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To: thecodont

I have a net worth over a million and I drive a 2002 Rodeo that I bought 4 years ago for 3800 bucks, I love it. I have better things to do with my money than trying to impress people with the car I drive.


21 posted on 02/28/2012 9:20:05 PM PST by tiki
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To: tiki; thecodont
I have a net worth over a million and I drive a 2002 Rodeo that I bought 4 years ago for 3800 bucks, I love it. I have better things to do with my money than trying to impress people with the car I drive.

I think the issue of money, net worth, discretionary spending power, and the purchasing decisions one makes, are a rather fluid concept that has nuances that can be VERY dissimilar depending on several factors. Factors such as location, source of the wealth (did you earn it or simply blessed by being born in the 'right family,' and even if you earned it did you earn it through years of hard work and frugal saving or simply by being in an industry where one year's bonus made you rich), personal outlook on life, etc. Many factors. By profession I am in the Private Equity industry, before that was in institutional fund management/wealth management, and in both cases looking after emerging and frontier markets. Why is that important? Because I have been exposed to rather wealthy (all the way to sheer opulence) people, and from different regions. I have also been in an industry that pays well (my first ever bonus was 300K gross, which wasn't bad for an early 20s African kid working in the banking industry during the mortgage bubble), and in PE the pay is far crazier.

What have I noted? First of all in the emerging/frontier markets, particular the top level emerging markets like China (I was in Beijing early last year) and Brazil (Sao Paulo last week) is that there is quite a bit of 'showing off.' A fair bit. Same thing among the wealthy in Africa, where I am based. However it is China that is boggling ...even lower level luxury cars like Audis and BMWs have huge sales in that Market (especially Audis), and there is a very clear hierarchy that starts at the Buick level (sales in China kept that vehicle alive) all the way to more exotic fare.

Another interesting thing is how the money is made. It is VERY possible to become a millionaire by prudent living, saving and investing. There are many rich people who got that way without ridiculous paychecks. Such people will be less willing to waste 100K on something as silly as a car. However, if you are working at, say, some VC firm, get some carry of say 500K for just one year on top of a salary of 200K, and you are 29, there is a good chance that at least 30% of that money will be spent on some frivolous thing. Guaranteed. Before the bubble burst some even spent it on, erm, 'trophy girlfriends' to put it mildly. Even worse are the scions of rich families, especially the noveuriche. There was an interesting story in the economist some years back about the lifespan of businesses. Basically the father creates a company that does well, his son (who was raised in a good solid manner) takes over when time comes and makes it even larger and more prosperous, and the HiS son takes over and it gets to a plateau stage ....most businesses evaluated never survives 3 generations. By the third all the hard work of the patriarch and the hard lessons of the second generation had all been lost. Scions of wealthy families are far more likely to spend money on exotic fare than most PE people I know, even in Dubai or Johannesburg.

I would say that both location and the way one made the money, especially the way one made their money, are important factors to how one spends it. In most, but obviously not all, cases. Those who built their millions through hard work and dedicated focus will have a level of fiscal prudence greater than those who simply have a good base salary and sweet bonuses. Their investment portfolios will also have far different asset allocations, with the 'hard work wealth' being more logical (and defensive). I have actually seen teachers with nest eggs that are better than the typical high level investment banker (which can be a disadvantage to the banker type should the job go, which was disastrous to some when the bubble burst). Also age is a factor, with a single guy having liquid assets far more likely to spend a certain way than a family person thinking about retirement and family.

25 posted on 02/28/2012 10:32:20 PM PST by spetznaz (Nuclear-tipped Ballistic Missiles: The Ultimate Phallic Symbol)
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To: tiki
Ironically if you go the poor side of town, you'll see cars with $5000 RIMS, and a $2000 stereo system.

But I'm sure the money to pay for those things was obtained "ethically", without cheating or robbing or stealing or selling drugs, etc.

28 posted on 02/28/2012 11:25:03 PM PST by boop (I hate hippies and dopeheads. Just hate them. ...Ernest Borgnine)
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To: tiki

Ditto. 2003 Subaru.


35 posted on 02/29/2012 1:00:42 AM PST by PA Engineer (Time to beat the swords of government tyranny into the plowshares of freedom.)
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