Are you richer/poorer than you thought?

[DrFfybes]

Following on from threads on whether the energy prices will affect you, viewtopic.php?f=14&t=35730 and what is "middle income" viewtopic.php?f=9&t=35714 , there was posted a link to a Net Worth calculator https://www.varbes.com/your-money/net-w ... culator-uk .

I was surprised where we fell in the distribution, and wondered if over/underestimating the wealth/income of others is a common trait. For reference I multiplied DB pensions by 20 to get a value for the assessor, and then split our total in half (turns out I probably could afford a divorce )

Paul

[Urbandreamer]

I'm afraid that I don't understand the poll.

Am I 20% richer or poorer than I thought? No because I already knew roughly what I was worth, with the exception of illiquid property values (that has to be a guess or opinion).

Do you mean to tactfully ask where Fools lie on the spectrum of wealth?

[stevensfo]

Following on from threads on whether the energy prices will affect you, viewtopic.php?f=14&t=35730 and what is "middle income" viewtopic.php?f=9&t=35714 , there was posted a link to a Net Worth calculator https://www.varbes.com/your-money/net-w ... culator-uk .

I was surprised where we fell in the distribution, and wondered if over/underestimating the wealth/income of others is a common trait. For reference I multiplied DB pensions by 20 to get a value for the assessor, and then split our total in half (turns out I probably could afford a divorce )

Paul

Maybe I'm missing something, but that calculator is only about wealth, and not income. Someone may have lived in a London house all their life and through no fault of their own, it's now worth a fortune - on paper, yet their income is average. Perhaps it would make more sense if it factored monthly or annual income into the equation.

Steve

[DrFfybes]

I'm afraid that I don't understand the poll.

Am I 20% richer or poorer than I thought? No because I already knew roughly what I was worth, with the exception of illiquid property values (that has to be a guess or opinion).

Do you mean to tactfully ask where Fools lie on the spectrum of wealth?

No, I was trying to ask whether you were further up or down the percentiles than you thought you were, eg if you thought you were of average wealth, but found you were actually in the top 25%.

Paul

[pje16]

I have never thought how about my status compared to others as what is important to me is how I am
That net worth calculator was quite pleasing, but most of mine is in a pension which I can't spend at the shops or indeed anyhwere else (as a lump sum)

[Urbandreamer]

I have never thought how about my status compared to others as what is important to me is how I am
That net worth calculator was quite pleasing, but most of mine is in a pension which I can't spend at the shops or indeed anyhwere else (as a lump sum)

Indeed, and quite misleading.

Take two people.

One dependent upon the state pension, with no assets.
The other with no state pension but with a private one paying the same and no assets.

The first is well below median wealth. The second well above.

What does "average wealth" actually mean?

Edit, I mispoke. Each having a £150k house.

[Dod101]

I'm afraid that I don't understand the poll.

Am I 20% richer or poorer than I thought? No because I already knew roughly what I was worth, with the exception of illiquid property values (that has to be a guess or opinion).

Do you mean to tactfully ask where Fools lie on the spectrum of wealth?

No, I was trying to ask whether you were further up or down the percentiles than you thought you were, eg if you thought you were of average wealth, but found you were actually in the top 25%.

Paul

I suspect that, on the basis you outline, most of us are much higher up the percentiles than we realise. Not that it matters one whit but it does show how little in the way of assets that most people must have. It may be that many of those who have already answered the poll would like to revise their response.

Dod

[Gersemi]

One thing that isn't clear is whether I should be answering for myself in the calculator or as a couple. I would assume that it is for myself only, but in financial reporting I find that individuals and households are often treated as interchangeable, when clearly they are not.

[Lanark]

Maybe I'm missing something, but that calculator is only about wealth, and not income. Someone may have lived in a London house all their life and through no fault of their own, it's now worth a fortune - on paper, yet their income is average. Perhaps it would make more sense if it factored monthly or annual income into the equation.

Steve

I think the point you are missing is that such a person could sell their house and have a comfortable retirement in many other places.

The idea of assessing your net worth is to consider if you chose to, or were forced to by illness, quit all work/income generating activity, how much could you liquidate.

There are a lot of people with high income and high expenses who are living month to month.

