How Many Americans Are Millionaires (Without Counting Their Homes)

About this video

• Video Title: How Many Americans Are Millionaires (Without Counting Their Homes)
• Channel: Alice Cheung
• Speakers: Alice Cheung
• Duration: 17:21

Overview

This video clarifies the distinction between "net worth millionaires" (which include home equity) and "liquid millionaires" (those with accessible, investable assets). The presenter, Alice Cheung, explains that while there are 25 million millionaires in America by net worth, only about 6 million qualify when home equity is excluded. The video emphasizes the importance of liquid wealth for financial freedom and outlines strategies for building it, contrasting a responsible homeowner mindset with that of a strategic investor.

Key takeaways

• Distinction between Net Worth and Liquid Millionaires: While 25 million Americans have a net worth of $1 million or more, this figure includes home equity. When excluding primary residences, the number of millionaires drops significantly to approximately 6 million.
• The Home Equity Trap: Many "millionaires on paper" are actually cash and investment poor because their wealth is tied up in their homes. This limits their financial flexibility to handle emergencies, seize opportunities, or make lifestyle changes.
• Real Millionaires Diversify: True millionaires typically have 70-75% of their net worth in assets outside of their primary residence, such as investment accounts, retirement funds, and cash.
• Strategic Investing vs. Responsible Homeownership: The video contrasts two approaches: a responsible homeowner who prioritizes paying down their mortgage, and a strategic investor who makes minimum payments and invests the difference. The latter approach generally leads to greater net worth and liquid wealth over time.
• Building Liquid Wealth: The video suggests a "70/30 wealth rule" (70% in liquid assets, max 30% in primary residence) and outlines a phased approach to building liquid assets, starting with emergency funds and retirement contributions, then moving to taxable investments and potentially real estate or side businesses.
• Financial Freedom Defined: True financial freedom is achieved when passive income covers lifestyle expenses, providing options and liberation, rather than simply having a high net worth tied up in non-liquid assets.