With an estimated net worth of around $200 billion, no doubt Jeff Bezos feels very wealthy! To try and put that in perspective, it would take the average person in a developed country like the US around 73,000 lifetimes to earn $200 billion. So, to most, Jeff Bezos is perceived as unimaginably wealthy. But the key word is perceived, because the perception of wealth changes depending on who’s viewing it.
To someone who is home- and penny-less, anyone with enough money to pay for food and shelter is wealthy. To someone who has a house, food, family, car, and savings, someone who has a bigger house and better car is wealthier than them. We naturally tend to focus on, and want, what we don’t have.
So, how do you judge your own wealth? How wealthy are you and how wealthy do you need to be? It is a question that often comes up, especially when focusing on retirement planning or achieving financial independence. How much wealth do you need? The answer is different for everyone, but a big part of the answer lies in understanding what you don’t need and removing it from the equation.
I have seen clients from both sides. Some who have way more wealth than they realise and fairly modest needs. Understanding this means they can take less risks with their investments and protect what they have. More importantly, they can take the pressure off themselves knowing they’re in a secure position. Other clients have expensive lifestyles and big goals for passive income, but their current level of spending means future goals are going to be hard to sustain, even though they are achievable. Knowing this means they can make a choice: adjust future goals or adjust their current lifestyle. The answer usually lies somewhere in-between.
Putting goals into dollars, if your goal is $6,000 passive income a month, purely from investments, assuming a 5% investment return, you will need a portfolio of around $1,440,000. You will still have to consider investment risk, so this is not guaranteed. However, the sooner you have your goal set, the quicker you can put a plan in place to achieve it.
Not knowing your goals means you are running towards an unclear finish line. You may not see it and keep running, wasting valuable energy and time, when you could be enjoying life. On the flip side, you may get there and realise you are going to have to keep running, and if you can’t, then you’re going to need to make some big changes. So, it comes back down to the same two simple questions. How wealthy am I? How wealthy do I need to be?
To finish, both of these sites are quite an eye-opening and tell you where your income ranks in both Singapore and the world.
This simple tool tells how your income compares to the average income in Singapore and the rest of the world.
Where does your income rank globally for buying power?