[Urbandreamer]

Maybe I'm missing something, but that calculator is only about wealth, and not income. Someone may have lived in a London house all their life and through no fault of their own, it's now worth a fortune - on paper, yet their income is average. Perhaps it would make more sense if it factored monthly or annual income into the equation.

Steve

I think the point you are missing is that such a person could sell their house and have a comfortable retirement in many other places.

The idea of assessing your net worth is to consider if you chose to, or were forced to by illness, quit all work/income generating activity, how much could you liquidate.

There are a lot of people with high income and high expenses who are living month to month.

Sorry, that is A valid reason, not THE reason. Very specifically, if you are comparing how wealthy you are relative to others (the "average") then it is definitely not THE reason. It has been explained that is the subject of the thread.

"Average" wealth has no impact upon your ability to liquidate assets to live upon them, only the sum of your own assets effects that.

Personally I can't see a reason to find out where on the scale of wealth you are, possibly someone can explain it.

If, as I expect, the scale has something to do with wealth inequality, then lumps of indivisible wealth like houses in London are a distortion to any concept of redistribution to reduce inequality. NOTE that line is not a comment upon any in this thread, but upon the reason I believe such a scale is produced by the ONS.

I would like to think issues such as wealth inequality, tax levels, types of tax etc were outside the remit of this board, but this thread seems to be about statistics at the heart of such.

[Dod101]

Maybe I'm missing something, but that calculator is only about wealth, and not income. Someone may have lived in a London house all their life and through no fault of their own, it's now worth a fortune - on paper, yet their income is average. Perhaps it would make more sense if it factored monthly or annual income into the equation.

Steve

I think the point you are missing is that such a person could sell their house and have a comfortable retirement in many other places.

The idea of assessing your net worth is to consider if you chose to, or were forced to by illness, quit all work/income generating activity, how much could you liquidate.

There are a lot of people with high income and high expenses who are living month to month.

Sorry, that is A valid reason, not THE reason. Very specifically, if you are comparing how wealthy you are relative to others (the "average") then it is definitely not THE reason. It has been explained that is the subject of the thread.

"Average" wealth has no impact upon your ability to liquidate assets to live upon them, only the sum of your own assets effects that.

Personally I can't see a reason to find out where on the scale of wealth you are, possibly someone can explain it.

If, as I expect, the scale has something to do with wealth inequality, then lumps of indivisible wealth like houses in London are a distortion to any concept of redistribution to reduce inequality. NOTE that line is not a comment upon any in this thread, but upon the reason I believe such a scale is produced by the ONS.

I would like to think issues such as wealth inequality, tax levels, types of tax etc were outside the remit of this board, but this thread seems to be about statistics at the heart of such.

It seems to me that the point of this rather pointless question is to show how your net wealth compares to the wealth of others in the UK. What it is likely to show is that most of us would appear to be have a high net worth compared to the great majority in the UK. Or you could say that it shows that most people living in the UK have not got much by way of financial worth, savings in the form of cash or investments or in terms of housing and that those that do are a relatively small number.

Not sure that it otherwsie shows very much.

Dod

[servodude]

Maybe I'm missing something, but that calculator is only about wealth, and not income. Someone may have lived in a London house all their life and through no fault of their own, it's now worth a fortune - on paper, yet their income is average. Perhaps it would make more sense if it factored monthly or annual income into the equation.

Steve

I think the point you are missing is that such a person could sell their house and have a comfortable retirement in many other places.

The idea of assessing your net worth is to consider if you chose to, or were forced to by illness, quit all work/income generating activity, how much could you liquidate.

There are a lot of people with high income and high expenses who are living month to month.

Sorry, that is A valid reason, not THE reason. Very specifically, if you are comparing how wealthy you are relative to others (the "average") then it is definitely not THE reason. It has been explained that is the subject of the thread.

"Average" wealth has no impact upon your ability to liquidate assets to live upon them, only the sum of your own assets effects that.

Personally I can't see a reason to find out where on the scale of wealth you are, possibly someone can explain it.

If, as I expect, the scale has something to do with wealth inequality, then lumps of indivisible wealth like houses in London are a distortion to any concept of redistribution to reduce inequality. NOTE that line is not a comment upon any in this thread, but upon the reason I believe such a scale is produced by the ONS.

I would like to think issues such as wealth inequality, tax levels, types of tax etc were outside the remit of this board, but this thread seems to be about statistics at the heart of such.

