Last week the Financial Times ran a story on its front page saying that Asian millionaires have overtaken their European counterparts in the global rich list. “No surprise there,” I thought to myself. The Asians are an industrious lot and the Europeans are famously broke now that they have discovered that their economies were linked to high property prices and not much else. Besides, there are more Asians (1.2bln or thereabouts in China alone) than there are Europeans so they have a statistical advantage anyway.
On reading the article though I discovered that the entry level was a rather lowly $1 million or roughly R7.7 million. Obviously plenty of millionaires on the Asian list can scrape together more than $1 million as can a few on the European list. However, the guys behind this are Merrill Lynch and the findings are rather fascinating in the sense that they reveal how relatively poor the vast majority of people are.
The Merril Lynch Wealth Management Survey defines millionaires as people with net financial wealth of more than $1 million excluding their primary residence. That means you have to pay off your debts and you can’t bump up the price of your house just to make yourself feel richer. Fair enough. But R7.7 million isn’t a great deal of money in the big scheme of things. Most of our politicians have managed to become much richer than that thanks to BEE and the pickings from strangely awarded tenders. Even Julius (Kiddie Amin) Malema is reputed to have over R50 million just sitting in his current account. Sacked heads of parastatals demand huge amounts in compensation for being booted for not doing their jobs and in the corporate world remuneration in the tens of millions isn’t uncommon.
So have Merril Lynch set the bar too low or are we just one of those countries that produces a lot of millionaires? To give you some idea of how many people in other countries qualify; in the UK the number of millionaires rose to 448 100 in 2009. That was up 24% from the previous year but it still means that almost 62 million people in the UK are worth less than $1 million. They are poorer than struggle hero Julius Malema. Even China can only manage 477 000 out of their huge population and the figure is even lower as a percentage of the population in India.
The question then is this. If there are so many people on the planet who can’t even scrape together $1 million then who the hell is buying all this expensive property and splashing out on luxury goods? Since there obviously aren’t enough rich people to go round the answer must be the people who aren’t worth $1 million. And that’s because they are borrowing from the people who do have the money in order to live lives way beyond their financial means. One day those people will die and they will no longer have any debt but they will have lived it up tremendously. The rich people will also die but they’ll have to leave the money behind and that must be a real wrench as you lie on your deathbed thinking of all that unspent moolah. The moral of the story is simple…always spend somebody else’s money……particularly if you’ve already made it onto the rich list and want to stay there.