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Paper Millionaire

What is 'Paper Millionaire'

An individual who has achieved a high net worth as a result of the large total market value of the assets he or she owns. This phenomenon usually occurs when investors buy marketable securities that are later bid up to much higher prices on the open market. While this creates large amounts of "paper profit", the paper millionaire's riches usually aren't safe until these holdings are liquidated.

Explaining 'Paper Millionaire'

It is important to note that paper millionaires are not the same as true millionaires, which generally refers to people who have more than $1 million in cash in the bank.

For example, consider a hypothetical investor during the 1990s technology bubble who invested in startup dotcom companies. Assuming that none of this investor's shares is sold, he or she would have become a paper millionaire, as recorded on the brokerage statement, despite having very little cash in the bank.

However, once the dotcom bubble burst, technology stocks saw their share prices collapse, and former paper millionaires once again found themselves poor, owning only pieces of paper (i.e. share certificates) that were no longer worth the millions of dollars at which the market had previously valued them.


Further Reading


Paper millionaires: How valuable is stock to a stockholder who is restricted from selling it?
www.sciencedirect.com [PDF]
Many firms have stockholders who face severe restrictions on their ability to sell their shares and diversify the risk of their personal wealth. We study the costs of these liquidity restrictions on stockholders using a continuous-time portfolio choice framework. These …

The transformation of business finance into financial economics: The roles of academic expansion and changes in US capital marketsThe transformation of business finance into financial economics: The roles of academic expansion and changes in US capital markets
www.sciencedirect.com [PDF]
Many firms have stockholders who face severe restrictions on their ability to sell their shares and diversify the risk of their personal wealth. We study the costs of these liquidity restrictions on stockholders using a continuous-time portfolio choice framework. These …

Millionaire investors: financial advisors, attribution theory and gender differencesMillionaire investors: financial advisors, attribution theory and gender differences
www.tandfonline.com [PDF]
Many firms have stockholders who face severe restrictions on their ability to sell their shares and diversify the risk of their personal wealth. We study the costs of these liquidity restrictions on stockholders using a continuous-time portfolio choice framework. These …

Millionaires and the public in Czech politicsMillionaires and the public in Czech politics
www.tandfonline.com [PDF]
Many firms have stockholders who face severe restrictions on their ability to sell their shares and diversify the risk of their personal wealth. We study the costs of these liquidity restrictions on stockholders using a continuous-time portfolio choice framework. These …

The role of billionaires in the economic paradigm of the 21st centuryThe role of billionaires in the economic paradigm of the 21st century
www.ceeol.com [PDF]
Many firms have stockholders who face severe restrictions on their ability to sell their shares and diversify the risk of their personal wealth. We study the costs of these liquidity restrictions on stockholders using a continuous-time portfolio choice framework. These …

Cultural economics of TV programme cloning: or why India has produced multi‐“millionaires”Cultural economics of TV programme cloning: or why India has produced multi‐“millionaires”
www.emerald.com [PDF]
Many firms have stockholders who face severe restrictions on their ability to sell their shares and diversify the risk of their personal wealth. We study the costs of these liquidity restrictions on stockholders using a continuous-time portfolio choice framework. These …

Improving economic and financial education: A program for urban schoolsImproving economic and financial education: A program for urban schools
go.gale.com [PDF]
Many firms have stockholders who face severe restrictions on their ability to sell their shares and diversify the risk of their personal wealth. We study the costs of these liquidity restrictions on stockholders using a continuous-time portfolio choice framework. These …

Who wants to be a millionaire? Nigerian youths and the commodification of kidnappingWho wants to be a millionaire? Nigerian youths and the commodification of kidnapping
www.tandfonline.com [PDF]
Many firms have stockholders who face severe restrictions on their ability to sell their shares and diversify the risk of their personal wealth. We study the costs of these liquidity restrictions on stockholders using a continuous-time portfolio choice framework. These …

Who Wants to be a Millionaire? A Behavioral Economy Analysis*'Who Wants to be a Millionaire? A Behavioral Economy Analysis*'
books.google.com [PDF]
Many firms have stockholders who face severe restrictions on their ability to sell their shares and diversify the risk of their personal wealth. We study the costs of these liquidity restrictions on stockholders using a continuous-time portfolio choice framework. These …



Q&A About Paper Millionaire


Is it possible for someone to be both a true and paper millionaire?

Yes, it is possible for someone to be both a true and paper millionaire if he or she has more than $1 million in cash in the bank but also owns valuable stock shares that have appreciated greatly over time.

What does the term paper millionaire refer to?

A paper millionaire refers to an individual who has achieved a high net worth as a result of the large total market value of assets owned.

Who is considered a true millionaire?

Those with more than $1 million in cash in the bank.

What happened during the 1999 technology bubble?

Technology stocks saw their share prices collapse and former paper millionaires once again found themselves poor, owning only pieces of paper that were no longer worth millions of dollars at which they had previously valued them.

Does this mean that anyone who invests heavily into stocks will eventually become wealthy ?

No, this does not necessarily mean that everyone who invests heavily into stocks will eventually become wealthy; instead, it means that those who do invest heavily into stocks may potentially achieve great wealth through investment gains over time .

How can you become a paper millionaire?

By investing in marketable securities that are later bid up to much higher prices on the open market.

Can you lose your status as a paper millionaire if your stock shares decline significantly in value ?

Yes, if your stock shares decline significantly in value then you may lose your status as being a "paper" or "virtual" millionaire (i.e., one whose wealth exists only on account statements).

Are paper millionaires true millionaires?

No, they are not true millionaires because their riches aren't safe until these holdings are liquidated.