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Summary: Most people have it all wrong on how you become wealthy
Review: Most people have it all wrong about how you become wealthy, according to the author-researchers of The Millionaire Next Door. Their 20-year study of how people become wealthy involved focus groups and personal interviews and accompanying statistical tables on where they shop, cars they drive, and the daily work they do. I found the statistical tables of mild interest, but insights into their views and beliefs were surprising and revealing. The target group studied have net worths of one to ten-million dollars.The majority acquired their wealth in one generation and followed these factors of wealth accumulation: •Live well below your means. •Spend your time, energy and money efficiently in ways that build wealth. •Believe that financial independence is more important than social status •Their parents didn't help. •Their adult children are economically seW-sufficient. •They know how to pick market opportunities. .They chose the right occupation. As a group, they all have supreme confidence in their own ability. If you thought ancestry had much to do with it consider this: The highest concen-trations of millionaires by ancestry in order of rank are Russians; Scotts; Hungarians; Latvians; Australians; Egyptians. Self-employment is a major correlate of wealth. They are frugal and their spouses even more so. Not only are they planners and budgeters, they don't shop where you might think; their two favorite stores are J. C. Penny and Sears. Most answer these questions the right way: -Does your household operate on an annual budget? -Do you know how much your family spends each year for food, clothing, shelter? -Do you have a clear, defined set of daily, weekly, monthly, annual and lifetime goals? -Do you spe'd a lot of time planning your financial future? -Do you niinnnize your taxable income and maximize your other income? While nearly all own stocks, they don't follow the ups and downs of the market. They firmly believe the more intellect, time and energy you spend hiring a financial adviser, the more likely you will be to find a successful one. They use CPAS to not only do taxes, but also to provide investment advice and they usually choose one with the most millionaire clients. They believe it is easier to earn a lot of money than it is to accumulate wealth. A couple of charters are devoted to their relationships with their children. They believe the more dollars they give to adult children, the fewer dollars these children accumulate (a statistically proved relationship). Here are the rules they more or less live by in dealing with their offspring: -Never tell your kids you are wealthy. -Teach your children discipline and frugality. -Minimize discussion on what your kids will inherit. -Never give cash or significant gifts as part of a negotiation. -Stay out of your adult children's' family matters. -Emphasize their achievements.. .not your success. -Assure them many things are more valuable than money. Millionaires encourage their children to become seW-employed professionals such as doctors, attorneys, engineers, architects, accountants and dentists. They believe only a small number of professional people fail to make a profit any given year and they earn more than the average for small businesses. "You can lose your business, but not your intellect," they say. Most own their own business because they believe self-employment is less risky than working for another. Well worth reading. You can learn a lot about how to accumulate wealth.
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Summary: A Good Read
Review: The Millionaire Next Door by Thomas J. Stanley and William Danko is a fun to read book for anyone interested in understanding America's wealthy, defined by Stanley and Danko as those people who have net worth of $1 million dollars or more. The Millionaire Next Door claims that there are seven key factors that lead to wealth accumulation. Included are: 1. Living Well Below your financial means. In other words being frugal. Buying the reliable used car versus the shinny new BMW or Porsche. 2. Spending your time wisely and in ways that lead to building wealth, such as studying investment. 3. Being more concerned about financial independence rather than showing off how much wealth you possess. This is a book that will make you feel good about yourself if you are a compulsive coupon clipper or if you keep telling your kids to shut the door as they are letting the heat out of the house and it is costing you money. The book claims that it will teach you how to join the ranks of America's millionaires. Who could resist reading such a book? To get rich, you must first learn not to be a hyperconsumer. In other words don't buy a lot of expensive stuff you don't need. You need good "offense" or generating earnings of at least $60,000 or more a year. Then you need good "defense" or saving a goodly portion of what you earn. Then you need to get old. In fact, even if you don't have a million dollars, you can still be "rich" by being a PAW. PAWs or "Prodigious Accumulators of Wealth" have more money than you would think they would based upon their age and income. In contrast are the wasteful UAWs or "Under Accumulators of Wealth." There are also AAWs (Average Accumulators of Wealth) but they aren't discussed much. No mention is made of how much EWOKS tend to accumulate. But, I'm betting those furry little fellows save a lot. So even athletes worth tens of millions of dollars can be UAWs. There is something reassuring in that! There is a lot of interesting knowledge to be gleamed from this book. We learn that 3.5 of every 100 households in America have a net worth of $1 million dollars or more. But that 22 of every 100 households headed by Russians have a net worth over $1 million dollars. We also learn that self-employed people account for over 2/3 of the wealthy in America. But Stanley and Danko do not tell everyone to start their own business. That's too risky, the authors say. In later chapters they do mention some businesses that they believe are poised for growth in the future. Businesses that cater to millionaires. Danko and Stanley seem to see a glimpse of successful businesses when they suggest starting professional businesses. Such businesses tend to need to generate less revenue to make an equivalent level of profits. But this is equivalent to starting a business with high net margins. Many non-professional businesses also have relatively high profit margins. Many college drop outs have built computer-programming based companies, for example. Despite having