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September 18, 2013


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Personally I think the most important factor is patience and not giving up. There are times when my patience is tested when it comes to refraining from spending however every time I do avoid overspending I get stronger. I've now come to a point where I can just look at something that I really want and then turn my back on it. Patience is also required to move forward, if you really want to be rich and you've got a plan then you need patience to see the plan through. This is a very thought provoking post, thanks for sharing.

You said it exactly right. The steps to building wealth are very simple, but following them is often difficult.

I like to compare it to dieting…we all know that to lose weight you need to eat healthy and exercise, but doing so consistently can be difficult. That bacon cheeseburger just looks soooo good!

I am a 79 year old grandfather and my observation is that there has been a huge generational change regarding "saving". In my generation it was customary when you were living with your parents that you gave them a portion of your paycheck to help with the family expenses - that seems to no longer be the case. Also, since my generation had no expectation of owning a car or being able to support themselves for several years they became serious savers.
My children's generation were not handed everything on a platter, they didn't have iPhones, computers etc. and although we provided their keep they all had a variety of jobs while they were going to school and each became savers at an early age - my 53 and 55 year old daughters are now multi-millionaires and my 59 year old son is getting close to a million.
My grandchildren however are a different story altogether - they all have Iphones & computers, the older ones have cars of course and they save practically nothing. In their generation there have also been huge societal changes involving marriage, cohabitation, pre-marital sex, divorces and abortions. They tend to be "spenders" rather than "savers", have no investments, and their #1 priority seems to be having fun. When they have a money problem the first people they call are "Mum" or "Dad". Their generation will no doubt inherit quite a bit of money from their parents and grandparents but they may be the last.

The reason that most people think becoming weathy is difficult or unattainable is because most people consider wealth to matter more when they are young.

As I have said on here many times, becoming wealthy over time isn't impressive because it is as you say, very simple. Anyone can do it, and many do, as long as there is enough time.

What is impressive, and therefore difficult and therefore secretive, or as you say luck, knowledge or a trick or skill, is becoming wealthy without the benefit of time's compounding interest.

30 year old millionaires are rare. 75 year old millionaires are not. To be a 30 year old millionaire, it takes more than time and frugality and automatic contributions. It takes skill, or education, or risk taking, or an idea of some type. It takes something that most do not have. That is what makes it desirable.

To have wealth at a young age (under 40) requires true effort of some type. Any wealth in later years is likely more a product of time than effort. Not that that's bad. It's just different.

Troy --

I agree with the sentiment of what you're saying, but my take would be a bit different. I would highlight the fact that becoming wealthy (for instance, having a net worth over $1 million) in any way is both impressive and at least uncommon (if not rare.)

Troy is quite correct!
Becoming wealthy at a young age takes a lot of talent and often requires taking considerable risks.
Being a millionaire meant a lot years ago but there has been a huge amount of inflation that greatly lessens the real value today of a million dollars. For example the home that I bought in 1977 for $107,000 would now sell for $1.3M and the home that I bought in 1963 for $26,950 would sell today for over $800K.

I retired in 1992 with a $320K investment portfolio and was confident that it would be plenty sufficient, along with our pensions and SS checks, to provide a comfortable retirement. Twenty one years later I think it would have been sufficient providing I avoided taking a big hit in the great recession, which I did.

However I got lucky. I never figured on the Internet Bubble which I believe was a once in a lifetime happening in the market. I also never figured on using my engineering and software talents after I retired to build some investment software that I was able to market successfully to a great many others.

The people today that I consider really wealthy are the big risk takers, many of which, here in Silicon Valley, have names that you all know because of the companies they formed and the products that many of you use.
Bill Hewlett & Dave Packard started their iconic business in a garage, and Steve Jobs and Steve Wozniak started Apple Computer in their bedroom - both buildings are treated like 'shrines' today.

@Old Limey -

I won't argue that there hasn't been a great deal of inflation, but those housing numbers are also inflated due to the huge boom in the Silicon Valley market. Those same houses in a less desirable area (even in other places in CA) would go for much less, around $200k-$400k I would guess.

I agree that $1M in the bay area is not exactly an extravagant lifestyle or even that uncommon, but it is very rare in the majority of locations in the US, at a young or older age.


