What Makes Wealthy People Wealthy

Yesterday I talked about the book The Difference: How Anyone Can Prosper in Even The Toughest Times by Jean Chatzky. In particular I noted that the book broke survey respondents into four groups and listed the percentage each group was of the US population. Here they are:

• The Wealthy - 3%
• The Financially Comfortable - 27%
• The Paycheck-to-Paychecks - 54%
• The Further-in-Debtors - 15%

Today we're going to focus on the top group -- the Wealthy -- and detail who they are and what the difference is between them and the rest of the world. We'll start with the vital stats. On average, the Wealthy have investable assets (not including home equity) of nearly $2 million But the research also categorized others as wealthy if they had achieved the following wealth levels by various ages as follows:

• $1 million or more for ages 55 or older
• $750,000 or more for ages 45-54
• $500,000 or more for ages 35-44
• $250,000 or more if under age 35

How did they become wealthy? A few highlights:

• Most did not become wealthy overnight nor did they become so via inheritance, etc.

• Nearly nine out of ten said their wealth developed over time.

• They credit a combination of the Top Twenty (covered yesterday) including attitudes/attributes and habits (you have to have some of both).

So what are those traits and habits that made the Wealthy become wealthy? Here are the seven traits:

• Optimism
• Resilience
• Connectedness
• Drive
• Curiosity
• Intuition
• Confidence

And here are the four habits of the Wealthy:

• Work hard
• Save habitually
• Invest soundly and aggressively
• Give back

One final quote from the book before we get to my thoughts:

Interestingly, although the Paycheck-to-Paychecks and Further-in-Debtors are likely to blame their financial troubles on bad luck, the wealthy say they didn't get there by virtue of a lucky break. They got there by landing a good-paying job and sticking with it. Or by creating, as an entrepreneur, a good-paying job for themselves.

Now, a few comments from me:

1. The net worths they used seem right to me. If you have that level of wealth at those ages, you certainly are among the richest people in the US (not to mention the world.)

2. So many people are focused on how to get rich quickly. Again we see that the pathway to wealth takes time for the vast majority of people.

3. Interesting list of traits. If you didn't know what this research was about and were asked if someone with those seven attributes would be wealthy or not, you probably would say "yes." Seems fairly intuitive.

4. The financial habits look very similar to my three steps for getting rich. Funny how that worked out, huh?

5. Again we see that giving and being wealthy are related (FYI, giving also makes you happier.)

6. More proof that the difference between being wealthy and not being wealthy is how successfully you manage your career. Again, not new news to regular readers here, but it feels good to me to have some factual validation. :-)

Come back tomorrow and we'll meet the next-highest group, the Financially Comfortable.

Comments

[LotharBot]

I think you can summarize the list of 20 attributes from the previous posts in four parts -- the wealthy:
* want to be financially comfortable and independent (owning a home and a decent portfolio.)
* save and invest, getting a positive return on their money (not the negative return you get from debt)
* take care of themselves physically, emotionally, and intellectually (college, marriage, exercise, pay attention to current events, etc.)
* expect that they can succeed and overcome obstacles to get there, rather than expecting failure and taking any excuse that pops up

The previous post mentioned that people with 10+ of the 20 traits are generally well-off. I would guess that it's more like, they need to have all four of my list of traits, each of which can be seen clearly in someone who has 3 or 4 of the traits from each of the previous groupings. I think the same is true of the list of habits and personality traits today -- it's not that you need each and every one, but rather, each of the traits tends to correlate with the above attitudes. If you've got a bunch of them, you have a very good chance to become wealthy.

Of course, luck does play some role. A bad injury or disease can knock you down, and happening to apply to and get the right job at the right time can give you a leg up. But blaming bad luck is a way to set yourself up for failure; resist that temptation.

[brooklyn money]

So I'm 35. I'm either close to wealthy based on the under 35 critieria or practically broke based on the 35 and above criteria. Between 34 and 35 there's a difference of 250K in assets a "wealthy" person is supposed to have accumulated. Uh, something's not so scientific in these definitions of wealth.

[Jim]

"the wealthy say they didn't get there by virtue of a lucky break"

I don't think its surprising that successful people feel their success isn't a result of luck. I wonder if they realize how much luck has played a factor though? Would they still think that luck didn't play a factor if they lost it all?? I doubt it. I am sure these people didn't get their money by winning the lottery. But there is some luck involved in not being struck by a grave illness or getting into the right company at the right time or finding the right spouse, etc. I'm sure they made their success by hard work as often as not, but I hope they can see that luck (good and bad) plays a big factor in everyones lives.