studied wealth for decades, and holding PhD's, Stanley and Danko seem to have some misunderstanding about the nature of wealth building via entrepreneurship. It is pointed out that many corporate businesses fail to report profits in any given 12 month period. No allowance is made for businesses like amazon.com which are growing rapidly and establishing themselves. The implied message seems to be that running a business is just too risky. And, it is pointed out that many businesses demand considerable resources like land for coal mining. But, before this the authors are toting investing in assets that appreciate. Land is one of those assets. We are told that one key factor of the rich is that they minimize their tax bite. The rich tend to pay a much smaller percentage of their overall wealth in taxes than most people. But, here it seems Stanley and Danko are mixing up cause and effect. Yes, the rich think about taxes. But, it is precisely because they have already saved a lot, and have retained wealth that is not taxed, that they pay a smaller percentage of their wealth in taxes. But Stanley and Danko can be excused for any oversight as they hold PhD's and "being well educated has certain drawbacks" with regard to the creation of wealth. The flaw of pursuing spending to show you are affluent and have financial status is very thoroughly trashed, as it rightfully should be. All successful people tend to be achievement oriented. But, I think the book could do a better job of following up upon the fact that 2/3 of America's wealthy are small business owners. It seems an injustice to just sweepingly say that likelihood of success in business is tenuous, and imply you should get a professional degree so that you have high earnings to save. Maybe this is what some business owners tell their children, but it is not how they acquired their wealth. To really understand wealth creation, you need to understand business, and I feel Stanley and Danko could do a better job expanding upon this. Finally, there is some very interesting food for thought about how wealth will affect your children. I like this book a lot and recommend it. Peter Hupalo, author of Thinking Like An Entrepreneur.
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Summary: I really like this book
Review: This book is a great book to read to find out about financial independence. I don't know why some people don't like this book
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Summary: Uncovering Myths with Important Financial Tips
Review: This book provided several interesting insights behind the many folks in America today who are those "millionaires" today. Many studies revealed things we'd expect. However most gave us a new train of thought to work with. In America there are a lot of "poseurs" who drive the luxury cars, wear the expensive clothing, and live in prestigious neighborhoods. In actuality these wealth-projectors are quite broke. They finance most of their material possesions to the hilt, and if they lost their job, or there was a sudden downturn in the economy, they would likely lose all the things they're "renting." I have seen this happen to some people. I learned a lot from this book. It gives a great sense of perspective, that we at times can forget in today's society, as well as prudent financial advice from those who've reached the million mark.
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Summary: Interesting
Review: I'd recommend the book for entertainment and interesting fact reading. For those who don't understand that living below your means is important to wealth building, this is a good primer and motivator. By studying the "common" millionaire, you can copy their habits even if your last name is not Rockefeller (sp?) or Trump. I do believe, as the book shows, that the average joe can do well by saving and investing. There is some fluff in the book, in particular the chapter on what kind of used cars the rich buy and why. But still entertaining.
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Summary: The Millionaire Next Door
Review: This is an exceptional book that is a must for anyone wanting to understand key elements of becoming wealthy in America!
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Summary: Excellent book.
Review: Let's face it - very few people are able to create mass amounts of wealth through vehicles other than lifetime saving. While people like Bill Gates and Michael Dell won't find much value in this book; the rest of us certainly will. This book beautifully illustrates what separates those of us who become wealthy from those of us who don't. It usually has little to do with your level of income (although this certainly helps); but instead has more to do with the lifestyle you maintain. Central theme: frugal living leads to wealth. While none of the information provided is ground breaking(in fact, it's nothing more than common sense), it's offered in a manner that is fun to read and somehow adds value to the information provided. In a society in which we are encouraged to spend money on material objects so that we can keep up with our neighbors next door, this book certainly serves as a positive confirmation for living a more financially reasonable lifestyle.
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Summary: Invest the money instead.
Review: You will be better off adding the money to your investment instead of buying this book.
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Summary: Split feelings
Review: This book was an interesting split. It validates what you are doing as well as encourages you to do more. You can feel good about saving instead of spending, and you can even "look down" on those with nice cars, etc. Halfway through the book however, the constant reiteration of the same point becomes monotonous. The book carries a very "working class hero" tone which becomes tiresome because it is poured on so heavily. The saving concepts presented are solid enough to make the book worth recommending.
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Summary: RIGHT...LIKE YOU NEED TO READ ANOTHER REVIEW!
Review: PHENOMENAL BOOK, 99% TRUE AND ACCURATE. MY WIFE AND I BECAME WEALTHY USING THE SAME FORMULA (STARTED YEARS BEFORE THE BOOK WAS PUBLISHED, READING THE BOOK GAVE JOYOUS CONFIRMATION TO OUR CHOICES AND ACTIONS DURING THE SPARCE YEARS. I AM RECOMMENDING THE BOOK TO ALL I KNOW. FYI, WE ARE NOW (12-7-99) 40 AND 35, MILLIONAIRES, AND NO LONGER NEED TO WORK ANOTHER DAY OF OUR LIVES (ALTHOUGH WE STILL DO)! PS- RENTAL REAL ESTATE BEATS THE PULP OUT OF ANY OTHER INVESTMENT INCLUDING STOCKS.
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