In 2012 it's still the dream of many to obtain one million units of currency. That's good but I often wonder what having $1,000,000 would really feel like. I'm not too interested in what that kind of money will do for me at retirement ((jack-shit)), I'm more intrigued by the thought of having it between the ages of 21 and 55. That gives a lot of room to put this conversation in perspective because I can go back to 1990, the year when many of these 21 year olds were born and when these 55 year olds were only 33'ish. So to find out just how much the value of money has changed we have to look at the USD purchasing power that is based on the information in our US Consumer Price Index (CPI). Basically $1,000,000 from 1990 is equivalent to $1,720,000 in 2011. That's not even the worst part... Economic status and power are treated in the equation as well. The equivalent to having $1 million economic status in 1990 would require $2,090,000 today and economic power..shit, you would need $2,600,000 to have the same amount of influence on the economy's production as $1,000,000 from 1990. So now that we have a good idea of how inflation(rising costs of goods/services) has touched us over the past 22 years we can start talking about how this is seen on a micro-economic level. The highest yielding annuities (around 7.0%) would make an investor about $70,000 a year on a $1,000,000 investment. That isn't too bad but it surely won't buy you a millionaire's lifestyle. Now at 21, funds like this would be better than what most college grads are making 3 years after graduating. This kind of money is wonderful until our good friend inflation creeps up and sucks our profits dry over time. The same goes for our folks on the latter end of our age group. Retirement funds will be undercut by inflation as well. Now when it comes to the traditional way of making money, working for it, $1,000,000 seems to be a bit more attractive to the common eye but let's take a closer look. Studies show that when an employee reaches a salary in the million dollar range they aren't exactly expecting twelve pay checks of $83,333.33 a month. What they actually receive is a combination of compensation, such as cash and non-cash incentives to be payable in one or multiple years. So you don't actually make $1,000,000 a year. If you're considering taking your money abroad then consider this...you would have to trade in your $1,000,000 for 824,130.54 Euros, 645,459 British Pounds, 971,815 Australian dollars, or 989,781 Swiss Francs. Just so you know how horrible this deal is, know that the cost of living is on average, higher in each of these currency territories. If you were to stay in america and you used this money for normal american things, like a car, house, and life then consider this; the average US home is priced around $190,000. According to the National Automobile Dealers Association as of 2010 the average cost of a new car was around $28,400. Out of your $1,000,000 you're now missing $218,400. With $781,600 you're supposed to live. The average salary of US workers, including the dependent and the self employed, is broken up into disposable and gross income with disposable at $31,410 and gross at 42,028. With our $781,600 we could sustain an average american income of $35,527.27 for 22 years and then it would be gone. It's safe to say that $1,000,000 today isn't what it used to be anytime before now. It's about enough money for you to start a life and build an even better life, with permitting time conditions. $1,000,000 is not enough to live like a rich person and it is not enough to make you rich instantly like the myths of the six zeros once had us believe. This kind of money is what $100,000 was in the early 90's. A good amount to have but not enough to never want. I hope this provides a perspective of the actual value of money and what it means in respect to this day in age.
Keep your mind happy and don't be happy with just $1,000,000.
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