[Financial Samurai]

With the right process, I truly believe that in time, we can ALL be wealthy.

The funny thing is, FMF's 7 years to 6 figures is actually pretty slow by normal standards. It only takes 2 years to attend b-school, and if you graduate from a Top 10 school, you are already likely making the median $120,000-$140,000 at age 29. FMF by his own admissions just took longer because he went to the bottom of the Top 25 schools, which is of course, still respectable.

Hence, to get to $250,000-$500,000 by 35 years old is pretty easy to accomplish if you save $50,000 from ages 29-35 and have a stable 2-4% annual return.

Right process + time = lots of wealth.

[AZnOUT]

I agree with the comments on luck...it's easy to conclude that certain individuals are geared for success and to some extent create their own luck by commitment, hard work, skills, education, etc. However, in any successful career (whether employed or self-employed) being in the right situation at the right time with adequate support involves an element of luck. Surprised that the "wealthy" don't generally conclude this...

[VirginiaBob]

Also, a lot of this has to do with the family wealth also. Did you come from the slums, or an upper-middle class family that paid your way through college and bought you your first car, and helped you with the downpayment on your first house? If you came from the slums, you are happy to break even by 30 versus having $250K in wealth. This stuff does make a difference, although some will never admit this.

[Old Limey]

Jim:
Luck is certainly part of the formula for becoming wealthy.

One attribute that you don't want to have is impulsiveness - that often leads to making very poor decisions. You can also alleviate what some might consider to be bad luck by making very intelligent choices. For example, young people entering college now should be trying to figure out where the most interesting, most stable, and best paying jobs are going to be in the future rather than just assuming that what has been great for the previous generation will continue to be great for them.

It's also essential not to make a mess of the really big decisions, some of which you have to get right the first time because you may not get a second chance.

One tremendous resource that wasn't available to me throughout my career is of course the Internet which I believe is the greatest invention of the last 100 years. There's a wealth of valuable information on the Internet in the form of articles and papers on just about any subject by some of the greatest minds alive. Most great products are not original, they are significant improvements built upon what someone else did years before. Very hard work, high intelligence and great perseverance are major attributes of the wealthy and succesful people that I have known and worked with.

Even when tough times come along, they are tough for everyone and the best and brightest will always come to the top. Thus the Luck and Chance that will affect everyone at some time or another is not something to concentrate upon. If you have what it takes to be successful and avoid making mistakes and bad decisions, there will be opportunities that present themselves that you have to seize and not allow to get away.

Looking back on my life I can't think of a major decision that I wish I had made differently. There was one choice which was, "Do we buy a bigger home in a more prestigious neighborhood or do we stay put and buy a second home at Lake Tahoe for recreational use?" I favored the former, my wife favored the latter. We went with the latter. Going with the former we would be have added at least $1M to our net worth, however we would have forfeited some of the best family times of our life - times that our children still talk about with great nostalgia. I am so glad that my wife prevailed.

[Jackie]

Are those numbers for a household or for an individual?

[FMF]

Jackie --

I'm not sure (don't have the book with me now.) Does it matter anyway? Are you in one class by yourself and another if you count a spouse?

[jlh]

My husband and I (both early 50s) are well into the the wealthy category. Here are the most important reasons, in my view:
1) Luck. Both of us were born with well above-average IQs and both of us achieved a high level of academic success, attributable to inherited intelligence and also to the luck of being born into stable, middle-class to affluent families living in very good to excellent school districts. In my case, my parents fully funded my college education, and I graduated without ever having to work, and with zero debt.
2) Both of us invested heavily in our human capital. We both went to top graduate schools immediately after college, and earned Ph.D.s by age 27. Given education costs at the time, this was achieved with only a very small amount of student loan debt.
3) Neither of us are materialistic. I personally do not even enjoy shopping. We buy new vehicles (with cash) that are nice, but not luxury vehicles.
4) We benefited from buying real estate at a time when it was fairly inexpensive, even in inflation-adjusted terms (late 1980s and early 1990s). As a result, we have both a large primary residence and a vacation home, neither of which required that we borrow large sums of money.
4) Except for a very short period of time in our 20s to finance appliances for our first house, we have never carried a balance on our credit cards.
5) We don't have children.
6) We did what was necessary to advance our careers (working long hours during certain crucial times, although not for most of the time).
7) Each of our employers has provided a generous 7.5 percent match for retirement contributions up to age 50, and a 10 percent match since age 50.
8) I should mention that individually we don't earn especially high salaries, but the combined sum is quite respectable. So part of our wealth can be attributed to the fact that we chose our spouses well, and have stayed married for over 25 years!

