16 PF

Millionaire

[mil-yuh-nair]

A millionaire (originally and sometimes still millionnaire) is an individual whose net worth or wealth 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.

The increasing number of millionaires is partially due to prevailing economics: Increasingly, the term denotes more and more to the status of high wealth. American sociologist Leonard Beeghley classifies all households with net worth exceeding $1 million as "The Rich." Currently, there are over 10 million residents around the globe classified as millionaires.

Terminology

The word was first used (as millionnaire, double "n") in French in 1719 by John Law, and is first recorded in English (millionaire, as a French term) in a letter of Lord Byron of 1816, then in print in Vivian Gray, a novel of 1826 by Benjamin Disraeli. 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". The first American printed use is thought to be in an obituary of New York tobacco manufacturer Pierre Lorillard II in 1843.

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 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 furnishing, 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 $1,025,000 and every individual in this household would thus be a millionaire. However, according to the net financial assets measurement, 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 is "net investable assets".

In the real estate bubble up to 2007, average house prices in some regions such as Palo Alto, exceeded $1 million. 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. For this reason, those who market goods, services, and investments to high net worth individuals are careful to specify a net worth "not counting principal residence."

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. 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 US-dollar billionaires in the world. The number of Millionaires and Multimillionaires is also higher.

Historical Worth

Depending on how we calculate it, a million US dollars in 1900 is equivalent to 2006 US dollars of

  • $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 we see that at the turn of the 20th century one would have needed twenty to a couple of hundred times more modern US dollars than one does today, to qualify as a millionaire (in the US).

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 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."

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.

HNWIs (more than $1 million, in 2006)
Region Number Percentage of regional population
Global 9,500,000 0.15%
North America 3,000,000 0.62%
Europe 2,900,000 0.41%
Asia-Pacific 2,600,000 0.06%
Latin America 400,000 0.07%
Middle East 300,000 N/A
Africa 100,000 0.01%

  • Ultra-HNWIs (Ultra-HNWIs Account for 1.0% of All HNWIs) (more than $30 million, in 2006)

UHNWIs (more than $30 million, in 2006)
Region Number Percentage of regional population
Global 95,000 0.001%
North America 38,400 0.007%
Europe 23,200 0.003%
Asia-Pacific 18,200 0.0004%
Latin America 9,600 0.002%
Middle East 3,300 N/A
Africa 2,000 0.00002%

Scotland has more female millionaires than male.

United States

There is a wide disparity in the estimates of the number of millionaires residing currently in the United States. According to TNS Financial Services, as reported by CNN money, 8.9 million households in the US alone had a net worth of at least $1 million excluding primary residences in 2005. According to TNS, the number of millionaire US households is now 9.3 million, with an increase of half a million since 2005. 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. Another finding was a record "33 percent increase over the 6.2 million households that met that criteria in 2003," fueled largely by the country's real estate boom.

A report by Capgemini for Merrill Lynch on the other hand stated that 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 (p. 35).

According to ABC News, Los Angeles County has the highest number of millionaires at 262,800 households, followed closely by Orange County, California, Cook County, Illinois and Maricopa County, Arizona.

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 US by Regis Philbin and Meredith Vieira. Who Wants to Be a Super Millionaire also aired in the US, where contestants could win a total of $10,000,000. Many reality TV shows offer one million dollars as first prize.

Watch Me Become a Millionaire

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