July 2018
Many talk about building wealth but few succeed.
Most are not born into wealth, do not win the lottery, become a professional sports player or make a killing in the stock market.
The majority of millionaires are average people who have done the best they can with what they have. Mostly, it comes down to how they handle risk. Understanding how these people think and manage risk may be the best way to follow in their footsteps.
Ohio State University research by Jay Zagorsky finds that people who remain married are wealthier than those who never marry. Divorce can result in average wealth dropping by 77%. Financial assets of married couples can be ten times that of singles by the time they reach retirement age according to the National Bureau of Economic Research.
Average millionaires tend to own a single home through most of their lives. Trading up to a larger home eats up wealth through the payment of commissions and moving costs. Focusing on a single mortgage, and only refinancing with shorter-term loans, typically results in equity that can be used to finance retirement.
When it comes to investing average people avoid speculation. They have diversified portfolios that include stocks, bonds, real estate and cash.
A BMO Private Bank survey (2013) found that 90% of millionaires have a college degree. Over half of this group had a graduate or professional degree. A CNBC Millionaire Survey reports that 80% of millionaires believe higher education played a role in accumulating their wealth.
A Spectrum Group survey (2014) of millionaires found 70% used the services of financial advisors.
