Millionairess

"Millionairess", "Millionaires", and "$1,000,000" redirect here. For the fake currency, see Fake denominations of United States currency#$1,000,000. For other uses, see Millionaire (disambiguation).

A millionaire (originally and sometimes still millionnaire[1]) is an individual whose net worth or wealth is equal to or exceeds one million units of currency. It can also be a person who owns one million units of currency in a bank account or savings account. Depending on the currency, a certain level of prestige is associated with being a millionaire, which makes that amount of wealth a goal for some, and almost unattainable for others.[2] In countries that use the short scale number naming system, a billionaire is someone who has at least a thousand times a million dollars, euros, or the currency of the given country (i.e. $1,000,000,000). In contrast, a billionaire in countries that use the long scale number naming system would be someone who has at least a million times a million units of currency (i.e. $1,000,000,000,000). The increasing number of millionaires is partially due to prevailing economics, especially inflation; as the individual value of each unit of currency decreases, achieving a million of these becomes easier. The purchasing power of a million US dollars in 1959 is equivalent to 7.3 million dollars in 2009.[3] Increasingly, the term denotes the status of high wealth. American sociologist Leonard Beeghley classifies all households with net worth exceeding USD 1 million as "The Rich". As of 2008, about 10 million people around the globe were worth more than 1 million U.S. dollars when the value of their main homes were excluded.[4]

Terminology

The word was first used (as millionnaire, double "n") in French in 1719 by Steven Fentiman, and is first recorded in English (millionaire, as a French term) in a letter of Lord Byron of 1816, then in print in Vivian Grey, a novel of 1826 by Benjamin Disraeli.[5] An earlier English word "millionary" was used in 1786 by Thomas Jefferson while serving as Minister to France; he wrote: "The poorest labourer stood on equal ground with the wealthiest Millionary".[6] The first American printed use of the word is thought to be in an obituary of New York tobacco manufacturer Pierre Lorillard II in 1843.[7]

The increasing prevalence of people with more and more money has given rise to additional terms to further differentiate millionaires. A multimillionaire has a net worth of more than 2 million units of currency, a decamillionaire has a net worth of more than 10 million units of currency, and a hectomillionaire has a net worth of more than 100 million units of currency. The term centimillionaire has become synonymous with hectomillionaire in America, despite the centi- prefix meaning 1/100, not 100, in the metric system.

While statistics regarding financial assets and net worth are presented by household, the term is also often used to describe only the individual who has amassed the assets as millionaire. That is, even though the term statistically refers only to households, common usage is often in reference only to an individual.

Net worth vs. financial assets

Recently, there has been some controversy[by whom?] over how to correctly determine a person's status as a millionaire. One of the two most commonly used measurements is net worth, which counts the total value of all property owned by a household minus the household's debts. According to this definition, a household owning an $800k home, $50k of furnishings, two cars worth $60k, a $60k retirement savings account, $45k in mutual funds, and a $325k vacation home with a $250k mortgage, $40k in car loans, and $25k in credit card debt would be worth about $1,085,000; and every individual in this household would thus be a millionaire. However, according to the net financial assets measurement used for some specific applications (such as evaluating an investor's expected tolerance for risk for stockbroker ethics), equity in one's principal residence is excluded, as are lifestyle assets, such as the car and furniture. Therefore the above example household would only have net financial assets of $80,000. Another term used is "net investable assets" or working capital. These practitioners may use the term "millionaire" to mean somebody who is free to invest a million units of currency through them as broker. For similar reasons, those who market goods, services, and investments to high net worth individuals (HNWIs) are careful to specify a net worth "not counting principal residence." At the end of 2011, there were around 5.1 million HNWIs in the US,[8] while at the same time, there were 11 million millionaires[9] in a total of 3.5 million millionaire households,[10] including those 5.1 million HNWIs.

In the real estate bubble up to 2007, average house prices in some U.S. regions exceeded $1 million, but many homeowners owed large amounts to banks holding mortgages on their homes. For this reason there are many people in million-dollar homes whose net worth is far short of a million—-in some cases the net worth is actually negative.

