High-net-worth (HNW) individuals: Covid

Full agreed with @kierank but to me, it is simple.

High net worth meant you have much higher net worth (Asset - Liability) than median number, does not matter your spending or saving until the net worth drops to median

 

I would rather be a IGA owner or pharmacist than the owner of the larger flash travel agency.

But a couple who own a agency with no debts may fare better than a IGA owner with three properties and none of the tenants want or can pay and they have massive loans to consider.

Dont make assumptions about who will do well or poorly. Its not what you see. They guy down the road may have paid cash for their euro cars and house, The old dump across the road may be mortgaged up the wahzoo and the owner out of work, divorcing and out of cash to even sell it.

 

Professors sometimes get it right, often on motherhood statements...

 

I myself am not high net worth, but my sibling could be viewed to be. I have a joint bank account with my bro in-law. Pre-Covid he was up for a new mortgage application. Bank took a look at his financial position - including our joint account - and other joint assets. I had made a horrible financial decsion at about the same time to quit my cushy job with an established employment history (4+ yrs) to be self employed - banks hate that becase of the inconsistent/unpredictable income; works against you in loan applications.

I don't believe he or his family budgets strictly - as they have sufficient means to cover their lifestyle, and he himself was quite shocked when the numbers came back. His rent is 43k a month; his other non housing related living expenses amounted to about 20k a month. He is 'high net worth' enough to have a private banker, and even the private banker had to do a double take at his calculated monthly expenses.

 

wt...

 

What was he renting? A stadium? or a Bunnings store?

 

LOL Hong Kong. There are other places in the world where real estate prices are a lot worse than Australia's.

 

That would be a modest home then. Hardly any land component. Hong Kong has the highest property prices in the world.

 

In Hong Kong you do not own the land only the building

 

high net worth .. me probably not BUT

the property i have is in locale now attractive to $1 million ( plus) buyers , but well-heeled buyer ... i suppose i should test out the Councils view on a multi-unit dwelling again , an approval like that would boost the value significantly

but being on the bear end of investment sentiment , i expected a big crash near the middle of 2013 , so had a strong focus toward MY idea of safe-haven stocks

now some of those picks did rather well despite the continuing bull market , some stocks ( like WOW went up despite everything they did ) so despite looking at the market from the incorrect perspective i have done OK before the virus fuss and during it , now the coming 12 months might be different .. as will be the risk of lower div. income ( the part that counts for me )

the share portfolio value is far from jaw-dropping , but unknown is the property worth and other odds and sods ( collectibles )

 

OK decided to work out what s High net worth individual in Australia, and it will different dependent on country

here we go

What does High Net Wealth look like in Australia? - Keystone Private


Here’s the benchmark

$1M invested assets
$2.5m including family home. (You sydney investors are all good here)
$250,000 income pa. ATO ( ? I wonder if some investors work around this one
Control net worth of $5M


And then its a different beast for the rich families/business’

 

i absolutely miss on the annual income

and don't seek values on the property nor collectibles , i have no desire to appear in BRW so it doesn't matter to me

and my lifestyle is very low key

one thing i do benefit from is lack of leverage ( now sure if you can leverage and cover the expenses by a factor of 3 or 4 times , be my guest , normally the maths don't work for me )

different strategies for different folks

 

I don’t understand why you posted “income pa ATO”.

One can earn income which legally doesn’t have to be declared on one’s tax return.

 

Of course, and why I said.....
‘I wonder if some investors work around this one’

 

Sorry - I interpreted the words “work around this one” to mean that one had to do something dodgey.

I am thinking legit income that the ATO doesn’t expect one to declare.

 

I might meet the criteria on paper but banks don't want to have a bar of me.

 

"millionaires" arent wealthy people these days. Many people also talk about their property portfolio worth "$2.5m" ...but they owe $2m. Drive a flash car. That is financed.
Have seen people with great wealth on paper who live a frugal and sad life. Others seemingly wealthy spend far more than they can afford.

True HNW is often different described by those who are true HNW rather than seeking to become....
- Sufficient cash resources to buy anything they choose without need for finance
- Happy and have suitable free time to do things they choose rather than work to live.
- owe $0 in tax and debt is a convenience not a necessity. Debt could be repaid if required.
- Have a source of wealth / income that is secure and not at risk and if they spend any it wont affect their income production needs
- Philanthropist activities interest them more than "work"
- Have lifestyle assets that are as much as 40% of their income assets

 

i don't care if i meet the criteria , only the banks and ATO seem to dwell on that , and if i don't feature in the BRW , the banks and ATO won't make plans for my net worth .

(wink )

 

I think true HNW is like a piece of art: you can’t determine its real worth until the artist dies.

A true HNW person will have at least 5 unencumbered fights at the reading of their will. And at least two or more of them will involve some use of designer drugs.

If the answer to the question of how much popcorn is needed is “wheelbarrow”, then I’d say that individual has truly done well for themselves.