It seems to me that the point of this rather pointless question is to show how your net wealth compares to the wealth of others in the UK. What it is likely to show is that most of us would appear to be have a high net worth compared to the great majority in the UK. Or you could say that it shows that most people living in the UK have not got much by way of financial worth, savings in the form of cash or investments or in terms of housing and that those that do are a relatively small number.

Not sure that it otherwsie shows very much.

Dod

Might show up some misconceptions give folk a bit of context?

[Dod101]

Maybe I'm missing something, but that calculator is only about wealth, and not income. Someone may have lived in a London house all their life and through no fault of their own, it's now worth a fortune - on paper, yet their income is average. Perhaps it would make more sense if it factored monthly or annual income into the equation.

Steve

I think the point you are missing is that such a person could sell their house and have a comfortable retirement in many other places.

The idea of assessing your net worth is to consider if you chose to, or were forced to by illness, quit all work/income generating activity, how much could you liquidate.

There are a lot of people with high income and high expenses who are living month to month.

Sorry, that is A valid reason, not THE reason. Very specifically, if you are comparing how wealthy you are relative to others (the "average") then it is definitely not THE reason. It has been explained that is the subject of the thread.

"Average" wealth has no impact upon your ability to liquidate assets to live upon them, only the sum of your own assets effects that.

Personally I can't see a reason to find out where on the scale of wealth you are, possibly someone can explain it.

If, as I expect, the scale has something to do with wealth inequality, then lumps of indivisible wealth like houses in London are a distortion to any concept of redistribution to reduce inequality. NOTE that line is not a comment upon any in this thread, but upon the reason I believe such a scale is produced by the ONS.

I would like to think issues such as wealth inequality, tax levels, types of tax etc were outside the remit of this board, but this thread seems to be about statistics at the heart of such.

It seems to me that the point of this rather pointless question is to show how your net wealth compares to the wealth of others in the UK. What it is likely to show is that most of us would appear to be have a high net worth compared to the great majority in the UK. Or you could say that it shows that most people living in the UK have not got much by way of financial worth, savings in the form of cash or investments or in terms of housing and that those that do are a relatively small number.

Not sure that it otherwsie shows very much.

Dod

Might show up some misconceptions give folk a bit of context?

Yes I agree with that. I expect most of us on these Boards are much higher up the percentiles than we would have thought.

Dod

[DrFfybes]

It seems to me that the point of this rather pointless question is to show how your net wealth compares to the wealth of others in the UK. What it is likely to show is that most of us would appear to be have a high net worth compared to the great majority in the UK.
Dod

No - you are missing the point.

The aim is to show whether people routinely over or under assess their wealth compared to others - there should be nothing in the poll that asks what your net wealth is. You could be in the 10-20% range, but think you are in the bottom 5%, so asses yourself much poorer than your peers.

It arose from a coupe of commenst and conversations, including one family member who said "well how can anyone manage on £50k a year?"e from chatting to a late 60s neighbour who has worked and lived around the world, run their own business, had 3 kids, and is now downsizing from a 7 bed property who was asking about investments as they are getting worried they will be short of cash later in life, yet has just spent £4k on a new cycle, and is about to spend a good 5 figure sum on a wedding. - Both were discussing bills and rising prices, and wondering what the fuss is about, and are obviously completely out of touch with what the majority of people have, and how much they had in comparisson.

Having seen some comments on here in a similar vein, I thought it would be interesting to see if 'we' were of the same opinion. Looking at the results, it seems a lot of us are, but interestingly nobody is much lower down the scale. Maybe we're all pessimists.

Might show up some misconceptions give folk a bit of context?

Or I could have just said that

[Dod101]

It seems to me that the point of this rather pointless question is to show how your net wealth compares to the wealth of others in the UK. What it is likely to show is that most of us would appear to be have a high net worth compared to the great majority in the UK.
Dod

No - you are missing the point.

The aim is to show whether people routinely over or under assess their wealth compared to others - there should be nothing in the poll that asks what your net wealth is. You could be in the 10-20% range, but think you are in the bottom 5%, so asses yourself much poorer than your peers.

