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What is 'wealthy'? $5 million and plenty of cash

Monday, 22 Jul 2013 | 4:13 PM ET
What is 'wealthy?'
Monday, 22 Jul 2013 | 4:44 PM ET
According to a report by UBS, 70 percent of investors with more than $1 million in invest-able assets do not consider themselves wealthy. Mike Ryan, UBS, and CNBC's Robert Frank, discuss the definition of wealthy.

Everyone has their own definition of "wealthy." Some say it's $1 million, others say $100 million. Some say it means making more than your brother-in-law. Others say it means not having to work or having strong relationships with family and friends.

But a new survey from UBS shows that most investors say "wealthy" means $5 million—with at least $1 million of that in cold, hard cash.

The UBS Investor Watch asked 4,450 investors if they consider themselves wealthy. Fully 60 percent of those worth $5 million or more said they're wealthy, while only 28 percent of those worth $1 million to $5 million said they were wealthy (those were the only two categories given).

(Read more: Top 1% control 39% of world's wealth)

Half of the respondents said that, more broadly, being wealthy means having "no financial constraints on activities." Only 16 percent said it meant "surpassing a certain asset threshold" and 10 percent said it means "not having to work again."

Jose Luis Pelaez | Photodisc | Getty Images

Yet being wealthy doesn't just mean having millions in investments or assets. It means having plenty of cash on hand to handle any expense. Driven by the bad memories of the crisis, when many of the so-called wealthy were caught short of cash, investors currently have an average of 23 percent of their overall asset allocation in cash or equivalents. That's the highest number since at least 2010.

(Read more: We're rich again! We just can't feel it)

And they don't plan to draw down their cash anytime soon. About two-thirds of investors feel they have the right amount of cash. As long as they take risk with some of their money in equities, they want a large pile of cash to balance the risk.

"Current investor asset allocations tend toward the 'barbell' approach," UBS said in the study, "with more cash than the industry would typically recommend but also sizable equity holdings."

Among the top reasons to keep cash were to cover emergencies, to "give me peace of mind" and to "make large purchases without selling assets."

—By CNBC's Robert Frank. Follow him on Twitter @robtfrank.

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  • A reporter and editor, Robert Frank is a leading authority on the American wealthy for CNBC.