Wes Moss, a seasoned financial expert and CFP®, shares insights on building wealth and retirement planning. He highlights the rise of 'mini millionaires' and what sets them apart, such as financial independence and education. Wes also revisits the principles from "The Millionaire Next Door" and distills three key investment lessons from John Bogle, emphasizing long-term strategies and expense control. Additionally, he tackles listener questions on navigating aggressive savings and investment choices, providing valuable advice for aspiring millionaires.
The rise of 'mini millionaires' highlights that achieving millionaire status is more about overall net worth than just cash savings.
Successful wealth accumulation relies on a combination of diligent work, education, and strategic investment rather than solely on high salaries.
Deep dives
The Rise of Millionaires
The episode discusses the increasing number of millionaires in America, with recent data indicating that approximately 12% of the population, or about 16 million people, have achieved a net worth of at least one million dollars. This growth, especially notable between 2019 and 2022, can be attributed to various factors, including rising stock markets and home equity, particularly during a period of economic recovery after the COVID-19 pandemic. The Wall Street Journal highlights a segment termed 'mini millionaires', emphasizing that many individuals are not necessarily holding a million dollars in cash, but are increasingly reaching this milestone through overall net worth. It’s important to note that while the average family’s net worth has increased, this figure is significantly skewed by the wealth of billionaires, suggesting a complex landscape of wealth distribution in the country.
Common Traits of New Millionaires
The podcast outlines several key characteristics of individuals who have recently become millionaires, demonstrating that high income alone does not guarantee wealth. Most new millionaires earn between $150,000 to $250,000 annually, rather than substantially higher salaries. Furthermore, they tend to engage in stock market investments and own their homes, capitalizing on favorable market conditions that have seen their net worth increase significantly during recent years. With 90% of this demographic reporting stock ownership and 87% being homeowners, this reflects a proactive approach to financial management and investment that contributes to their wealth accumulation.
The Importance of Education and Hard Work
While higher education correlates with wealth accumulation, the episode emphasizes that hard work is the most crucial factor leading to financial success. Statistics show that around 45% of individuals aged 55 to 64 with a college degree have a net worth over one million dollars, but many millionaires also come from backgrounds without formal college education. The discussion highlights how trades and practical skills can lead to lucrative opportunities, contrary to the traditional view of wealth being predominantly tied to higher education. Ultimately, a combination of education and diligent work ethic is portrayed as a reliable pathway to achieving and maintaining wealth in today’s economy.
The Evolution of Investment Strategies
The episode offers insight into the changing landscape of investment strategies influenced by historical figures like John Bogle, the founder of Vanguard and advocate for low-cost index fund investing. Bogle's philosophy emphasized the importance of being an investor rather than a speculator, urging individuals to adopt a long-term perspective for their investments. He argued for the necessity to control expenses and cultivate emotional resilience to achieve better financial outcomes. Additionally, the episode notes that Bogle’s principles remain relevant today, advocating for good plans over the unrealistic pursuit of perfection in financial strategies, encouraging individuals to start investing with a practical approach.
Do you want to be a millionaire? Wes dives into the fascinating trend of "mini millionaires" and uncovers the secrets to their success. He explores data from the Federal Reserve and the Wall Street Journal, revealing the common traits of those achieving millionaire status. Are they earning massive salaries? How much does education matter? He breaks down the key factors. Plus, he revisits the timeless wisdom of "The Millionaire Next Door" and how its core principles still apply today. Also, Wes shares three powerful investing lessons from an interview with the legendary John Bogle, founder of Vanguard.
Plus, Christa shares your #AskWes questions and Wes gives his take. All this and more on the February 18, 2025, Ask an Advisor episode of the Clark Howard podcast.
We hope you enjoy our weekly Ask An Advisor episodes, in which Christa and Wes discuss investing and retirement savings in depth. Let us know what you think in the comments!