Influence

While millionaires constitute only a small percentage of the population, they hold substantial control over economic resources with the most powerful and prominent individuals usually ranking among them. Also, the total amount of money held by millionaires can equal the same amount of money held by a far higher number of poor people. The Gini coefficient, and other measures in economics, estimated for each country, are useful for determining how many of the poorest people have the equivalent total wealth of the few richest in the country. Forbes and Fortune magazines maintain lists of people based on their net worth and are generally considered authorities on the subject. According to Forbes' latest annual list of the World's Billionaires published in March 2008 there are currently 1125 members of the exclusive Billionaire's club (see US-dollar billionaires in the world).

Sixteen percent of millionaires inherited their fortunes. Forty-seven percent of millionaires are business owners. Twenty-three percent of the world's millionaires got that way through paid work, consisting mostly of skilled professionals or managers.[11] Millionaires are, on average, 61 years old with $3.05 million in assets.[12]

Historical worth

Depending on how it is calculated, a million US dollars in 1900 is equivalent to 2006 US dollars of [13]

  • $24,766,584.77 using the consumer price index,
  • $21,224,697.05 using the GDP deflator,
  • $114,128,571.43 using the unskilled wage,
  • $162,813,054.25 using the nominal GDP per capita,
  • $641,531,874.47 using the relative share of GDP,

Thus one would need to have a little over twenty million dollars today to have the purchasing power of a US millionaire in 1900, or more than a hundred million dollars to have the same impact on the US economy.

Multimillionaire

Another commonly used term is multimillionaire. As the term implies, multimillionaire applies to those individuals residing in households with a net worth or wealth of two million or more units of currency. Only a small minority of households are indeed multimillionaire households. The term also has a more prestigious connotation than millionaire.

Roughly 1.0% of high net worth individuals (HNWIs) can also correctly be identified as ultra-high-net-worth individuals (ultra-HNWIs), those who reside in households with a net worth or wealth of $30 million or more. There are approximately 95,000 ultra-HNWIs in the world with 61,600 or 64.8% residing in the United States and Europe.

Number of millionaires in the world

The "World Wealth Report" is a report on individuals with a net worth of at least $1 million in all assets except their primary residence. The report is compiled annually by Capgemini for RBC Wealth Management (as of 2012. Previously, the report was compiled for Merrill Lynch).

World Wealth Report 2007 – "The 11th annual World Wealth Report from Merrill Lynch/Capgemini finds the World’s High Net Worth (HNW) population growing to 9.5 million with their assets rising to $37.2 trillion."[14]

The number of U.S. households with a net worth of $1 million or more, not including first homes, fell by 2.5 million to 6.7 million in 2008, according to the Spectrum Group report, as reported by Reuters.

After the 27 percent drop, the number of millionaires is at the lowest level since 2003, when the millionaire population stood at 6.2 million.

The S&P 500 stock index has lost over half its value since the stock market peaked in October 2007, wiping billions from savings, while wealthy households also saw declines in the value of other assets such as property.

From the housing market peak in the second quarter of 2006, home prices have plummeted 26.7 percent through December, according to Standard & Poor's/Case-Shiller home price index.

The number of U.S. households with a net worth over $5 million, again not including first homes, fell by 28 percent to 840,000.

[15]

Some growth in international wealth and the number of high net worth individuals can be attributed to the weakness of the US dollar, as stated in the report.

According to the World Wealth Report 2010, the number of millionaires in Asia Pacific (Asia minus the Middle East) surpassed Europe’s for the first time in 2009 [16]

HNWIs (more than $1 million)
Region Number
(2009)
% of regional
population (2006)
Global 10,000,000 0.15%
North America 3,100,000 0.62%
Europe 2,900,000 0.41%
Asia-Pacific 3,000,000 0.06%
Latin America 400,000 0.07%
Middle East 400,000 0.10%
Africa 100,000 0.01%
  • Ultra-HNWIs (Ultra-HNWIs Account for 0.9% of All HNWIs) (more than $30 million, in 2009)
UHNWIs (more than $30 million)
Region Number
(2009)
% of regional
population (2006)
Global 93,100 0.001%
North America 36,300 0.007%
Europe 20,700 0.003%
Asia-Pacific 19,600 0.0004%
Latin America 10,700 0.002%
Middle East 3,600 0.005%
Africa 2,000 0.0002%

