Can become a CA millionaire

Are Millionaires Rich?

Stupid question, many users will think of the title. After all, the term millionaire is synonymous with wealth.

And even if at the end of the last century a Schilling millionaire with the equivalent of 73,000 euros did not really swim in money, for the consulting company Capgemini, for example, the million dollars (750,000 euros) count as investable assets as a threshold for "high net worth individuals" , the modern term for the rich.

There are around 99,000 millionaires in Austria, the majority of them at the lower end between 750,000 and one and a half million euros.

But how rich is someone who has 750,000 euros on the high edge? He or she can use it to buy a beautiful single-family house in the suburbs or a small apartment in the city; Villas and luxury apartments close to the city center have long ceased to exist in view of the rise in real estate prices. And people who have such accommodations are usually not referred to as rich.

The traditional idea of ​​wealth is that one can live on the proceeds of one's wealth without reducing the wealth itself in order to then be able to bequeath it to one's children. This is the picture of the reindeer.

Therefore, the question arises, what brings you 750,000 euros today. In the past 30 years - that is, since the early 1980s - investment advisors with a clear conscience have promised returns of five percent without great risk. Because despite a few setbacks, the capital markets ran brilliantly until the 2008 financial crisis. Those days are over.

If you want to generate a real net return (i.e. after taxes and taking into account the devaluation) of only one percent today, you need skill and a little luck. Because he has to take some risk and can only hope that he won't lose anything. And little will change in that in the years to come, and probably decades too, even if interest rates rise again. The factors that have made capital so lucrative - especially advancing globalization - have reached their limits.

But a return of one percent at 750,000 euros means only 7,500 euros a year or 625 euros a month. That's better than nothing, but it doesn't finance a lot of consumption. Wealth looks different.

Of course, a 60 year old can decide to use up his money over 20 years and would then have around 40,000 euros a year or 3,300 euros a month. This is nice for (mostly) childless pensioners, but also not a ticket to the world of the rich.

In the US, with its thin social safety net, this is an acute social issue. A million dollars at such low interest rates is no protection against old-age poverty. Millions of baby boomers cannot stop working as a result.

This question is also relevant in Austria because wealth could play a major role in the upcoming election campaign; The SPÖ is pushing for a wealth tax for assets of one million euros or more. According to a study by the National Bank, wealth is particularly unfairly distributed in Austria. The study is controversial because it omits certain financial values ​​that, while traditionally not considered assets, enable a more affluent life. These include, above all, high pensions and affordable long-term housing, from which other social classes usually benefit than the typical wealthy.

It makes sense, therefore, to compare the benefit of a small fortune with these other privileges. If you live in a community apartment, in a row house that was once subsidized, or with 700 euros in rent in a 200 square meter apartment in the city center, you have an advantage over market-based housing costs that is much more than 625 euros.

He is de facto richer than the millionaire, even if this value cannot always (but often thanks to entry rights and cooperative ownership) be passed on to children.

And a retired civil servant who, instead of the ASVG maximum pension of 3,258 euros, receives only a thousand euros more per month - and there are quite a few of them in Austria - who will spend about as much as a two- Makes a million dollar fortune. And that - in contrast to financial investments - with practically no risk.

A trader who has sold his business for this amount and now needs the income to top up his small pension is far worse off.

In Austria in particular, the sole focus on fixed assets is therefore out of place. That does not speak against a higher taxation of certain assets, especially inheritance and property. After all, greater wealth usually goes hand in hand with high wealth.

But that is not a matter of course. The million, whether in euros or dollars, is therefore the wrong basis for debates on redistribution. (Eric Frey,, June 23, 2013)