[HIQ]

This is very true. I have known a few wealthy people in my lifetime and they are optimistic and look for opportunities in ANY situation. They also work very hard. I have a friend who was millionaire at 27. He worked 60+ hours a week and was always open to new ideas.

For you in debt folks out there "including myself" I would suggest listening to Dave Ramsey.

[Mike Hunt]

I think Old Limey answered the question on how luck relates to being wealthy. I couldn't have answered that better.

FMF,

I would have thought the net worth levels you listed above would fit with the financially comfortable (where I'd place myself) and not the wealthy. When I was thinking about people who are considered wealthy I'd be multiplying those numbers by at least a factor of 10 for each age range!

-Mike

[Kenny]

Someone above said "Right Process + Time = Lots of Wealth"

I will modify this a bit to what I believe:

Right Attitude towards Savings + Wealth Creation + Lots of Time = Guaranteed Wealth

1. Right attitude towards savings is all about thinking about each $ and saying is that being used, going to good use or can be sacrificed and spent later? Attitudes of most Americans is 'to have it now' instead of waiting for a 'better moment'. Attitude is one of sacrifice, which is quite different from frugality. Attitude is one of not giving in, and saying 'I can live without'.

2. Wealth Creation is an attitude of saying that I want to make my money saved make more money, i.e. make my savings work 24 hours a day and 3 times harder than me. In addition, wealth creation is making a career out of your job/business and progressing to higher risk / higher return jobs, and keeping it going. Wealth Creation is by far the way to make the most wealth, since one is creating it with your own mind, body and soul.

3. Giving things a lot of time, simply means doing #1 and #2 above for a long period of time. This means that sacrifice goes on not for 1-2-3 months, and then you binge or spend, but it means that you drive a car that goes A to B, until it is ready to DIE. It means not buying the newest HD or BlueRay player until the $250 Progressive Scan DVD player dies!

4. Guaranteed Wealth: Please do 1, 2 and 3 and you will get to this point.

I have done this, and proved that 1,2 and 3 lead to 4. Me and my wife are under 50 and above the 55 threshold by a margin, although only this and another blog know about it, since none of our friends can see through it since our attitude (#1) shows that we are NOT at those wealthy levels.

My parents taught me this and they were first generation in this country. Their wealth is NOT part of mine when I count my own, and they did not give me their wealth until 11 months ago. So, I tell my kids that Grandparents wealth is transferring over to the kids, and I am just a 'gardener of my parents wealth'. Managing it until I can and then handing it over in the right way to them.

Example> Today, my kids are 15 and 17 and they get $5 a week in allowance, take lunch from home, and drink water when they go to a restaurant.....! This is sacrifice at the onset of their lives, while rest of kids do their thumb scan and buy lunch.

Kenny

[MC]

I agree with VirginiaBob--it's silly to discount family wealth in these situations.

Particularly key: family wealth can allow you to get your education without going into debt. Many well-off families also provide downpayments when their adult children purchase their first house.

If you have education loans and need to save for the downpayment yourself it takes much more time to accumulate significant assets.

[Kate]

I think that coming from a stable environment can be more important than wealth. We are considered wealthy by the books standards, but did not receive much of the assistance other commenters mentioned. My parents did fund my four year college education, but I was on my own after that. I bought my first car, used and spartan, after college. I saved for the down payment on my first house. My husbands parents did not provide any assistance with college. He attended a community college, then had to drop out of university due to lack of money. He worked full time and managed to finish his undergraduate degree while doing so. For graduate school he essentially gave up everything; he couldn't afford to keep his car, he had to live in roach infested conditions, and he took out student loans.

I think one of the biggest advantages that my husband and I had was coming from stable families, where we learned how to live responsibly. Neither one of us came from money, nor have we been given assistance as adults.

We have never made a lot of money, but I have saved since after college and we live beneath our means. Tom Stanley has a new book, "Stop Acting Rich, and Live Like a Real Millionaire". It seems to be a rehash of his earlier books, but he is much more starightforward in saying that those that comsume (spend) a lot are usually not rich, while those that are rich usually are not big consumers.

