The goal of MillionaireCorner.com is to take a research based approach to reviewing how individuals become Millionaires. Based upon the research completed by Spectrem Group each quarter with thousands of wealthy household, the common factors that apply to millionaire households have been identified and analyzed. Hopefully this information will be helpful to you as you review your own financial and investment goals and habits.
Let’s review the common eight factors that have been identified in previous articles.
1. Education. Millionaires tend to be highly educated.
2. Hard Work and Average Hours worked will be reviewed today.
3. Business or Professional Practice ownership
4. Slightly aggressive risk tolerance
5. Use of professional advisors
6. Balanced portfolios that include alternatives.
7. Investment real estate
8. Willingness to invest in new but well researched ideas and concepts
This segment will focus on Hard Work and Average hours worked.
The traditional American dream has focused on the belief that if you “work hard” you will be able to achieve whatever you want. The research supports this belief.
When we ask Millionaires and those with even greater wealth what factors do they attribute to their wealth, the number one answer is always “Hard Work”.
The chart attached describes how households with $1-5 million of net worth (not including their Primary Residence) as well as households with over $5 million achieved their financial status.
Note that Education, discussed in our previous installment, is the second most important factor for many of these households. Smart investing is in third place and Frugality in fourth. More than half acknowledge that some risk is part of the process. Inheritance is a factor for less than 30% of wealthy households. Family connections are even less important.
When Millionaires and the wealthier households say they have worked hard, they mean it. A comparison of the average hours worked by wealth levels indicates that the wealthiest households are the most likely to have worked 60 hour weeks. Almost a quarter of households with $1-5 million worked 51-60 hours. Households with $100,000 to $1 million of net worth were the most likely to have worked less than 40 hours per week. Another sizeable portion worked 41 to 50 hours, but only a few worked more than 50 hours.
Focusing on one’s goals and putting in the hours to make them work seems to be one of the common traits of wealthy individuals. Putting in the effort and working more than 40 hours, as long as they are fruitful, appears to be a common trait of the wealthy. Granted, a lucky 40% of the wealthy were able to work fewer that 40 hours, but they do not represent the majority.