How a Wealthy man Identified?

by: Nibhapan Poonsatiansup CFP®, independent financial planner, writer and lecturer

Have you ever been curiously “how much money does make one a wealthy man?”

Actually, we do count people wealthiness by their “Net Worth” … the remaining total assets after debts deduction, as shown by the following equation: 

Net Worth = Assets – Liabilities 

Thai people might have heard the term “a millionaire” to assume that the mentioned person has more than one million baht.  In the western world, especially_ United States, they also identify a millionaire by the wealth of 1 million US$ dollars, equal to 32 million baht, approximately.  This group of people is called the “High Net Worth Individuals”  

Nonetheless, a definition is of definitiveness since many wealthy persons of various net work for unit of tens to million never recon themselves as being rich.  Therefore, being rich should be firstly start with individual preference for specific meaning  

This article would identify “wealthiness” as the passive income, or sufficient income earning from capital investment to take care of oneself and other dependents until the day of departure.  How much would it be, depending on one’s life style.  For instance, if your expenditure is 10,000 baht monthly (120,000 b. yearly), then you must be of the investment port to yield you 10,000 monthly.  Supposing the dividend is more or less 4% yearly, you’ll then need a port of approximately 3 million baht (3,000,000 b. x 4% yearly= 120,000 per year). 

If your monthly spending is at 30,000 baht (360,000 yearly) then it shall be of three times more comparing to the first investment which is 9 million baht (9,000,000 b. x 4% yearly = 360,000 b. yearly) to be sufficiently rich.  This is the reason why each individual is of different richness, and can be appropriately decided. 

The secret of being wealthy is of two types of income – the working or Active Income, and income from assets or Passive Income. 

Normally we start to earn the active income by working.  With a good saving plan we would have money to invest for earning the passive income.  If one has found no, or too little saving, the person should try to increase earning and reduce spending.  Trying, as well, to increase yielding from investment with higher capacity, good time management and so on.  It is, thus, important to continually develop oneself.  

Passive income can be of 2 categories:

  1. From investment in bonds, finance market, stocks, mutual fund and other assets for cash exchange. 
  2. Income from business in any system, or one that provides regular returns without your direct involvement i.e. assets rental, copyright fees from books, music, software, franchise selling, go down rental and others.  That is having the business worked by itself and earned for you. 

Additionally, you need to study on how to earn from assets by learning about investment approaches and various tools as above mentioned.  Firstly, pick up a certain skill then increasingly involve in the others.  Investment is not, of course, an easy matter, but not as well too difficult to study and protect yourself against any fraudulent investment and unreasonably facing losses.  

Lastly, both poverty and wealthiness is nothing to do with having more or less money.  It is mainly by a happy, sufficient way of living with caring kindness for other people.  The real richness is getting to know yourself for what is good for you, being proud of what you have while making sure for your own success now, and for the future.