[Meg]

I'm considered wealthy by this standard, but like Kenny I'm a child of immigrants. I know I'm lucky because I was blessed with a family that valued hard work and education as well as a good brain and lots of drive. My parents didn't have enough money to send me to college, so I couldn't go to my dream school and ended up settling for a place that would give me a full scholarship. I took out student loans for graduate school. My parents gave me their old car, but that was the extent of their assistance to me. The key is that, unlike many other parents, I was never told to "do what you love." I was taught to do what made the most money and do what I loved on my own time. Now that I'm in my 40's, I have enough wealth so I can do what I love more often and not worry about how I'm going to pay the bills. I don't recommend it to everyone because it involves a LOT of delayed gratification and sacrifice, but thankfully it's worked out for me.

[D]

A hell of a quote:

"I'm a great believer in luck and I find the harder I work, the more I have of it."
- Thomas Jefferson

[Old Limey]

Here's more about how Luck and Chance figure in the way your life plays out.

I had excellent grades in my final exams at my Grammar school in England and was offered a scholarship to the University of London that covered books and tuition but no living expenses. My parents were barely making it and couldn't afford to give me any help so they encouraged me to leave school and get a job so that I could contribute to the family living expenses. I did that. The job paid quite well considering I had no experience at all and I gave my parents 1/3 of my pay. The job turned out to be very boring and was a dead end job with no future. A few months later an uncle of mine visited us. He had been an electrical apprentice and had worked his way up to becoming the manager of the Electricity Board for a rural area in Devonshire, England. He quickly assessed my situation and gave me some life changing advice. It was "Quit your job and become a trade apprentice where for 5 years you will be trained and given time off to attend a municipal college where you can continue your education". I did that and joined the DeHavilland Aircraft Company, now part of British Aircraft Corporation. Because of my grammar school education it wasn't long before I was switched from a 'Trade' apprentice to an 'Engineering' apprentice. I sailed through the municipal college classes, finished up at a university and became a structural engineer. Right about that time England was undergoing what was called a 'Brain Drain' as the Cold War had created a big shortage of engineers in both Canada and the USA. I was recruited first by a Canadian company, worked for them briefly and then came to the USA where I have had a wonderful and very successful career and a very fulfilling life, ending up with a Masters degree in engineering.

Looking back I can see that if my parents had been middle class rather than working class I would have gone to London University, never emigrated, and probably ended up working for the government somewhere as a civil servant and I wouldn't be a wealthy American. One other piece of great fortune was that I was already going steady with my future wife so we emigrated together, are totally compatible, and have been married for 53 years. I have to add that our frugal lifestyle and good saving habits made us very comfortably well off by the time we retired but what made us wealthy was that a few years after I retired and had taught myself a lot about the technical analysis of stock trends, the DOT.COM Bubble got underway and I used my newly acquired expertise and my own software to multiply our net worth ten fold from the time we retired.

[D]

@Old Limey

You're one lucky SOB!!!! Congrats. Luckily for me when the bubble occurred I was in college and had little money. I became a "day trader" and actually bought my first car with my "winnings" (Lexus - dumb move now as I look back, but hey, I was in college). In any case I bought heavily in Qualcomm; the stock tanked, but learned a VALUABLE lesson and got a $30,000 car out of it ;)

[Old Limey]

D:
I remember well how Day Trading offices sprang up all over the Bay Area in small shopping centers. It became the thing to do - some people even quit their jobs to become Day Traders. Now there's not a single one of those offices remaining. That tells me that for most people Day Trading isn't profitable.
I have never day traded - mutual funds held for periods of weeks to months were my vehicles of choice. I also discovered that I wasn't comfortable selling short and using margin.

[Jim]

I agree with Old Limey's take on it. I do feel luck is a factor. But generally bad luck can usually be overcome by consistently making the right choices and working hard. Everyone has some bad luck. On the other hand most of us have good luck that we don't even realize happens.

[Old Limey]

Jim:
I have had some bad luck of course but it wasn't anything that affected my finances.

The absolute worst of all was losing an 8 year old granddaughter to a brain stem tumor. She was unusually intelligent and such a sponge for knowledge that I tutored her every week in Math & Science - she could have been anything she wanted to be. Her two grandfathers would have sent her to any university she wanted for any career she wanted.

