Focus: Not as rich as we think

Nearly 50,000 Britons are now millionaires. But these days you need a lot more than that in the bank to join the highest society

Who wants to be a millionaire? I don't. You need far more than that in the bank to be really comfortable nowadays - and besides, millionaires are so common.

When Frank Sinatra and Celeste Holm debated the issue in the 1956 musical High Society, millionaires were rarer than bum notes. In this country they were generally aristocrats or captains of industry, who lived in huge mansions and kept well apart from hoi polloi.

Now anyone can win a million on the National Lottery: 764 people have done so since it began in November 1994. But that hardly accounts for the astonishing rise in the number of millionaires in Britain over the last few years. There were 6,600 in 1992; the total has since grown to more than 47,000.

The super-rich, like the poor, will be with us always. The world's richest man is Bill Gates, 43, founder of Microsoft, whose personal fortune passed the $100bn (pounds 62bn) mark last week.

A list of the 200 richest Asians in Britain published last Wednesday was topped by the Hinduja brothers, Srichand and Gopi, who have made pounds 1.3bn from a range of investments including oil and telecommunications. Another wealthy Asian, steel magnate and Labour peer Lord Paul, is estimated to be worth about pounds 325m.

The list gave a strong indication of where many of Britain's new rich get their money: the media or computers. Lord Alli, co-owner of TV company Planet 24, was on the list; so was Ajaz Ahmed, a 25-year-old university dropout whose internet consultancy has earned him pounds 14m.

There are other ways of earning a million. In the City, many are rewarded with huge bonuses. When you add designers, artists, celebrity chefs, lawyers, pop stars and footballers it is easy to see why millionaires are getting younger. Market analysis company Datamonitor defines the "mega net worth individuals" as having liquid assets worth pounds 1m, which disregards the many whose homes are valued at that amount. The only way for them to be real millionaires instead of paper ones is to sell the house in Hampstead and live in a tent.

"A million pounds is not what it was," said Richard Green, a UK director of Barclays Private Bank Ltd. "In real terms it's worth about half what it was at the beginning of the 1980s. If you're hoping to retire and live on the interest, it won't be enough."

Many new millionaires come to see Mr Green. His job is to get to know them and offer personal help with the management of their assets - for a fee, of course. His rivals include traditional establishments such as Coutts, who have no need to advertise.

David Wells of the investment bankers Arthur Andersen represents a third choice. If you go to him with pounds 1m to invest, he estimates being able to provide an annual income of pounds 39,500. Assuming that you have a mortgage of pounds 50,000 to pay off and don't want to blow huge chunks of money on a Ferrari, a Bentley, a Porsche and a Rolls, as did Lottery winner Lee Ryan, he suggests putting pounds 650,000 into unit and investment trusts. This should yield three per cent interest - or pounds 19,500 a year. The next pounds 150,000 should go into corporate bond funds, bringing home seven per cent or pounds 10,500. Investing a further pounds 100,000 in property trusts should also have a return of seven per cent, or pounds 7,000. That leaves a last pounds 50,000 to put on cash deposit in the bank, which might pay five per cent. Hiring someone from Andersens for a one-off consultancy and an annual review of your portfolio would cost at least pounds 1,000. Leaving it all to a fund manager while you went to the Bahamas would be considerably more.

Living off interest in a home you own outright sounds great, but it's hardly the extravagant life imagined by Cole Porter's song. You couldn't afford to "wallow in champagne" too often. Filling a bathtub with two dozen bottles of good supermarket bubbly at pounds 30 each, once a week, would cost pounds 37,440 a year.

That's almost all the interest gone, even before you've considered whether you want "the bother of a country estate". One modest option is Sir Freddie Laker's beautiful 50-acre Furzegrove Farm near Lewes in Sussex, which is on the market with Strutt & Parker. The 16th century Grade II listed house will cost you about pounds 1m - but what are you going to live on, with nothing left to invest?

Your million won't open any doors in high society - it takes five or 10 times more than that to be considered serious - but there is a way to gain social cachet and impress others. Unfortunately, it involves giving some of your cash away. This is tricky to pull off, because you have to appear both generous and modest, and do it quietly while making sure everyone knows. Bill Gates is a good model: the famously private man has set up charitable foundations worth $3.3bn and pledged $1.5m to Kosovo refugees.

Before long, you will be tired, hassled, insecure and broke. You'll be commuting to work on crowded trains again, and buying lottery tickets twice a week. So how much would it really take to live like a millionaire, in the way Frank and Celeste imagined? According to the Bank of England, pounds 1m then was the equivalent of pounds 14.23m in today's money. Now that would be enough to make anyone roll over.