The millionaire next door

I have long thought about net worth and who really accumulates extreme wealth. Whilst names like Bill Gates, Warren Buffett, Jeff Bezos, Larry Ellison and Michael Bloomberg easily spring to mind, but what about people who generate enough wealth to be comfortable?

With property prices rising, homeowners are generating wealth at a steady rate and people are accumulating this wealth predominately through real estate investment. Australia had 234,000 high net worth individuals in 2015, that is one million dollars USD in investable assets not including the primary residence or possessions.

Although individuals are not generating income through their primary residence; yet rising property prices are increasing their net wealth. But if the primary residence is not included in the calculation then the valuation becomes a whole lot harder. A modest home may indicate a degree of frugally freeing up capital for investment.

Likewise, an owned property may have a loan as collateral for investment but the whole net worth calculation then becomes clouded. Loaning capital against the family home for investment is fraught with danger, any decline in that investment may require the loan to be called in, margin calls are ugly. If these individuals have any investments in fixed interest, cash, bonds or equities then they have potential for both capital growth and investment income - this is a start.