The other disappointments were my children's marriages, 3 divorces between 2 daughters. It showed me that the Melting Pot concept of the American society often brings young people together from very different backgrounds resulting very often in incompatibility, whereas my wife and I are like leaves from the same tree.

[D]

@Old Limey
How did the divorce play out on their financial well being? You mentioned in previous posts that they were well off, just wondering if that was because of the divorces or did they go into the marriages with money and have a prenup in place

[Sarah]

Most of the wealthy people who I know personally well enough to hear anything about their finances have acknowledged that good fortune has played a role in their success. Personally, I think it's the middle class that's most reluctant to acknowledge this. They're insecure about their position and thus can sometimes be desperately invested in the idea that they got there by their own merit and can stay there by their own merit, without outside factors upsetting their lives. The genuinely wealthy feel less vulnerable (and often have a better education/broader perspective on our legal and economic structures that gives them a better understanding of how our system actually works in practice and the role that non-merit-based factors end up playing).

[Old Limey]

D:
One daughter, now 49, married a much older man that was about as different from her in every possible way, particularly ethnicity. He was a very successful attorney but a man that should have never married. The wonderful daughter they had was the glue that held everything together. After the young daughter died she waited until the boys became adults and had left home, then obtained a divorce, avoided litigation, and came away with a multi-million dollar settlement and very large alimony for 9 years. She could have got more through litigation but it would have been very long and messy.

The other daughter, now 51, worked for an employer that had a generous SEP-IRA plan for his employees. She asked me to manage her IRA for her, which I am still doing today. I took it over on 5/11/1992 when it was worth $64K. She changed from full time to part time tele-commuting when she remarried and moved away about 10 years ago, so that her recent contributions have only been between $3K to $4K but thanks again to the DOT.COM Bubble her SEP-IRA is worth $1.46M today and growing nicely.

[D]

@Old Limey

Care to take over mine!?!?!?! :)

[Old Limey]

Sarah:
Your choice of phrases such as 'middle class' as being quite different from the 'genuinely wealthy' puzzles me a little. The problem I have is that 'middle class' infers the existence of a 'lower class' and an 'upper class'. Personally I don't believe that in the USA there is much of a connection between Class and Wealth or for that matter Education and Wealth. The founders of Microsoft and also Apple Computer never obtained university degrees and Andrew Carnegie received only 5 years of formal education.

For example we have some very low class individuals that make huge amounts of money (particularly in sports & entertainment) and some very high class individuals that are only comfortably well off. In the USA it would seem to me that almost everyone considers themself to be middle class.

In the UK it's quite different, the very old families, many of whom have titles, that became super wealthy by extracting wealth from the colonies over many centuries, are considered the Upper Class, below them is the Middle Class which are generally college educated, and below them is the Working Class which generally has no education past high school.

Do you care to comment?

[Mike Hunt]

Old Limey,

You are quite correct- the US is one place where there is a lot of 'new money' especially over the past 20 years and it's more egalaterian than places like Thailand, the UK, Continental Europe and lost of SE Asia where people are wealthy in a larger part due to old money and families holding land or businesses. In Thailand people associated with the Royal Family tend to hold very high wealth and status, a lot of this is from many generations ago.

Interestingly enough I see that in China there is a tremendous explosion of new wealth being generated, in that sense it's very much like the US in the 1990's to early 2000's.

-Mike

[Mike Hunt]

One more thing,

Check out this table in the following link:

http://www.goodmoneyblog.com/archives/2008/06/how-far-are-you-from-being-rich/#

I would take this to mean that the median top 1% would be wealthy, this equates to a net worth of $886K for 20-29 years old, $1.83 million for 30-39, $4.16 M for 40-49, $9.05M for 50-59, $9.7M for 60-69, $7.03M for 70-79 and $2.3M for 80+. Also tells me that Old Limey is wealthy as in the top 1% even for his age group, I'm nearly there for my age group (about $100k short) but I have a lot of work to do to get to that level in the 40's which will come to pass within 4 years (gulp)...

Note that this is based on 2001 data but given the fact that the stock market isn't higher than that time, real estate is coming down, and salaries are about the same I feel ok with using this data in 2009.

If you would like to use the median top 5% or median top 10% then the numbers would be lower but I'd argue that they are financially comfortable and not wealthy. In your book analysis the wealthy is defined as the top 3% so it's probably better to use the top 1% bracket.