It arose from a coupe of commenst and conversations, including one family member who said "well how can anyone manage on £50k a year?"e from chatting to a late 60s neighbour who has worked and lived around the world, run their own business, had 3 kids, and is now downsizing from a 7 bed property who was asking about investments as they are getting worried they will be short of cash later in life, yet has just spent £4k on a new cycle, and is about to spend a good 5 figure sum on a wedding. - Both were discussing bills and rising prices, and wondering what the fuss is about, and are obviously completely out of touch with what the majority of people have, and how much they had in comparisson.

Having seen some comments on here in a similar vein, I thought it would be interesting to see if 'we' were of the same opinion. Looking at the results, it seems a lot of us are, but interestingly nobody is much lower down the scale. Maybe we're all pessimists.

Might show up some misconceptions give folk a bit of context?

Or I could have just said that

OK. Frankly I do not care what others have. I just know that I do not feel (and am not) very wealthy but my sister for instance seems to think that money grows out of my ears. I have more than enough for my own needs and that is all that matters to me.

Dod

[Urbandreamer]

The aim is to show whether people routinely over or under assess their wealth compared to others - there should be nothing in the poll that asks what your net wealth is. You could be in the 10-20% range, but think you are in the bottom 5%, so asses yourself much poorer than your peers.

Well the trouble with that, is that in itself it only shows how much people pay attention to either statistics or the situation of others. In my experience the answer is that MOST people don't and have no interest.

Off topic but my employer didn't use to dictate that we had "bank" holidays. I never managed to get my family to understand that I needed to book them and if they wanted me to attend a bank holiday event that they planned, that they needed to let me know in time to book the time off.

Friends also believed that since they were off work, I should be.

Back to the topic, I was not surprised by where I lay on the scale because I knew the form of the distribution and hence where I lay upon it. This is because I have an interest in the very things that I pointed out lay beyond the remit of this board. Does everyone? How common is it on this board to be interested in such things? If it's uncommon, then why should there be any surprise that people lack knowledge?

IMHO much of the trouble is the word "average". People think that they know what it means, but they don't. Most drivers think that their abilities are above "average", even though most can't be above the median. They also think of themselves as not being far from "average" in income or wealth, without looking at what "average" means or indeed what the "average" is. Strangely they don't think that they have "average" age, "average" children or an "average" amount of children (there was even a sitcom 2.4 children).

What does this actually tell us that we didn't know before?

[Gerry557]

Whilst I know that I am rIcher or wealthier now than I was previously I don't feel that way. Generally having wealth such as property and investments means they normally rise over time.

Unfortunately income does not. Generally most stop work and retire hopefully with at least a full state pension.

So when we were both working we "felt" richer than we do now. I suppose the thought of a ression with large increase in outgoings due to inflation and utilities bills is likely to cause increased outflows at a time income is likely to fall.

This will probably reduce my wealth too with investments and property falling but might not make too much difference to my average or where I am on the calculator as the rest of the country follow me downwards.

Having looked at those sort of calculators in the past I knew roughly where I was but was surprised the first couple of times. Normally investing when the market has dropped is a good thing, assuming you have spare funds to do so.

I didn't vote

[scotview]

I was pleasantly surprised.

[funduffer]

I assumed pension is gross, so I took the sum of my annual gross pensions and multiplied by 20. Does this sound right?

I assumed half the value of the house ( and all of it, if I inherited my wife's half).

I did the calc for myself and then assuming I inherited my wife's wealth. It pushed me up a couple of percentiles. (No hidden plot to bump her off!! On the other hand, should I show her the results??!!).

Overall, I came out a bit higher than I expected, but not massively so.

I suspect there are a lot of people in the upper reaches of this distribution on TLF, but this is not surprising given it is predominantly an investment website.

FD

[Urbandreamer]

I assumed pension is gross, so I took the sum of my annual gross pensions and multiplied by 20. Does this sound right?

It really depends upon what you are attempting to measure. There were no fields to enter income, so it could be argued that pension income that does not relate to capital should be ignored.

Hence someone with a private pension has more wealth than someone using a final salary pension.

Of course such a distinction it only relevant if, as was suggested a couple of years ago, we were to tax wealth.

As I understand it the people proposing such (WTC) planned to take property and private pensions into account but not final salary or state pensions.
https://www.ftadviser.com/pensions/2021 ... look-like/

Since their aim was to raise tax that made sense.