Becoming a millionaire by age 75 is as you say aided significantly by time and compounding.

1. It is not complicated.
2. It does not require great skill.
3. It does not require great intelligence.
4. It does not require great and hard to attain knowledge.
5. It does not require a huge salary.
6. It does not require living like a pauper.

It does require 2 things:

1. A small amount of knowledge.

Unfortunately #2 is extremely rare in our current culture.

And to that extent I take issue with your statement that it is not rare. The numbers seem to show that it is quite rare. I am going to use age 65 instead of 75 for 2 reasons. One most people have stopped making money by then and it is easy to find demographic info for that age. I am also going to use 2 million instead of 1 million for two reasons. 1 million isn't what it used to be and most people agree that you need more than 1 million to safely retire and not run out of money which doesn't even make you rich, just not poor, and secondly it is also easier to find data on people worth more than 2 million than 1 million.

In 2010 there were 40.3 million Americans age 65 and older. In 2012 There were 1.8 million people who are worth 2 million dollars or more. The 1.8 million people are not all over 65. Certainly plenty of them are younger than that but lets just presume that most of them were over 65, lets say 1.5 million. By 2012 there would be more than the 40.3 million Americans who are over 65 but lets assume it stayed static. That would put 3.7% of people over age 65 as being worth 2 million dollars or more. And that is an upper bound. It is likely less than 3%.

When something is that straightforward, that desirable, and that achievable and only 3% of people achieve it, I would say that is indeed quite rare. I would suggest it is worth considering why rather than dismissing it as not impressive.

What it means is there are competing interests that very few people are able to say no to that prohibit them from achieving the very achievable and very desirable. They have traded it for something that at the time they found more desirable.

In this case they have traded long term desires for short term ones. With a small amount of knowledge most people have everything they need to achieve this goal, but very few will achieve it because of a lack of discipline. (I know there are some who are in circumstances where they cannot achieve it because their income is so extremely low. This does describe a number of people but it does not describe the majority of people so it is still achievable by a large percentage of the population, but not all).

It takes discipline to implement the plan because the plan plays out over a lifetime and it means saying no to all the attractive but mostly unnecessary things that constantly compete for the object of our desires. Without discipline most people give-in to the the competing objects of their desires. They do not do it by consciously deciding to trade the future for the present. It isn't that direct of a thought process.

How can a TV cost you your future, or an iPhone, or daily Starbucks, or a new car, or an elaborate vacation, or special lessons for your child in skill X,Y,or Z or a large or expensive ward robe, or an upgrade to a desirable neighborhood, or regular meals at nice restaurants, or annual tickets to the theater, or maid service, or a kitchen remodel, or .... I could go on for pages really.

And none of those will cost you your future. You can do any of those things will minimal impact. But when combined into a large number those things will have a huge impact. And yet a much more exhaustive list than that is how many people live their lives. And the things on anyone's list are the things that their current salary plus potential credit will afford. If their income and credit is increased, the items on that list can increase in number an value. And they do. And no one thinks about them as costing them their future. They just think about it as living. And most think to themselves that one day when these demands are less they can get around to saving for their future but that is a long way away so there is time. The one thing that all of that kind of thinking has running through it is a lazy non-thinking kind of lack of discipline.

So I think that the person who reaches a level of wealth that we would consider wealthy (and 2 million seems like a pretty good number for that) is impressive no matter how they did it because they stand against the common pull of our society and do what very few others are willing to do. The fact that it is not complicated does not change the fact that it is very difficult for most people to implement.

Discipline is rare and becoming more rare by the year. I believe that will lead to the number of people reaching independent wealth getting smaller in the future not larger. In fact it appears the decreasing amount of discipline among the young is coming at a time of decreasing economic opportunity as well. This double whammy is going to result in almost none of them reaching independent wealth unless it is given to them by their parents. Very few will achieve it on their own.

It's the price of land that has driven up the property values in Silicon Valley. When we arrived in 1960 there was masses of orchard land. The aerospace company that I went to work for was the largest employer in the valley, attracted there by a city's offer of several hundred acres for free if they located there. At the peak of the Cold War the company had 35,000 employees, today they have about 5,000.

