The Forbes 400 list of Richest Americans celebrated its 25th anniversary this year. When the list was first published in 1982, the bottom of the list could be yours for a mere $90 million. In the 2007 listing, it takes $1 billion to join the party. Staggering.
After you’ve perused through the pages of the magazine, you’ll feel like you’ve clinked Cristal with The Donald (net worth $3 billion) and wondered what 33-year old John Arnold (net worth $1.5 billion) has that you don’t have. Now that you’ve had your fun, join me back on terra firma as we walk through “everyday wealth.”
A few facts:
• By the end of the decade, demographers predict that 10% of America’s households will have a net worth of at least $1 million—an unprecedented 11 million households.
• Of those 11 million households, more than 90% of them have net worths between $1 million and $10 million.
• These households cumulatively control $20.7 trillion, nearly 60% more than the cumulative net worth of people with more than $10 million ($12.5 trillion) and 13 times the wealth controlled by the Forbes 400 ($1.54 trillion). (All of these statistics (except Forbes 400 figures) are based on the Federal Reserve Board’s 2004 Survey of Consumer Finances. The next survey results from the Fed are due in 2009 and they’ll be based on 2007 data.)
In 2006, Russ Alan Prince and I commissioned a survey of 586 Americans with net worths between $1 million and $10 million for our upcoming book, The Middle-Class Millionaire. These are the “working rich,” middle-class people who’ve managed to accumulate considerable wealth, but also continue to work hard to support their increasingly expensive lifestyles. As I read through the profiles of the world’s billionaires, I noticed several similarities between them and the Middle-Class Millionaires in our survey.
To begin with, the ranks of America’s wealthy continue to be stacked by people who started their own businesses. The top eight spots on the Forbes 400 this year belong to entrepreneurs. In our study of 586 Middle-Class Millionaires, more than 80% of them either owned their own businesses or were partners in a professional practice.
Here are a few other similarities:
On “Luck”
According to our survey, 31% of Middle-Class Millionaires said that “luck was very or extremely important in achieving financial success.”
Forbes asked these self-made billionaires, “How much of your success do you attribute to sheer luck?”
• Jorge Perez ($1.8 billion), a condominium titan from Miami, answered “33% (to go along with 33% brains and education and 33% hard work).”
• Mortimer Zuckerman ($2.4 billion), real estate and media magnate, responded, “at least a third.”
• A. Alfred Taubman ($1.8 billion), a real estate tycoon, said, “Good luck and bad luck balance each other out. As my old friend Henry Ford II said, the harder you work, the luckier you get.”
On “People and Networking”
According to our survey, 36.9% of the Middle-Class Millionaire respondents felt that “Making an effort to work with ‘good people’ was very or extremely important in achieving financial success.”
When Forbes asked these billionaires “What is the hardest lesson you’ve had to learn?”, here’s what they had to say:
• Logging maven, Tim Blixseth ($1.3 billion) responded, “Learning to allow people to make decisions without me.”
• Financial services magnate, Eli Broad ($7 billion), said, “You can’t do it all yourself.”
• O. Bruton Smith ($1.5 billion), racing king of the south, puts no spin on his response, “Dealing with incompetent attorneys.”
Becoming wealthy seems to require many of the same practices and attitudes whether you’re striving for seven figures or ten. One thing millionaires and billionaires alike share is this: you can never seem to have enough. When we asked Middle-Class Millionaires how much money they would need in order to “feel wealthy,” the average response was $24.3 million. When Phillip Ruffin, who made $2.1 billion in the casino business, was what his hardest lesson was, he responded, “selling too early.”
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