There’s a study I like to read every year it’s done by the Spectrum Group Research Group, and they provide some fascinating information concerning millionaires in this particular study. It’s a survey of American millionaires. I’m going to working hard to be part of the millionaire club! See I want to be a millionaire. I mean I really, really, really, really, want to be a millionaire. They surveyed millionaires from across the United States about how they spend and invest their money. When we can see what they are doing it can be a lesson on what we need to emulate to reach that status as well, right?
So here are some facts for you. Currently, there are 11.3 million individuals in the United States that have a net worth between $1,000,000 and $5,000,000. Of those 11.3 million individuals the average age is 62, with 67% of them being male and 33% are female. Also, 76% of them are married.
When I first started looking at the case, I’m thinking, these are doctors and lawyers and such to be able to reach that much money and be a millionaire. However, that simply was not the case. The average income is only $125,000 a year. For some families that have two incomes, they can reach that in a blue-collar working environment. So really you don’t have to have a lot of money to achieve that status. Let’s dig in and look at some of the data to exactly what they are doing to make the list.
I want to look at is their spending and investing habits. First, on spending, there are some cool things we can make note of.
1. Only 10% of these millionaires spent more than $25,000 on a car. That’s crazy to me because I know individuals that make $30,000, $40,000, or $50,000 a year and they go out and buy a brand new car for $30,000, $40,000, or even $50,000. If you’re going to be a millionaire you just can’t do that. Even the people who are millionaires and can afford to don’t do it.
2, Just 5% of these millionaires spend more than $5000 on entertainment per year. They’re not taking their family to some high-end gala somewhere. They just are not doing it.
3. Interestingly enough only 20% of these individuals spend more than $10,000 year on travel. I always had this idea that if you were a millionaire that you were just going to travel the world, but that simply is not the case.
4. With all the bling in Hollywood, surely these millionaires are spending lots of money on jewelry, but they’re not. Only 4% of the millionaires pay more than $5000 a year for jewelry.
So if we want to be a millionaire, maybe we should start acting like one. Not only on the spending side but the investing side too. I hear all sorts of investing ideas to get rich.
1. Of these millionaires them 55% of their net worth is invested in stocks and bonds investable assets. I know that it makes sense, but it’s really cool to see those numbers translate.
2. Only 16% of a millionaire‘s net worth is in their personal residence. Many people believe millionaires live in these big lavish million dollar homes, but they don’t.
3. Of those 11.3 million people, 12% of their net worth is in retirement plans. While another 8% of their net worth is in insurance and annuities. OK let’s think about this, it’s not uncommon for me each week as a CERTIFIED FINANCIAL PLANNER™ in Knoxville, Tennessee to hear people have almost 90-100% of net worth in annuities. Millionaires don’t do that.
4. Here’s the one that really shocked me! I mean I almost fell out of my chair type shock. Just 6% of these millionaires net worth is invested in an investment property or real estate. That blows my mind! Every day I hear people tell me to invest in rental property. Invest in some commercial building. Invest in real estate. It’s the best way to get rich, but that’s not true for the millionaires.
5. Now this fact I had to dig a little further to find. Only 2% of these millionaires net worth is in business interest or closely held family business interest. We’re talking specifically about millionaires with net worths between $1 million and $5 million. [THAT IS NOT THE CASE FOR MULTI OR DECAMILLIONAIRES!]
If we want to be a millionaire, why is it we buck the system? The Spectrum Group study for me is like a checklist. I get to see how the millionaire club is doing nationally and then glean some information for myself and my clients. I just find these habits to be intriguing. So how are you measuring up? Will you find yourself on this list anytime soon? Well, one day you can and will reach that millionaire status IF you spend and invest money they way millionaires do.