Research shows that most of today's millionaires were not born into wealth. Asurvey published by Weth-Xfound that about 68 percent of those with a net worth of $30 million or more did so themselves. Additionally, another study from Fidelity Investments found that 88 percent of all millionaires are self-made, meaning they have not inherited their wealth.
For self-made millionaires, becoming rich is not always an easy process; many of them have worked hard for itfinancial successand then used their shrewdness and prudence to put their new wealth in the right places. What do some of these self-made millionaires have in common, and what lessons can you learn from your own investing strategy?
How Millionaires Get Rich
The Fidelity survey found that when considering their financial future, 30 percent of millionaires surveyed said they were concerned about preserving their wealth, while 20 percent said they were focused on growing their wealth. This forms the basis of some basic strategies if you hope to join the ranks of millionaires.
“Today's millionaires are multi-dimensional, and to truly understand them you need to look not just at their outlook, but also at their path to wealth and their financial goals for the future,” said Sanjiv Mirchandani, former president of National Financial, an advisor to Fidelity. Investment company.
Millionaires suggest different ways to build your wealth. Here are a few you can learn for yourself:
Invest in different locations and options
Don't put all your eggs in one basket. By diversifying your investments, you can manage risk by ensuring that all your money isn't at risk if one particular investment fails.
Provide multiple income streams
For many self-made millionaires, the money comes from multiple places, including their ownsalaries, returns from investments,incomefrom rental properties and investments they have made in other business ventures, to name just a few examples. If one revenue stream slows down, another can take its place. Much of this is mentionedpassive incomeor money earned without actively investing time and effort into the business.
Reduce expenses
Before they became rich, many millionaires developed the habit of limiting their spending. They came up with a plan for the money they made and strategically evaluated every aspect of their finances. Such an approach should start with reducing costs and eliminating unnecessary debt that takes away revenue and prevents account growth.
Save, save, save
A common theme you'll hear from self-made millionaires is holding on to your money. Put your money in investment accounts where it can sit and earn interest over time.
ter info
Research shows that millionaires have many traits in common, including ambition, the value of time, not being afraid of failure and knowing when to ask experts for help.
What qualities do millionaires have in common?
The results of the Fidelity study showed that while millionaires have different ways of making money, they often share these traits:
- They set ambitious goals and act on them.Self-made millionaires put their ideas and dreams into action, whatever they may bestart a businessor pursue other professional or personal pursuits. This determination is a common driving force among many who made their millions without an inheritance.
- They have mentors.Many self-made millionaires are quick to admit that they can't possibly know how to do everything. They reach others who know the ins and outs of different types of saving and investing, and tap the best minds for perspective and insight on each topic. It's definitely worth it.
- They are looking for feedback.For a self-made millionaire, the self-improvement never stops. Self-made millionaires seek criticism and feedback on their ideas and business practices, which helps them better identify blind spots and ensure their ventures will succeed.
- They are not afraid of failure.Millionaires understand the benefits of learning lessons through failure. But the risks they take are carefully calculated and each scenario is played out. Once they commit to something, they give it their all.
- They understand the value of time.Time is money, and millionaires know this all too well. They quickly learn to manage their time and know that there is no reason to trade time for money.
What do millionaires do with their money?
When it comes to investment strategies, self-made millionaires were more likely to make stock investments, while those who were born rich tended to have more investments in real estate, the study found. Diversifying these investments is crucial for many millionaires.
Millionaires put their money in a variety of places, including their primary residence, mutual funds, stocks andretirement accounts. Millionaires focus on putting their money where it will grow. They ensure that they do not invest large amounts of money in items that will depreciate in value. For example, a daily use car is likely to lose value over time.
The key for most millionaires is to save money before spending it. No matter how much their annual salary may be, most millionaires put their money where it can grow, usually in stocks, bonds and other forms of stable investments.
Key takeaway
Millionaires put their money in places where it can grow, such as mutual funds, stocks and retirement accounts.
Examples of self-made millionaires
According to the same Wealth-X survey discussed earlier in this article, just over 265,000 individuals are considered ultra-wealthy in 2018, meaning they have a net worth of $30 million or more. Moreover, more than two-thirds of ultra-rich people are self-made. Here are five famous examples:
- Barbara Corcoran. The real estate mogul turned aroundHadTank Investor started his eponymous brokerage with a $1,000 loan. Under her supervision, the company grew into a multi-million dollar empire, which she sold for $66 million in 2001.
- Janice Bryant Howroyd.The founder and CEO of ActOne Group started his employment agency with $1,500 ($900 of which was borrowed from his mother), a fax machine and a telephone. She is now one of the richest self-made black female millionaires in the United States, with an estimated net worth of $285 million.
- Warren Buffet.Perhaps one of the most famous and richest people in the world – and technically a billionaire and not a millionaire – Buffett still deserves a mention on this list because he is known for being self-made. The chairman and CEO of Berkshire Hathaway made his first millions running a hedge fund and is known for his principled and sensible approach to investing.
- John Mackey.Mackey, one of the founders of Whole Foods Market, started his dream with $5,000, which wasn't the $50,000 he wanted to save to start his business. He transformed the first floor of an old house into a small grocery store specializing in natural food. After running the store for two years, Mackey teamed up with the owners of another natural grocery store to create Whole Foods Market. In August 2017, Amazon bought Whole Foods for $13.7 billion.
- Whitney Wolfe herd.At the age of 25, Wolfe Herd founded Bumble and created a unique space in the online dating world. She used her experience working on another dating app to design a dating app where women initiate conversations. Wolfe Herd became the youngest woman to take an American company public. As of 2023, her net worth was over $500 million. Wolfe Herd stepped down as CEO of Bumble and became executive chairman in early 2024 so she could explore other opportunities.
Create your path to financial success
Becoming a millionaire requires a combination of financial discipline, strategic planning and a commitment to continuous self-improvement. Where possible, it can serve as a good basis for devoting some of your income to your long-term goals. Focus wisely on saving and investing to give your money the potential for exponential growth. As the people above have shown, the journey to becoming a millionaire is about more than just accumulating wealth; cultivating a productive mindset is also important.
Shayna Waltower contributed to this article. Source interviews were conducted for an earlier version of this article.