Note also that this table is quite different than what the book says- in the table you can see a very non linear explosion of net worth as people get into their 50's... in fact the top 10% median net worth is well north of $1M for this age group. Meanwhile the book shows this to be more linear.

This is the best table I've seen on reviewing this information, and gives me some numbers to shoot for as I get older!

-Mike

[Jackie]

FMF, yup, that's exactly it. Although I also wondered because it's probably easier to get into the higher classes with multiple incomes.

[Concojones]

What I take away from FMF's figures, is that saving $25k a year from your salary already makes you 'wealthy'. Now, $25k seems *very* attainable for most people. Simply get a high 5-figure salary and max out your retirement account plus a little extra effort or matching from your employer. Apparently there is no excuse not to get wealthy, if that's what you want.

@Mike Hunt: that table reminded me of something. Yes we can shoot ever higher (top 5%, 1%, 0.1%...) at ever increasing amounts of effort, a fraction of which could make a, say, 50% difference in other areas of our life. I just thought I'd mention this thought for all of us who're busy getting ahead financially. That's all I have to say. Not that there's anything bad with striving for more wealth. I think it's a fun competitive game, satisfying, addictive even. But can't the same be said about computer games?

[Old Limey]

Concojones:
I agree that for me, investing is all about the challenge, I just don't understand how intelligent people often fail to become interested in learning how to invest. There was a study done that compared two hypothetical investors. Mr. Timer had the best possible market timing but the worst possible fund selection. Mr. Selection had the worst possible timing but the best possible fund selection. Fund selection beat market timing hands down. Fund selection is very straightforward whereas market timing is much more difficult and very subjective. All you need is the data and the tools and after gaining some experience fund selection is a snap and fairly automatic. The mistake many people make is allowing some financial advisors to make all of their decisions for them, which is why they often get stuck paying a 5% up-front load fee on the funds that advisors select for them - that 5% goes right into the advisor's pocket on the day the fund is bought and the poor investor then has basically lost 5% before he even starts.

I have to admit that I am a Sudoku addict. I tell my wife I play it every day to prevent the onset of Alzheimers, whether it really helps is unproven. I only play the "extreme" level of difficulty but I use a free, online software program that not only generates fresh puzzles automatically but it provides tools that do the dogwork, but lets the user concentrate on the challenging mental part. Google 'Simple Sudoku' if you are interested, it can generate puzzles of 5 levels of difficulty. The extreme puzzles take between 5 and 30 minutes, the ones of lesser difficulty take a 2 or 3 minutes and are not must challenge at all once you have gained experience.

[Mike Hunt]

Concojones,

Actually striving for more wealth is just a game, no different than a computer game where you get addicted and stay up all night before giving it a rest for some time. It's just a challenge and at some point it just becomes a number. Whatever doesn't get spent will go to charity / family in the end so it's really pretty abstract.

I put up the table because I figured I need to set some personal goals and thought meeting the top 1% median would be interesting as I age. Otherwise I really don't need to work because my monthly expenses are so low and I have sufficent savings to live 50+ years (depending on inflation assumptions and assuming no growth in my portfolio) at my current expense level. Trouble is, I get bored easily and want to keep learning more / doing something that requires a challenge. Too young to fully hang it up so I'd like to keep going. So I need a good goal to motivate me. It was not meant to sound like pursuing money at all costs.

I spend a lot of time keeping a balanced life- enjoy my time with my wife and family. Exercise every day and love to do adventures like triathlons and mountain climbing... sudoku is also really fun although I've not done that for a few months now.

-Mike

[Concojones]

Mike,

I think you just did many readers a favor by showing that a great career can be perfectly combined with a balanced life, unlike what the stereotype says (and some examples around us). That said, I'm not really surprised by what you said, given that you've found the time to contribute to this blog. That means something, because to the CXOs I've known, 'leisure' means a weekly 1h walk in the park. :-)

BTW, Have you ever thought about building some sort of a business empire? I'm not sure it's compatible with family life, but it's where I'd aim after having scored well in the numbers game. Okay, maybe, because it's pretty daunting! But I really admire people like Lakshmi Mittal for what they've done.

Old Limey,

Wow, another Sudoku fan. Sounds like something I should look into one day (when I'm retired!). Personally I'm a Civilization (the pc game) addict. I say 'addict' because of the huge amounts of time I used to spend on it. I don't play it anymore because I decided that time was better spent elsewhere.

