Through the years, I have spoken with countless millionaires with the intention of gaining insights from their experiences and knowledge. I’ve shared these as Millionaire Interviews, showcasing my tailored questions and their answers. After conducting several hundred interviews, I came to realize that there was remarkable wisdom in many of the inquiries I posed, particularly when the answers from various interviewees are considered sequentially.
I’ve chosen to present these here on ESI Money in my Millionaire Wisdom series. Keep in mind, not every millionaire responded to every question, and I occasionally modified questions; that’s the reason not every millionaire is included below. Today we continue the series with millionaires responding to the following inquiry:
How did you build your net worth?
Here are their replies…
Millionaire 22: This has also been a journey characterized by steady work or employment without interruptions from 10 to 65. Because of consistent employment, I never had to tap into savings (aside from some divorce settlements). I commenced with a high salary and consistently outperformed my peers. I spent significantly less than I earned and invested most of my unexpected gains. My investment journey began with individual stocks and gradually transitioned to low-cost market funds. I maximized my IRA and Roth accounts yearly, and invested in a 401(k) with matching contributions. I always had cash available to seize opportunities.
I educated myself about finances and became an amateur Wealth Planner. Moving for my career compelled me to sell homes, and I utilized the equity to invest. I have been tracking my net worth since I was 25, hitting $1M at 50, $2M at 58, and nearly $4M at 67. I adhered to a monthly budget, reduced expenses by undertaking tasks myself, and learned from my father’s varied skills. Prioritize quality and plan for retirement early. Managed contributions to Social Security and Medicare premiums. Take market performance into account when retiring and modify withdrawals correspondingly. Suggestions for transitioning to the spending phase are appreciated.
Millionaire 23: We enjoy a comfortable lifestyle and concentrate on financial priorities such as ‘pay my taxes’ and ‘save for the best retirement.’ Taxes are paid as a priority. We automate $86K savings from our paycheck, max out 401K, HSAs, and utilize Backdoor Roth IRAs, along with a Mega Backdoor Roth strategy. Regular bills are settled electronically. We use a cashback Visa to earn 2%. We set a minimum cash flow requirement for our checking account. Any remaining funds are allocated for personal and family objectives. We maintain discipline and typically have extra funds for ‘fun money.’
Millionaire 24: My net worth originates from a solid income, particularly in the past four years, investments in the stock market, and my wife’s accomplishments in real estate. Good luck also played a role.
Millionaire 25: We consistently saved at least 40% of our incomes, now over 50%. With an asset allocation of 75% stocks and 25% bonds, investing in low-cost index funds, and utilizing dollar-cost averaging, we steadily increased our savings. Currently, we hold a 65% stock and 35% bond allocation.
Millionaire 26: Beginning to invest early and living conservatively contributed to the growth of my net worth. I saved an average of USD 40,000 annually, entirely in mutual funds with an average ROI of 9%. Savings decreased after marriage but still added up to a total of USD 3.4m.
Millionaire 27: Strategic career planning and willingness to take risks enabled the saving of 25%-30% of our combined incomes over 25 years. We diversified into mutual and managed funds, remained invested entirely in equities, and took advantage of deferred compensation programs. An upscale home combined with a focus on reducing luxuries elsewhere contributed to our net worth.
Millionaire 28: Initiating early with ESI principles helped initiate the momentum. Our income rose over time while we maintained controlled spending. Researching investments and learning from our errors supported our development.
Millionaire 29: Beginning at a startup during the dot com boom launched my investment venture. We fully utilized 401ks and IRAs, taking advantage of real estate gains through savvy buying and selling.
Plenty of valuable insights, right? Stay tuned, as we will be expanding this series in forthcoming posts.