More good news on the economic front. Back in December of 2009, I shared the data coming from the major mutual fund companies showing that the average 401(k) investor in the United States had finally reached the point where he or she had more money in their account than when the recession began in late 2008.
Today, The Wall Street Journal is reporting that the 2010 Global Wealth Report, which is released by the Boston Consulting Group, is finally showing that the total number of millionaire households in the United States has bounced back to pre-crisis levels. That means that 4% of American households, or 1 out of every 25, has a net worth in excess of $1,000,000.
The great thing about this country is that Federal Reserve data shows that 90% of these are first-generation rich that made it themselves. That is the highest percentage in American history, even relative to the first part of the 20th century when most wealth was inherited from family fortunes. (A really interesting fact is that the millionaire density is greatest in Singapore, where 11% of households, or 1 out of every 9, has a net worth of more than $1,000,000.)
The implications of this are important because with a bit of algebra, we can break the numbers down further: That means that if you live in the United States, 1 out every 25 households you see is a millionaire. We can go even further and calculate the break-down of self-made millionaires versus millionaires that inherited their money: 1 out every 27 households in the United States consists of self-made millionaires and 1 out every 250 consists of millionaires who inherited their money. Put another way, self-made millionaires outnumber those who inherited their money by 9-1.
That is why it is difficult for me not to laugh when I hear tired falsisms such as the "looter class", which were accurate 120 years ago but bear no relationships to reality in today's economic world. I think that is emotionally freeing and exciting because if you or I aren't multi-millionaires it is, in the words of Charlie Munger, "our own damn fault" with the exception of tragic health situations, such as having a family member with cancer or being in an accident, which can set you back years.
What are you waiting for? Start crafting your own plan to join the capitalist class.
A silly distortion: “one out of every 25 households you see…” Not from where I’m standing, although if I cross town…
StillCrass,
No, seriously – one out of every 25 households you see. The average American millionaire drives an older Toyota, lives in a house valued at less than $300,000, has a boring low-profile job, and has no outward signs that they have money. Identifying these people (called “stealth wealth” in investment management circles), is big business.
One sign is Costco shopping. Statistically, those who do a lot of their purchasing from that chain have far higher incomes, education, and net worths than people at almost any other store. Another big indicator is if they have owned an equity stake in a small business in the same town for more than 15 years (think a plumber who lives in a run-down house but has been serving the community forever).
People like Grace Groener aren’t the exception, they are the rule. It’s just you will never see them on MTV cribs. The odds are good you personally have several millionaires in your circle of friends, family, and neighbors. You just don’t know how to spot them because the media has pulled a con job and told you these folks are likely to be driving a Mercedes.