More Brief Thoughts
The Millionaire Next Door
Although it has been a best seller for over a year, we (the person who posted this at Briefing.com) just finished reading "The Millionaire Next Door" by Thomas Stanley, and William Danko. This study of millionaires in America shows the average millionaire as a frugal business owner who compulsively saves and regularly invests.
Extremely interesting, overall, there are a few points Briefing.com readers might find interesting. First is the net worth test. The authors use the following formula as a quick acid test of whether
you have "Prodigious Accumulator of Wealth" (PAW) habits, or an "Under Accumulator of Wealth" (UAW).
Net Worth = 1/10 * Age * Income
For example, a 50 year old man with income of $100,000 should have a net worth, minus any inherited wealth, of at least $500,000. If you have a net worth higher than that, chances are you have the traits of a PAW. If your net worth is less than that determined by the formula, you probably do not have the savings habits of the average millionaire. Interesting
Most are buy-and-hold investors. Here is the data from the author's ten year study of millionaires in America.
Daytraders: 1%
Trade Weekly: 1%
Trade Monthly: 7%
Trade Yearly: 15% (includes daytrade, weekly, and monthly numbers)
Trade Every 1-2 Years: 20%
Trade Every 2-4 Years: 25%
Trade Every 4-6 Years: 13%
Trade 6 or more years: 32%
Hey gang, we must be overtrading... |
