What price home does someone with a $22 million net worth live in?

Analyzing Home Values as a Percentage of Net Worth

Nov 09, 2024

Exploring the Hidden Aspects of Wealth Building

This week we explore five real-life examples that unveil diverse paths to financial success, showing both common threads and unique approaches. While all of them underscore the importance of consistent saving, disciplined financial habits, and investing, they also reveal varying career trajectories, investment strategies, and retirement plans. Some individuals climbed corporate ladders, while others embraced entrepreneurship or alternative investments. Their perspectives on wealth range from purely financial to viewing it as a means for prioritizing family time, pursuing personal interests, or engaging in philanthropic activities.

A particularly intriguing aspect is the relationship between home value and overall net worth. Contrary to popular belief, the individuals with the highest net worth do not necessarily own the most expensive homes.

#1 - $490,000 home (31% of $1.6M net worth)
#2 - $700,000 home (3% of $22M net worth)
#3 - $425,000 home (22% of $1.1M net worth)
#4 - $900,000 in 2 homes (13% of $6.8M net worth)
#5 - $1,000,000 home (6% of $15.2M net worth)

Keep in mind that these stories are not meant to be blueprints, but rather sources of inspiration and insight. They demonstrate that there is no one-size-fits-all approach to building wealth, and that success often comes from aligning financial strategies with personal values and goals.

Consider taking one action today to create the life you want tomorrow!

In their 30s:

$1,580,000 net worth - 39-year-old couple with 2 pre-teens living in the eastern part of the US. Their accumulated net worth is 95th percentile within their age group. Their net worth consists of 62% in financial assets, 31% in real estate and 6% in cash. They have been married for 17 years and have been together since high school. Despite their busy lifestyle, they prioritize saving and have a budget aligned with their major spending goals. The couple has a well-thought-out retirement plan spanning different age ranges. From 40-50, they plan to continue in their current jobs. From 50-60, they aim to scale down, covering living expenses through work or passive income. For ages 60-72, they plan to partially cover expenses through passive income and draw down on assets. After 72, they expect Social Security and passive income to largely cover annual expenses. In this long-form interview, they emphasize the importance of financial education and self-teaching. They recommend owning one's financial decisions, building wealth intentionally, and directing finances through automation. The couple currently gives 1-2% of their income to charity but hopes to increase this in the future.

In their 40s:

$22,000,000 net worth - A 50-year-old (wife is 46) with 3 kids living in Northeast recently retired from accounting and finance, emphasizes the importance of attitude, work ethic, and negotiation in career growth. Their accumulated net worth is 99th percentile based upon their age group. Their net worth consists of 66% in publicly traded equites, 17% in private real estate holdings, 4.5% in private equity, 4.5% in alternatives (Venture Capital, Music Royalties, Litigation Finance, Life Settlements), 3% in private lending, 3% in primary home, and 3% in cash. In his interview, he advises saving at least 50% of income and investing in low-risk categories. Despite a modest annual spending of $195,000, he accumulated his net worth from careful investing and living below his means. He further emphasizes the importance of tracking money, developing financial models, and setting clear goals from an early age⁠⁠. In the interview, he also shares some money mistakes he made along the way, such as paying for unnecessary financial advisors and experimenting with risky alternative investments⁠. Having retired eight months ago at the age of 49, he views this ability to prioritize family time as the primary luxury afforded by his wealth.

In their 50s:

$1,090,000 net worth - a 51-year-old and his 50-year-old wife provide insights into their financial journey and retirement plans. They have been married for 24 years with three children⁠. Their accumulated net worth is 78th percentile based upon their age group. Their net worth consists of 75% in retirement accounts (IRAs/401k), 22% in home equity, and 2% in cash. Their financial awakening occurred at age 35 when they participated in Dave Ramsey's Financial Peace University, which helped them eliminate $60,000 in debt and grow their savings significantly⁠⁠. They discuss their retirement plans, which include relocating to a more affordable area and living on about $80,000 per year. They place a strong emphasis on charitable giving and community involvement. They are active in their church, participating in children's ministry and volunteering their time⁠.

$6,800,000 net worth - a 56-year-old and his 57-year-old wife have been married for 34 years and have 3 daughters. Their accumulated net worth is 96th percentile based upon their age group. Their net worth consists of 36% in retirement accounts (401k/IRA/HSA), 20% in cash, 13% in primary home, 12% in taxable brokerage account, 4% in 529 accounts, and 15% in family-owned land. They built their wealth through a combination of career success, smart investing, and disciplined financial habits. The interviewee emphasizes the importance of curiosity, pursuing excellence, and leveraging strengths in one's career, while advocating for low-fee index investing. Their approach to wealth goes beyond mere accumulation of assets. They view wealth as a state of mind rooted in contentment and faith, rather than just a number in a ledger. Their financial decisions are guided by their Christian beliefs, which influence their spending habits, giving practices, and overall perspective on money. They prioritize charitable giving, considering it a key pillar of their financial life, and have established a Donor Advised Fund to manage their philanthropic efforts efficiently. Looking to the future, the interviewee plans to transition to a lower-paying job in a ministry context, seeking better work-life balance and a sense of purpose. Their retirement plans include reducing work hours, potentially moving towards volunteering, and increasing travel for both leisure and ministry purposes.

$15,200,000 net worth - a 59-year-old single woman moved to Portugal after retiring from her job in the U.S. Her net worth is 98th percentile based upon her age. Her net worth consists of 83% in taxable brokerage accounts, 8% in retirement accounts (IRAs/HSA), ~6% in primary home, 2% in deferred comp and 2% in cash value of pension. She attributes her financial success to her natural tendency to save, consistently putting savings on autopilot, and letting compound interest work its magic over time. The interviewee retired twice, first in her 40s and then again after briefly returning to work, ultimately prioritizing her health and well-being over additional wealth accumulation. Throughout her journey, she learned valuable lessons about money management, including the importance of avoiding financial advisors who may not act in one's best interest, and the pitfalls of lending money to family members. She emphasizes the significance of maintaining a balance between saving and enjoying life, citing the book "Die With Zero" as an influence in helping her realize the importance of spending on experiences before running out of time. Looking towards the future, the interviewee plans to continue building community in her new home abroad while maintaining connections in the States. She intends to increase her spending on activities that bring joy, such as dining out, attending concerts, and traveling. She is exploring options for continuing care retirement communities in Europe and plans to apply for citizenship to broaden her living options within the European Union.