A weekend jaunt for many people back then was driving around looking at model homes since new subdivisions were springing up all over. The farmers were selling their land, the prune and apricot trees were being cut down and replaced with new homes at very attractive prices.

Finally almost all of the orchards disappeared, along with all the canneries. New freeways and expressways were built, and the price of land skyrocketed. At one time we thought about having a custom home built and started looking at building plots. I still remember being offered a superb 1 acre level lot in a great location for $20K. Today, a superb 1 acre lot in a great area would sell for $2M. We added up the price of that lot and the price of building a 4br, 2ba, home and realized it was out of our price range. The most recent big land purchases have been for new campuses for expanding companies such as Apple, Google, Facebook, Tesla etc.

These three characteristics are important and I think a fourth one is also necessary here - having an eye for money-making options. You need to know what your risk appetite is and match it to different investment options. If you decide to invest in stocks, you need to know which stock suits you and which doesn't. How much profit and risk are you willing to take?

***FMF-- This is such a great post. Provocative, simple, interesting and true.


I respectfully disagree. I just do not think that attaining wealth at a young age is more impressive than at an old age.

You said "30 year old Millionaires are rare. 75 Year old Millionaires are not". Really? You make it seem that, by default, anyone who happens to make it to 75 years of age becomes a millionaire. That is just not true. The statistics tell a whole different story.

I would wager that a VERY SMALL percentage of 75 year old Americans are Millionaires. And if you are talking 75 year olds around the world-- the percentage is even smaller.

Attaining wealth-- any way you achieve it (other than winning the lottery or by inheritance) takes HARD WORK. And discipline, and patience and persistence.

Hard work is to be respected in my book.

Personal Finance is akin to running a business. Lets call it "YOU, INC". And the traits of success for YOU, Inc are not that different than those for the corner gas station or Microsoft, Inc for that matter.

You need to have a sound business plan, put in many hours of hard work, keep your costs low, and make decisions that, with a little luck, result in a profit. And success takes a multitude of good decisions, a decent amount of research and day to day focus. It does not just "happen".

Your personal economy and the business of "you" is no different.

I applaud anyone who has worked hard and ended up with wealth. How long it took is of no consequence to me. And weather the result was obtained at 30 years of age or 65 years of age also matters not.

If you achieve financial independence by hard work-- you have put yourself into a very small club indeed. As they say, if it was easy everyone would do it.

The very fact that most do not achieve it-- makes it impressive indeed.


It took a surprising amount of hunting to find an answer to the simple question you're all arguing about, namely what percentage of each age cohort is wealthy.

The first hint I saw here:
"According to Spectrem Group, the average United States millionaire is 62 years old. Just 1% of millionaires are under the age of 35, and 38% of millionaires are 65 and older. West Coast millionaires skew slightly older."
Not stated are the denominators but we can probably assume adults under 35 and over 65 are probably roughly equal in number. So a random 65+ household has about 40 times the chance of being a millionaire than an under 35 household.

I found more details here:
Unfortunately this covers only up to 1992 and examines the top 1%, which I believe is currently the "penta" threshold. You need to ratio the numbers in Table 3 vs Table 2 to get the breakdown. For 10-year cohorts starting at ages 25,35,45,55,65, and 75 the top1% numbers are 0.1%,0.4%,1.6%,2.0%,1.9%,1.1%. In other words there are 20 times as many 1%ers aged 65-74 than aged 25-34. That hook down at 75+ I suspect to be because this group in 1992 reached adulthood during the Great Depression so their lifetime accumulated earnings probably took a serious hit.

So it appears that everyone's points are correct based on these numbers-- it's true that wealth under 35 is far rarer than over 65, but it's also true that wealth over 65 is still quite rare (only about double the aggregate).

Interesting post. I just recently hit the million dollar mark. I'm 57 and I have never made lots of money. I'll probably earn about 55k at my job this year. I pretty much just lead a simple life. I don't live cheap, but I also don't spend alot. I have invested in mutual funds and ETF's over the years. Mostly it's the time I've been invested and the money I've put in that has made me a millionaire. However, as others have pointed out on here, being a millionaire today isn't the same as what it once was. I don't consider myself "rich" I do feel like my retirement will be of financial stress. I expect over the next few years we will see lots of baby boomers become millionaires.

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