Episode summary
How To Be Rich
Ask The Compound
· · Hosts: Ben Carlson, Duncan Hill · Guests: Nick Maggiulli
Summary
Nick Maggiulli argues that wealth is best understood as a ladder, not a single number, and that the boundaries between middle class, upper middle class, and upper class should reflect both data and lifestyle. He says his ranges are meant to be location-agnostic, so $5 million can feel upper class in Alabama while still not buying a truly “upper class” lifestyle in New York City. He also says his framework uses total net worth, including home equity and retirement accounts, which is why the share of households in each level changes sharply if you look only at liquid assets.
The discussion also covered why financial plans usually use inflation-adjusted returns. Nick said that’s mostly a shorthand for comparing portfolio growth against rising expenses, but that the real key is each household’s own spending inflation, not the government average. From there, the conversation turned to geography: a $2.5 million net worth in a high-cost city can still leave people feeling behind, while the same money in a cheaper area can feel abundant.
On retirement and relocation, Nick was skeptical of putting a $6.5 million portfolio entirely in stocks, saying the family could reduce risk by shifting some money into Treasuries. He was also sympathetic to a Brooklyn family weighing a move near Philadelphia for space, schools, and taxes, but said the career trade-off depends on how much they value New York’s network and opportunity set.
Key takeaways
- Nick Maggiulli says his wealth ladder is meant to be location-agnostic, but he still treats $10 million-plus as the point where an upper class lifestyle becomes realistic.
- He says the gap between total net worth and liquid net worth is huge: roughly 18% of U.S. households are in his level four on total net worth, but only about 7% on liquid assets.
- Nick says inflation-adjusted returns are a planning shortcut, but a household’s own spending inflation is what really matters.
- On a $6.5 million all-stock portfolio, Nick argues for adding some Treasuries because the family has already “won the game” and should reduce downside risk.
- For the Brooklyn-to-Philly move, Nick says quality of life matters, but the decision should also account for future job flexibility and commuting risk.
Notable quotes
“I'm talking about you have teams of people. You may have your own private chef”
“Everything I've I've done is total net worth”
“I think it's just it's a shorthand. It saves time and that's why we do it”
“you have to think about what are the other ways that you can get hit besides just asset prices being cut”
How the episode opens
Welcome back to Ask the Compound. I'm your host, Ben Carlson. Is 10,000 is 10 million, excuse me, dollars middle class?
Is $6.5 million enough to retire in your 40s? Are you automatically wealthier if you move out of New York City? We're going to answer these questions and more on the show today.
Stick around. Our email here is askshow@gmail.com. The inbox was ridiculously full this week.
I think I say this all the time, but we're hitting new alltime highs. Tons of questions, tons of good ones. We to the right.
Yeah. Uh people love to share all sorts of information, some anonymously, some like to give their name. On today's show, you asked, we answer questions about Nick Mulli's new book, The Wealth Ladder.
Are inflationadjusted returns useless? How where you live impacts your wealth. I'm in the Midwest.
Duncan's on the East Coast. I think we know what that difference is. Is it prudent to retire in your mid4s with 100% of your portfolio in stocks?
And then how much can you save by moving out of New York City? Remember, everyone in the live chat on YouTube and Twitter. Fire off your questions and we'll answer them live on the spot as well.
Today's show is brought to you by our sponsors at Betterment Advisor Solutions. If you happen to be thinking there's a lot there's got to be a better way to grow my RAA, you're not alone. phone with Betterment Advisor Solutions.
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From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- wealth ladder
- inflation adjustment
- high net worth planning
- moving risk
- geography-based planning
Companies and tickers mentioned
- Betterment Advisor Solutions
- Ritholtz Wealth Management
Watch the episode
Watch “How To Be Rich” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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