What does it take to be rich these days? 100 million baht? 10 billion? Ask a dozen people what it means to be rich and you will probably hear a dozen different answers. Money is a funny thing. It means different things to different people.
A recent study by Skandia International, part of Old Mutual Wealth, of more than 5,000 consumers on four continents revealed the amount of net annual income needed for people to feel happy is an imposing US$162,000 (4.82 million baht).
Overall, 80% of individuals believe earning this amount each year would make them feel really happy.
The highest levels of aspired income were quoted by individuals living in Dubai, who need more than $250,000 to feel happy. The next highest financial aspirations were recorded in Singapore and Hong Kong.
Generally, respondents from Europe feel that much less is required to be happy, with the Germans reporting the most modest needs of all markets surveyed ($85,000).
Interestingly, in Hong Kong, Italy and Brazil, women reported having higher ambitions than men in order to feel content. Globally, only three in 20 individuals regard themselves as wealthy, requiring an average of $1.76 million in disposable assets to qualify for that status.
In Singapore, the average figure quoted was an ambitious $2.9 million, while Dubai and Hong Kong cited the next highest levels at $2.5 million and $2.46 million, respectively.
These figures are, of course, aspirational. Having lots of money is not the same thing as being wealthy. Simply put, money is just a medium of exchange, where you exchange banknotes in return for goods and services that you desire. But being wealthy is more than earning a six-digit salary or a collection of big mansions and fast cars. Wealth is what you accumulate, not what you spend.
The term "financially independent" often comes to mind when we try to define the meaning of wealth. Independent from holding on to that nine-to-five job or trying to make ends meet from pay cheque to pay cheque.
Admittedly, being financially independent is not easy. Most people rely primarily on their salary as their main source of income. However, many of us also have a second source in the form of investment income such as interest, rents and dividends.
Investment income determines whether you are financially independent. If your investment income exceeds your monthly expenditure, it means you are financially independent and have the luxury of quitting your day job anytime you like.
Financial independence is more often the result of a lifestyle of hard work, perseverance and, most important of all, having a financial plan comprising investment, spending and structuring what you have and how to pass it on to future generations in a tax-efficient manner.
Today more than ever, Certified Financial Planner (CFP) professionals are playing an ever-increasing role in raising professional standards in wealth management in Thailand.
Financial planning entails more than just investing. It primarily comprises budgeting, planning for retirement, saving for education, managing taxes and insurance coverage. Bringing all the pieces of people's financial life together is a challenging task.
Although many professionals may call themselves financial planners or financial advisers, only those who have fulfilled the certification and renewal requirements of the Thai Financial Planners Association can display the CFP certification trademarks that represent a high level of competence, ethics and professionalism.
And because they are held to a fiduciary standard of care, a CFP professional is required to act in the client's best interest.
Teera Phutrakul, CFP, is chairman of the Thai Financial Planners Association.
About the author
Writer: Teera Phutrakul