Inflation is a killer. Just ask your nearest millionaire. In 1992 £1m could pay for a house in Kensington and Chelsea, a Rolls Royce, a seagoing deluxe yacht and holiday homes in Tuscany and Cornwall.

Now one mill' will struggle to buy a large-ish four-bed piece of Victoriana in East London, a basic model luxury watch and a bottom spec SUV.

Need to know: Savings


The true cost of Club Class

Today, the cost of the 1992 basket has shot up by 163% to £2,619,720, says First Direct who measured the cost of so-called millionaire lifestyles between 1992 and 2012. Over the same period, the average gross annual salary has increased by 100% from £15,850 in 1992 to £31,606 today it claims.

"Over the past twenty years," says the bank, "the things that a million pounds can buy have become increasingly modest and our view of a million pounds as a sum of money has started to change - it is still seen as a significant amount of money by most people but not by as many as it once was."

Common as muck?

Inflation and the fact that a new millionaire is created almost every week with the National Lottery means some now have a higher expectation of what constitutes a large sum of money says Bruno Genovese, Head of Savings at First Direct.

Last year Barclays Wealth claimed there were 619,000 UK millionaires – including property assets – living in the Britain. But how many of them, you could ask, would truly consider themselves to be very wealthy? Strip out the value of most UK 'millionaire' homes and things would likely look dramatically different.

Don't blow it

Anyone with assets of £1m would be unwise to blow large chunks of their money on luxury cars or yachts, both former 'millionaire' commodities that carry fearsome deprecation.

What Car? calculates a £200,500 Rolls-Royce Ghost Saloon 6.6 V12 will lose you more than £100k in four years - not including running costs (see chart below).


New Rolls-Royce Ghost depreciation; source What Car?