There are approximately 8.5 million millionaires in the U.S. and if you are not currently one of those individuals, we presume you want to be one of them because you are reading this. In the past few weeks, Millionaire Corner has outlined for you the eight factors that many millionaires share based upon Millionaire Corner research and Spectrem Group research.
As indicated in earlier discussions, Spectrem Group, on behalf of Millionaire Corner, conducts ongoing research, both quantitative and qualitative, with wealthy investors. Each year we interview over 6,000 investor households. In the research conducted over the last 20 years we have found that 8 factors continually reappear when analyzing how millionaires acquired their fortunes. While not every factor occurs in every situation, the 8 factors occur frequently enough to be identified as an indicator of success.
The 8 factors include the following:
2. Hard Work and Average Hours Worked
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, and
8. Willingness to invest in new but well researched ideas and concepts
The first seven factors were discussed in previous versions of Millionaire Corner. Today we will focus on the last factor – “Willingness to invest in new but well researched ideas and concepts”. This factor is the hardest to describe and document.
While most of the factors are identified in our quantitative research, the last factor is built upon the qualitative research we have obtained through hundreds of one-on-one interviews as well as our ongoing focus group research. The fundamental premise of the factor is that millionaires think about and investigate new opportunities generally related to the field that they are proficient in.
Examples include the following:
-John, an anesthesiologist, invested in a company developing medical tools to assist anesthesiologists. The devices quickly became the leading industry products.
-Gerald owned a company that paved roads. He soon came to realize that there was no easy way to dispose of the old concrete and blacktop from the roads he was destroying. Finding a company that produced a machine in a different part of the country, he purchased the equipment and then offered the services to all of his competitors. He soon became the leading company to consume old road materials in a three state area.
-Julie, formerly a clothing designer before taking a break to have children, became frustrated with the lack of attractive clothing for her young children. Using her background in the fashion industry, she set up a store in a wealthy suburb selling interesting high end clothing for the under age 12 set. She quickly expanded to 3 stores within her suburban regional area. A larger company purchased the stores.
-Victor was a salesman of advertising on AM radio back in the 1950s. He learned about FM radio and decided it was the wave of the future. Using a small inheritance from his mother (who had passed away leaving a hardware store), he purchased a FM radio station. He quickly grew the station and continued to purchase additional stations. Eventually he owned over 130 FM stations across the country. He continued his pursuit and added magazines. At his death, he left his heirs a multi-media communications company that they quickly sold and cashed out.
-John was interested in the number of small trivial items being created in Southeast Asia when he was in the military shortly after WWII. He started buying the items, stuffing his suitcase and reselling them to dime stores in the U.S. He was so successful he kept returning to Asia and buying larger portions, which he shipped, and then distributed to five and dime stores across the country. Eventually he met a man at an industry event who was looking for ways to import more tchotckes, and John set up an exclusive importing relationship for 20 years with this individual. The store the individual ran became one of the largest retail stores in the U.S., providing enormous opportunity for John and his import business.
The common thread among these stories is the ability for these individuals to take something with which they were comfortable and to expand it to the next step. It’s not easy to explain “how” but more important to understand the “what”. The “what” portion is to invest in what you know and understand. Do some thinking about whether the idea will work and why. If possible, do some market research. Nowadays, that can be relatively inexpensive with tools available online. When something troubles you in your daily work efforts, figure out how to make the process more effective. Is your idea something that could help others?
Application of as many of the factors identified above will not automatically lead you to enormous wealth, but just incorporating some of the factors in your daily life and your portfolio could help you to increase your own investment success. The first seven factors are somewhat tangible while the last factor is intangible. Hopefully it will allow you to assess opportunities that may be available to you.
MillionaireCorner.com wishes you great success in becoming a Millionaire. Please feel free to share your stories with us.