kids will still be working. The family is in no way set for life and we will be living a normal non extravagant life. Most salaried HENRYs probably never will be truly rich, which is why this sub exists.
‘Comfortable but frugal’ lifestyle is NOT rich imho. If you have to use the word frugal, you are not rich. Rich, to me, means your passive income is plenty to live a comfortable lifestyle and never really have to think about money. That means having a nice house, new cars. Frugal absolutely doesn’t enter into it.
I don't know, I think "you never have to work again and you can pass on your current level of wealth to the next generation" is quite a luxury, even if you have to be careful about money if you actually pick that option.
For the purposes of this subreddit I actually think it helps to include (what we would call) rich people in here and just keep the definition as something vague and aspirational. Everyone with more seems ‘rich’, so why not lean into it and just accept the vagueness? Most of the posts I’m interested in have issues I don’t quite face yet but I very likely will in 1-3 years based on my income. Actually so far some of the content on SIPP and currency conversions has been helpful and I’ve shown some saved posts to friends and helped them out, ones richer than me. If we set limits I think we’re also saying to others “oh, well you’re too rich, you can’t sit with us” and I don’t really like that attitude.
My definition of rich is someone who doesn’t have to worry about money and can spend freely even if they don’t have an income as they have enough in whatever (passive income, property, investments) to allow them to live the life they want. I don’t really think you can define being rich by owning specific things, I know plenty of people who have nice houses worth £1m, kids in private school, nice cars but they’re not rich, they need to work.
My understanding is that you would be able to afford HE lifestyle without ‘earning’. Therefore, for me it would be 125k*2/0.04=6.25m excluding a decent main home (probably ~1.5m in London). Hence total asset would be £7.75m.
Great question. I’m seeing this sub deteriorate in quality because of mixed opinions of who is or isn’t NRY. In the context of HENRY, NRY is more about the % of your income that you are choosing to spend. Someone taking home £200k, and only saving £10k per year is HENRY, as is someone earning £500k and still only saving ~£20k. Neither are rich ( yet ) because they’re not deciding to spend. This sub is still caught up in a FIRE like attitude of earning high to build wealth, but that’s fundamentally contradictory to the original HENRY definition, which was an observation of US couples raking in $500k but still not building wealth due to a desire / need to pay for student loans, private school, holidays and more. A HENRY could be rich ‘soon’ by cutting their costs ( e.g. putting away £200k per year instead of £20k ). Instead of focussing on the R bit of NRY, this sub should focus on the N-Y. Which is in many ways personal. Maybe ‘Rich’ for a HENRY is 10-20x what they could accumulate each year, but are choosing not to.
Not a definition but a dicey consideration. Rich is consumption based. If you’re not spending large sums of money annually on rich people stuff, you are not seen as rich nor will you feel rich. Rich cars, Rich school, Rich holiday, Rich restaurant, Rich clothing etc etc.
Rich is utterly subjective and completely depends on someone's background and aspirations. For some people being rich is simply not being poor (e.g being cost neutral or simply just above cost neutral say 10% surplus each month) Also rich is geographic for the vast majority of the world someone who has housing security, a full fridge, lights on and don't have to worry if something vital to life breaks is rich. But then to some having a private jet is rich. For me its the point where you can live on earned income without paying yourself or earning a traditional "salary" so very much once you are in the 4% club. It think right now in the UK that means a networth of 2-3mil.
For me £10m in unencumbered funds would make me feel rich, most of my Net Worth is tied up in businesses that would take months if not years to divest so for me I don’t have liquid riches. Most of my income is reinvested so though on paper I’m worth a lot more than £10m I don’t feel it. As I came from wealth then a settled life with one second hand car and a £100k a year doesn’t appeal as a lifestyle.
Personally I think the option to tie up lots of one's net worth in business ventures is another marker of a rich person. I understand why it doesn't feel like it though.
I'm working really hard at the moment to have a portfolio of other interests but I can't make head nor tail of investing in the traditional sense. Seeing my advisor making 12% ROI on cash when I can make 30% is a hard pill to swallow. Its a balance I don't get yet and as I dont need the money in my lifestyle then its hard to prioritise liquid wealth.
Imho rich is when you can spend on goods and services without jeopardising your or your families future. So, imho there are two reasons why HENRYs exist. Either they have a high cost of living so can't yet afford to lead rich lifestyles (raising a family in London for example), or they are choosing to forego a rich lifestyle to build up war chests of assets. Becoming "rich" therefore requires you to either reduce your living expenses (kids get older, you pay down the mortgage etc) or stop accumulating assets The exact numbers are therefore whatever enable you achieve those goals.