Growing up, I thought there was some magic formula to building wealth. There had to be a secret sauce. I wondered if I had the "It Factor" necessary to become affluent. Today, I know there really is no secret sauce. It's about hard work and consistent behaviors. As you have probably heard us say in our conference room, building wealth is "simple, but not easy."
As financial planners, our mission is to help our clients achieve Financial Independence. Financial Independence (FI) is reached when your accumulated wealth is sufficient to meet your anticipated expenses over the remainder of your lifetime. Once FI is reached, working for income becomes optional.
For some of our clients, FI was reached when their investment portfolio was $500,000. For others, FI was not achieved until their investment portfolio hit $2,000,000. Factors such as lifestyle, income sources, and unique goals for retirement all have an impact on when FI is reached. At The Wealth Group, we are here to help you discover what FI looks like in your life, and to help you map out the path to reach FI for you.
So, once we know the path toward FI, how do we get there faster?
Is it earning more money? Investing in real estate? Private equity investments? A higher rate of return on your portfolio? A large inheritance?
Fortunately for us, there is a lot of research done each year into the people in America that have already built wealth. There are approximately 10,400,000 households in America with greater than $1,000,000 in assets (excluding the equity in their primary residence). There are now over 2,000,000 households in the US with greater than $3 million of net worth (again, excluding the value of their primary residence).
The outstanding research being done is increasingly focusing on the behaviors of the rich. By identifying and implementing those behaviors in your own life, you can build wealth more rapidly. You don't need to come from a wealthy or particularly successful family. You don't need to have a high IQ. And you certainly don't need to drive a certain kind of car!
Surveys of the affluent by U.S. Trust found that 3 out of 4 grew up middle class or poor, and only 10% of the respondents gained their wealth through inheritance. What were the most common values held by these wealthy folks?
- Hard work
- Personal ambition
- Family values
Lastly, check out this list of 12 habits of millionaires, courtesy of Money Magazine: