One Million Pounds Will Not Get You In The Rich Club Today
News Posted On: 13 April 2012
If you dream of becoming part of the jet-set club of wealthy Brits who maintain holiday homes in Tuscany, drive only limited-edition luxury cars, and dine at the fanciest restaurants, you'll have to aim higher than £1 million. In the 80's £1million could have afforded you the millionaire lifestyle, but today, it can provide you good financial security and a lifestyle that can be best described as 'very comfortable'.
According to UK's private banking house Coutts & Co., one million pounds cannot cover the costs of owning the essential assets of the wealthy class. These include five bedroom homes and personal staff, overseas properties, five-star holidays, and top-of-the-line wheels. About £3 million should probably do the trick, says Coutts & Co. Here's a look at why £1 million may not be quite enough to join the ranks of the super-wealthy, in the current times.
Buying a London home
A terraced home in the capital would drain you of more than half a million pounds, and that's the average rate in areas like Fulham and Hammersmith. For plusher abodes in Chelsea and Kensington, you'd have to forgo your million and need to take out a mortgage. And we're talking a two-bed plus home here. Say, you have put down £700,000; that leaves you with £300,000. That's certainly not enough for a millionaire lifestyle. A savings bond with a fixed rate of interest (say 5 per cent) from a top bank would probably seem like a wise move.
So you have £300,000 in the bank and yearly interest earnings of £15,000 on a rate of 5 per cent. That gives you a little more than £300 to live off each week. This is not bad of course, but simply not enough to buy modern art at Sotheby's auctions or plan a Saint Tropez holiday.
Bills and taxes
Nobody like 'em but there really is no choice but to pay 'em. You cannot escape council taxes on your home - for a West London residential property, this would come up to £2,000 on an annual basis, which puts your out-of-pocket costs at £40 per week. Utility bills - gas, water and electricity - will also eat into the £300, to the tune of at least £30 each week. Add to this internet and phone bills, and you are staring at anywhere between £150-£200 a week. Not chump change, but something the wealthy would scoff at!
What if you gave up your London dreams?
If you think London housing costs are just too pricey, you could consider buying a big and beautiful home for £300,000 in the North, Midlands or Wales. That will leave you with £700,000 and £35,000 a year or about £600 a week. Deducting utility bills would give you somewhere in the neighbourhood of £500 to spend. There's no denying this amount would allow a high-quality standard of living, but would fall short if you want to live at the Ritz very often or sponsor an island trip for friends and family.
So, there you have it, one million pounds is not enough to live like Richard Branson or Adele. Don’t think about quitting your job any time soon if you happen to win £1 million in lottery or inheritance!
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Written by Les Calvert
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