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The Very Wealthy Do Not Know How Much Wealth They Have

I remember reading an article on Donald Trump many year ago when he claimed that he wasn’t absolutely sure what his net worth was!

At the time, I thought “The Donald” was trying to avoid stating his true value because he wasn’t worth as much as he claimed, but now I’ve changed my mind.

For us average Americans, it’s easy to calculate our wealth level since most of us have just a few saving/investing accounts and a lot of debt.  Debt in the form of credit card debt, car loans, and mortgages.  So to calculate our net worth is fairly simple because of the simple assets and liabilities that we have.  But if we had multiple companies and partnerships along with many different types of investments in diverse assets, well the calculation of wealth would apparently be a much more daunting task.

I have some friends that are what I consider wealthy (having a few million dollars in net worth), but they have a pretty good idea of what they are worth.  So having a few million is definitely not the “Very Wealthy“!  Recently, Mitt Romney stated that he wasn’t sure of how much he made last year, let alone his calculated wealth.  He wasn’t totally avoiding the issue, I believe that he really didn’t know at the time.  Obviously, he is really wealthy…

Rich Dad Poor Dad

Even famous personal finance authors don’t really know their true net worth.  Rich Dad, Poor Dad Robert Kiyosaki has states that he didn’t know how much he was worth in interviews also.  If a financial author doesn’t know how much he is worth, I’m sure the rest of the wealthy don’t either.

This leads me to wonder what that magical threshold is where a person has a difficult time determining their net worth?  Just a wild guess I would venture perhaps somewhere over the twenty million mark.  Wouldn’t it be nice to be so wealthy that having a “number” didn’t really matter?

What do you think would be the number where you no long would even really care to know how wealthy you are?

19 Responses to The Very Wealthy Do Not Know How Much Wealth They Have

  1. I think I’ll always be able to ballpark it to the nearest $1k! Maybe the nearest $10k when I’m a retiree, but I dunno. I can’t fathom not even knowing how much I made in a year.

    • I think as you asset base expands it would get harder… Shoot, just knowing how much my house is really worth is a mystery to me anymore 🙂

  2. I bet it’s like birthdays, you start off bragging about being 4 and three quarters, and you wind up mumbling that you’re fifty-something or other.

  3. Interesting. I think the threshold is higher at around 100 million. I guess it’s the kind of person you are too. I bet most regular people don’t know their net worth either.

    • That might well be the case! If I have a 100 million, I know I’m rich and definitely won’t be keeping track closely… At least if I’m well diversified and have a moderate risk model for my financial and asset portfolio

  4. All these people know their net worth, but it is dated. They all have applied for loans and must submit financial statements. The truth is they may not know their net worth as of that day. Net worth for wealthy people is a scorecard, they know the score. I could instantly tell my net worth, but it may be inaccurate based on today’s date.

    • I guess if they have to track it they will. I watch my regular account closely, but I just let my 401K balance roll. It’s not that I don’t care about it, but just that I don’t actively manage it… that what the financial pros at the mutual fund companies are for 🙂

      Of course both I and the company (via fund selection) make sure that I have decent moderate risk mutual fund options…

  5. I think you hit the nail on the head when you say it would be nice that it didn’t matter – and I think it really is just that. These people must reach a stage in life where they realise that their portfolio is so rich and diversified that there is no chance they will ever want for anything. That would be amazing.

    Similar to Kacie, I would always want to know to the nearest 1000 (£ for me, not $ 😉 )

  6. I think it has a lot to do with the number of businesses the extremely wealthy juggle at any time, like you mentioned. Therefore, I think that owning 3 – 5 multi-billion dollar companies would be the clincher to where net worth doesn’t seem to matter.

    • Definitely with owning companies, it’s more about watching the performance of that than individual accounts! Or at least I would think it would be 🙂

  7. I’ve always thought their point was that the net worth wasn’t important: the work that they do to achieve the net worth is where their focus is at (and should be). I’ve found that if I focus on the effectiveness of my activities, net worth takes care of itself.

    • After a certain point, money isn’t as important (if you are super rich)… and work is the focus and the game, and passion of their lives… I’ve seen people go through this transformation…

      Once you have over 100 million, does 1 or 2 million really matter as much…

  8. I doubt they ever stressed over their net worth or put so much emphasis on it that it mattered to them. Their goal was building something. The wealth was just a nice side effect of that goal. A good lesson for everyone.

  9. I think all of the people mentioned know what their net worth is. They may not know the exact amount, but they have a good idea.

    The reason they avoid answering the question is because it’s not as high as others would assume it is.

    For example, if you were to ask me, Donald Trump is worth a couple hundred million. That would be my guess. But, he had to file bankruptcy a few times because of his casino’s.

    As for Rich Dad, Poor Dad, if it turns out he is only worth $750K, people may not take his advice as seriously. They have an image they need. They need to appear uber-rich By not answering the question, they can keep that image up.

  10. Based on the comments above, I think everyone is considering this the wrong way. The reason a wealthy person can’t say what their net worth precisely is has nothing to do with not keeping track, and everything to do with not necessarily being able to place a value on all of their assets and investments. I am not yet wealthy, but I have a number of highly speculative investments that could be worthless or could make me millions. They technically have a value right now, but to place a number on that value would be at best a wild guess. I generally leave those assets out of my net worth calculation, but because of them I can never be sure what my actual net worth is.

  11. My office sees A LOT of high net worth individuals and I don’t think it is the number as much as it is the number of assets. We have had clients that had a couple million in properties but never really took out a piece of paper to add the net worth and I have met with clients worth around $50mil and they knew exactly their net worth since they only had a handful of assets.