.
.
. The Millionaire Next Door: The surprising secrets of America's wealthy.by Thomas J Stanley, Ph.D., William D. Danko, Ph.D., |
An excellent book on who's wealthy and what it takes to get wealthy. Lots of examples, anecdotes, and folksy aphorisms. Presents formula for calculating how much wealth you're accumulating compared to other wealthy people. The authors make the important distinction between the truly wealthy and those that just spend a lot of money to look wealthy (i.e., those who are "all hat and no cattle.") Excerpts from and comments on the best parts follow: . Page 3. "The Seven Factors...Seven common denominators among those who successfully build wealth.
. Page 13. "Computing one's expected net worth:
Given your age and income, how does your net worth match up? Where do you stand along the wealth continuum? If you are in the top quartile for wealth accumulation, you are a PAW,or prodigious accumulator of wealth. If you are in the bottom quartile, you are a UAW, or under accumulator of wealth." Mr. Duncan in the example above is an AAW, or average accumulator of wealth The authors have developed a simple rule of thumb: if your net worth equals the average calculated by the formula above, you are an AAW, if your net worth is twice the average, you are a PAW, if your net worth is half the average, you are a UAW. Whatever your income, if you want to Retire Early you must be a PAW. |
. Page 27. What the wealthy eat. The authors tell a hilarious anecdote about a study of high-net worth individuals they did for a large international trust company. To make sure the respondents were comfortable during the interview they rented a penthouse on Manhattan's East side and hired a gourmet chef to put together a menu of four pates and three kinds of caviar. They also served a high quality Bordeaux wine. Nine people attended this two-hour function. They occasionally glanced at the buffet but only ate the gourmet crackers, avoiding the pate and caviar. One respondent, a Mr. Bud, was offered the Bordeaux wine. Mr. Bud looked at the interviewers with a puzzeled expression and said:
It turns out that few millionaires are gourmets, but a large number of trust company officers and college professors are. The food was consumed by the latter after the millionaires departed. . Page 32. What the wealthy wear. The authors tell us that half of all millionaires they surveyed spent less than $399 on the last suit they purchased, less than $140 on the last pair of shoes, and less than $235 for their last wristwatch. . Page 55. "To build wealth, minimize your realized (taxable) income and maximize your unrealized income (wealth/capital appreciation without a cash flow)." Sound advice for any season. . Page 68. "It's easier to accumulate wealth if you don't live in a high status neighborhood." Surprisingly, it's easier to be affluent if you don't live in an affluent neighborhood. . Page 100. "Forty-two percent of millionaires the authors interviewed for their latest survey had made no trades whatsoever in their stock portfolios in the year prior to the interview. The so called active investor is one of the more difficult types of millionaires to find for interview purposes." Frequent traders take note: buy and hold seems to create more wealth. . Page 106. The Martin Method for selecting financal advisors. When a stock broker or other financial salesperson telephones Mr. Martin with an investment idea. He tells them to send a copy of their personal income tax return along with a list of what they had in their portfolio for the past three years. If stock broker has made more money from his investments than Mr. Martin, he'll invest with them. Mr. Martin reports that so far none of the cold calling salespeople have submitted their income and capital appreciation data. Wonder why? . Page 113. How many millionaires indicated that their most recent vehicle purchase was used? Nearly 37 percent. . Page 116. How do millionaires buy their cars? "These people are not into status; they buy automobiles by the pound." . Page 141. Economic Outpatient Care (EOC). How much money should you give your kids and what will it do to them? Lots of examples and anecdotes, both amusing and frightening. . Page 211. Businesses and professions that will prosper as the number of wealthy families increase in the coming years. Estate and tax lawyers along with cosmetic surgeons are prominently mentioned. . Page 216. The wealth tax is coming. Several states (e.g. Florida) have an intangible tax on the value of stock and bond portfolios. Which means you have to pay a tax on the value of your investment portfolio similar to the real estate tax you pay on the value of your home. The authors predict we will see this on the Federal level. . Page 229. It's not easy to become wealthy. "That's why [the authors] are offended by people who tell the American public:
Wade Cook. Repent! . Page 243. The six-figure doggie. The best anecdote of the book. The problems a millionaire dog and condo owner had with his neighbors in a luxury high-rise. You'll have to buy the book to read the punch line. |
filename = millbook.html
Copyright © 1998 John P. Greaney, All rights reserved.