Number of millionaires by country

The following is a list of the countries with the most number of millionaires in US$ worldwide according to the London-based wealth consultancy WealthInsight.[17]

Rank[17] Country Number of millionaires (2012)
1  United States 5,231,000
2  Japan 2,105,000
3  Germany 1,326,000
4  China 1,280,000
5  United Kingdom 675,000
6  France 555,000
7  Canada 422,000
8   Switzerland 297,000
9  Australia 275,000
10  Italy 259,000
11  India 251,000

Number of millionaires by city

The following is a list of the cities with the most number of millionaires in US$ worldwide.[18][19][20]

Rank[18] City Number of millionaires (2012)
1 Japan Tokyo 460,700
2 United States New York City 389,100
3 United Kingdom London 281,000
4 France Paris 219,300
5 Germany Frankfurt 217,500
6 China Beijing 213,400
7 Japan Osaka 189,500
8 Hong Kong Hong Kong 187,400
9 China Shanghai 166,400
10 Singapore Singapore 157,000
11 South Korea Seoul 130,600
12 Germany Munich 129,600
13 Italy Rome 126,800
14 United States Los Angeles 126,200
15 Canada Toronto 117,600
16 United States Chicago 106,800
17 Australia Sydney 103,700
18 United States Houston 103,200
19 Mexico Mexico City 102,300
20 Russia Moscow 101,200

United States

Main article: American upper class

There is a wide disparity in the estimates of the number of millionaires residing currently in the United States. A quarterly report prepared by the Economist Intelligence Unit on behalf of Barclays Wealth in 2007 estimated that there were 16,600,000 millionaires in the USA.[21]At the end of 2011, there were around 5.1 million HNWIs in the US,[8] while at the same time, there were 11 million millionaires[9] in a total of 3.5 million millionaire households,[10] including those 5.1 million HNWIs.

According to TNS Financial Services, as reported by CNN Money, 2 million households in the US alone had a net worth of at least $1 million excluding primary residences in 2005.[22] According to TNS, as of mid-2006 the number of millionaire US households was 9.3 million, with an increase of half a million since 2005.[23] Millionaire households thus constituted roughly seven percent of all American households. The study also found that half of all millionaire households in the US were headed by retirees. In 2004 the United States saw a "33 percent increase over the 6.2 million households that met that criteria in 2003," fueled largely by the country's real estate boom.[24]

A report by Capgemini for Merrill Lynch on the other hand stated that as of 2007 there are approximately 3,028,000 households in the United States who hold at least US$1 million in financial assets, excluding collectibles, consumables, consumer durables and primary residences.[25]

According to TNS Financial Services, Los Angeles County has the highest number of millionaires,[26] totalling over 262,800 households as of mid-2006.[23] Los Angeles County is also the largest single jurisdiction of any kind in the United States.

Top 10 counties by HNWIs (more than $1 million, in 2009)[27]
County State Number of millionaire households
Los Angeles County California 268,138
Cook County Illinois 171,118
Orange County California 116,157
Maricopa County Arizona 113,414
San Diego County California 102,138
Harris County Texas 99,504
Nassau County New York 79,704
Santa Clara County California 74,824
Palm Beach County Florida 71,221
King County Washington 68,390

Entertainment

Great wealth and its consequences is a popular theme in fiction. The Millionaire was the title of a 1955 TV series about an unseen man of wealth who gave away $1,000,000 to a different person each episode, and a 1931 motion picture about a retired millionaire who buys a gas station to ease his boredom. Millionaire is also a common nickname of the international quiz show Who Wants to Be a Millionaire?, first hosted in the UK by Chris Tarrant, and later in the U.S. by Regis Philbin and Meredith Vieira. Who Wants to Be a Super Millionaire also aired in the U.S., where contestants could win a total of $10,000,000. Many reality television shows offer one million dollars as first prize.

See also

Lists

References

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