By Alexander Green What do most rich people look like?
You might be surprised. During my 16 years in the money management business, I dealt with a lot of highly affluent individuals.
And if you imagine that most of them drive Bentleys, wear Armani suits and sport diamond-encrusted Rolexes, you’re wrong. Dead wrong.
Most of these folks act, dress and talk the same way you do. (Or maybe a little worse, since they generally don’t have to impress anyone.) Picture someone browsing around a Tractor Supply store, and you’ll have just the right image.
I call them “The Invisible Rich.” And they’re all around you.
According to Barron’s, last year, the number of U.S. households with $1 million or more in investable assets totaled nearly 6.8 million. That’s 5.5% of U.S. households. Include home equity, and that number grows substantially.
So it’s reasonable to assume that better than one in 20 people you bump into each day have a net worth at the seven-figure mark… or higher.
How did all these Americans attain their financial freedom? Fortunately, we don’t have to wonder, thanks to the work of Dr. Thomas Stanley.
Stanley conducted decades of research on the habits and characteristics of America’s wealthy and wrote several best-sellers, including The Millionaire Next Door and The Millionaire Mind.
Stanley points out that the vast majority of millionaires do not have exceptional skills. They do not have hit records. They do not play in the NBA. They did not found a software company in their garage.
They are ordinary people who worked and saved and invested their money sensibly. In The Millionaire Next Door, Stanley detailed seven common denominators among those who build wealth successfully:
They live well below their means.
They allocate their time, energy and money efficiently, in ways conducive to building wealth.
They believe that financial independence is more important than displaying high social status.
Their parents did not provide economic outpatient care.
Their adult children are economically self-sufficient.
They are proficient in targeting market opportunities.
They chose the right occupation.
In short, your net worth is essentially a result of the choices you make.
To generate significant savings to invest, you need to make good career decisions, the right lifestyle decisions and smart spending decisions. It takes forethought. It takes discipline. And it often means making hard choices.
According to Stanley, the most productive accumulators of wealth live well below their means and religiously save and invest the difference.
Millionaires spend far less than they can afford on homes, cars, clothing, taxes, vacations, food and entertainment.
The wannabes, on the other hand (people with higher-than-average incomes but not much net worth), are merely “aspirational.” They buy expensive clothes, top-shelf wines and liquors, luxury cars, power boats, all kinds of bling and more houses than they can comfortably afford.
Their problem, in essence, is that they’re trying to look rich. This prevents them from ever becoming rich. (The Texas term is “all hat, no cattle.”)
Sure, the “glittering rich” – households with a net worth of $10 million or more – are often conspicuous consumers. That’s because they can comfortably …read more
Source:: Investment You