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Our idea of 'rich' is shifting

When a house in London costs half a million quid, being a 'millionaire' might not be that special

According to some research about public perceptions published by Oracle Capital Group, our idea of what constitutes 'rich' is shifting; nowadays, when a house in London costs the thick end of half a million quid, being a ‘millionaire’ is, maybe, nothing special.

As Yury Gantman, the boss of Oracle Capital puts it; “Clearly the idea of wealth is relative, but what is clear is that the word 'millionaire' does not necessarily now conjure up the sense of significant wealth that it did until relatively recently; today, it's more about being a 'ten millionaire'.”

That is true, and I always find myself converting money amounts in old films and TV shows to today’s prices, so I can make better sense of what is going on; a comical sounding 1971 rent of £5 per week, say (mentioned in an episode of Steptoe and Son, as it happens), would be more like £60 today, which still wouldn’t get you much in Shepherd’s Bush, but is a bit closer to reality. Anyway, yes we do need to recalibrate our perception of wealth generally to match inflation and other factors – and the old equation of “millionaire” with super rich doesn’t work too well nowadays (with a caveat I shall return to).

If you look at the collapse in the value of money over the last half century, then you would have to create the category of twenty or hundred millionaires to do it justice. Viv Nicholson famously won a fortune on the football pools in 1961 (and promised to “spend, spend, spend”), but her prize of £152,319 looks pretty paltry today. In real terms, though, it would mean a contemporary win of £2,871,273.  Similarly the “Great Train Robbery” of 1963; £2.6million then (not bad even now, I concede); but £46million today (and evidently far too much for mostly small time villains to cope with).

The best definition of rich I ever heard came from the late Alan Clark MP. It was a timeless one. His view was that you haven’t made it financially until you could live not only off the interest on your savings, but the interest on the interest, to give you a sufficient margin for life’s vicissitudes. Thus a fortune of, say, £2.8million in liquid assets would bring in, generously, a yield of say 5% or £140,000, which is more than adequate. But the interest on that interest, at £7,000 is about the old age pension, and doesn’t really count.

Now, if you take into account the substantial increase in inequality over the past few decades, then you would have to inflate your idea of rich by even more – say to a hundred times what it was in the 1960s.

All that said, and here is my caveat, the vast majority of the UK population don't have more than about £10,000 in terms of their wealth, excluding their home, so if you’ve managed to accumulate even that modest amount you will be way ahead of most Britons. Many have negative wealth, in and out of the clutches of pay day lenders just to get by. Wealth is indeed a relative concept.