Becoming a millionaire, or maintaining that status—whether through inheritance or even gambling winnings—requires discipline, consistent investments, and a long-term strategic outlook, especially if the intention is to preserve or expand one's wealth. In Brazil, this challenge can be amplified by the highly complex tax system and economic fluctuations. But what does it really mean to be a millionaire? Is having R$1 million in the bank enough to "qualify"? In this article, we explore the concept of a millionaire and the criteria used to define one.
Does Having R$1 Million in the Bank Make Me a Millionaire?
In Brazil, a millionaire is popularly understood as someone with a net worth of at least R$1 million. Net worth is the difference between assets (property and resources) and liabilities (debts and obligations). See the definitions of these terms:
- Assets: All property and resources with economic value, such as money, investments, real estate, vehicles, and even works of art.
- Liabilities: All debts and financial obligations, such as loans, financing, and bills payable.
- Net worth: The result of subtracting liabilities from assets. If the balance exceeds R$1 million, the individual can be considered a millionaire.
Therefore, having R$1 million in the bank does not necessarily make someone a millionaire. For example, a person with R$1 million in an account but R$1.5 million in debt does not have a positive net worth.
What Do the Experts Say?
Marcos Milan, a professor at FIA Business School, explains that an individual's wealth includes both invested resources and property such as real estate, companies, and works of art. To determine the net value of that wealth, all debts, including home and auto financing, must be subtracted.
Milan emphasizes that, after this calculation, if the resulting value is R$1 million or more, a person can be considered a millionaire even if the entire amount is not available in a bank account. He notes, however, that in global analyses, the term "millionaire" frequently refers to individuals with a net worth of at least US$1 million, which is equivalent to approximately R$5 million at the current exchange rate.
According to him, this distinction is important because, in countries with less valuable currencies such as Brazil, conversion to a strong currency like the dollar allows for a more precise international comparison of individuals' purchasing power and wealth.
How Many Millionaires Are There in Brazil?
The UBS report "Global Wealth Report 2023" indicates that Brazil recorded a 41% increase in the number of millionaires during the COVID-19 pandemic, rising from 293,000 to 413,000 individuals with wealth exceeding US$1 million.
The dollar is used as the standard for defining millionaires in global reports because of its role as an international reference currency. After World War II, the U.S. dollar became established as the main currency for international transactions, especially after the 1944 Bretton Woods Agreement, which set the dollar as the reference for other currencies.
This standardization makes it easier to compare the wealth of individuals from different countries, eliminating variations caused by exchange-rate fluctuations and local economic differences. By using the dollar as a reference, therefore, reports provide a uniform measure for evaluating wealth worldwide.
