This video clarifies the true number of millionaires in the U.S. by distinguishing between total net worth and "investable asset millionaires," which excludes home equity. While approximately 24 million Americans (9% of adults) have a net worth of $1 million or more, this number drops sharply to about 6 million people (2.3% of adults) when only liquid, investable assets are considered. The video explains that home equity, though valuable, is not easily accessible cash for daily expenses, investments, or retirement income without selling or borrowing against the property. It emphasizes that real financial security comes from liquid assets and passive income, which provide true financial independence and flexibility, rather than wealth tied up in illiquid assets like a primary residence.
Comparison of total millionaires vs. investable asset millionaires in the U.S.
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An investable asset millionaire has at least $1 million in liquid assets that can be easily converted into cash.
This typically includes money in bank accounts, stocks, bonds, mutual funds, and retirement accounts.
Assets like real estate, vehicles, collectibles, and businesses are usually excluded as they are harder to sell quickly and their value is more difficult to determine.
Investable asset millionaire definition with liquid and illiquid assets
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A more relevant question than net worth is how much passive income someone earns.
A business owner with a $1 million business and $300,000 income, but only $400,000 in liquid assets, wouldn't qualify as a liquid millionaire despite a total net worth over $1.4 million.
True financial security and independence are derived from assets that generate income and can be easily accessed.
An individual with a $1 million business and income, but only $400,000 in liquid assets, indicating limited investable wealth
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The Financial Independence, Retire Early (FIRE) community prioritizes liquid net worth.
They focus on accumulating passive income rather than home appreciation.
Success is measured by minimal needs and the longevity of funds without a paycheck.
Two people looking at financial charts, with an individual celebrating by a desk with money and a bag of gold, representing passive income and financial freedom
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These homeowners are often asset-rich (non-liquid assets) but cash-poor, still working and stressed despite their high Zillow estimate.
Relying too heavily on home equity, viewing it as accessible wealth, is a mistake.
A house on a hill with a Zillow estimate, contrasted with a man whose pockets are turned inside out, symbolizing being asset-rich but cash-poor
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