[Sarah]

Old Limey, I'd say that in America, wealth and class are much more tightly coupled, though wealth is not the only determinant of class. I don't think anyone in the U.S. would say that a basketball player who grew up extremely poor with uneducated parents who worked as menial laborers, but went to the NBA and has now made $5 million/yr. for the last eight years, is "low class." Assuming he hung onto that money, people would call him "upper class" or "wealthy."

[Mike Hunt]

Concojones,

Civilization is a fun game- I played an early version of that out of college 10++ years ago- only downside is it's a huge time sink. Actually, the things you need to do to build up a company and turn it from a loss making business to a profitable one is just like playing a real life game of civilizations. In addition to the customer & supplier and product development aspect, you also have to groom and build up a strong team. You can give them training, tools to better manage their function (ERP or IT systems), skills development and you can the modify the compensation structure to drive results. My favorite is we have a quartely bonus target and objectives that I slightly modify each quarter based on what I see we need to focus on- it's really effective and allows people to be quickly rewarded for focused effort! Communication is a huge tool in the arsenal. Hiring, coaching, firing- all really important to manage properly. In fact if you like civilizations you would love running a business as there are many game like elements to it!

I may consider taking on a business empire if the opportunity presents itself. Although I'm a CEO- it's pretty small time, my company only does around $50 million turnover per year and I don't have any equity in it unfortunately- I'm a 'hired hand' brought in by the investment bankers (the likes of JP Morgan and Goldman) although I'm a company employee. So cannot be compared to people like Mittal I'm really small potatoes! Of course I have some time to get there if I stay the course as I'm only 36 as of now... depends on luck, opportunity and if I still feel like this track is rewarding. Will have to wait to see that stage of my life unfold later.

I've had some good business ideas but haven't pulled the trigger on investing a lot of money into a venture just yet- the risk / reward ratio for each didn't seem so good after deeper investigation. That said I'm patient and am always looking for opportunities. Sometimes it's too easy to fritter away your hard earned money because a huge bank account is burning a hole in your pocket and you feel desperate to invest. Being compelled or restless to make a move is never a good place to be and when you are in this state of mind it's very easy to lose money!

-Mike

[Concojones]

Mike,

Running a business being like playing Civilization: I know!! I've also realized that I love maffia movies for the same reason (The Godfather). Oh and there's something else. While in college, I founded an online music sharing community, and grew it like a business (marketing/member acquisition, managing/motivating/negotiating with a team, competition with other organizations, ...). The experience became a huge eye opener for me about what I love doing most, and made me decide to start my career in business instead of engineering (my degree). So, I used one of those 'grad programmes' to manoeuvre myself in a spot where I could 'manage' the company (a $50 bn multinational - what was I thinking, lol). The 'manoeuvring' worked, but influencing the company turned out to be wishful thinking. (It was at that point that I got kind of frustrated and asked you for advice in another post on this blog.) I'm currently reorienting my career to engineering again, but the entrepreneur in me will be back someday.

Yeah I guessed you were a 'hired hand'. But hey, you're learning the trade and getting stronger (more experienced) for when an opportunity presents itself... And you're absolutely right being reluctant to invest significant savings in a venture. Concentrated risk, a huge failure rate... What I've heard is you always try to use 'OPM' (Other People's Money).

[Concojones]

[continuation of previous post]

My point is: I would separate 'venturing' and 'investing'. They shouldn't have anything to do with one another. (Admitted, you'll need to put in some money of your own into the venture, but you can try to keep it to a minimum.)

P.S. Mittal started out relatively small too (I believe he owned 1 factury in Indonesia).

[Concojones]

[for the record: I used to post under the nickname 'F']

[Mike Hunt]

Definitely more learning than any MBA could have provided. At first it was like taking a refreshing sip of water from a full power fire hose, now it's pretty managable. Still, it should be some time before I get bored.

-Mike

[Francis]

These figures seem pretty low, and I agree with Brooklyn Money's comment that there is a $250k jump from below to above 35-years-old, which seemed unscientific to me. Is there a generational gap where folks >35 caught the good times (90's) and was able to reap more reward than those who joined the workforce in the 00's? I think the metrics used here to denote someone as "wealthy" is more suitable for the "financially comfortable" group.

[Andrew @ Financial Services]

It's a lot like Survivor or The Apprentice. The people who usually make it are the ones who has a balanced personality and one who is able to roll with the punches. Then again, we're talking about financial wealth here, which is just a slice of the pie we call Life. Others may not have lots of money but consider themselves wealthy.