Quick Facts about Saving, Investing and Entrepreneurship…
Turns out, a lot of wealthy men and women think alike, at least in some key areas.
Several common personality traits are revealed in the Annual Insights on Wealth and Worth survey from U.S. Trust. This is the largest study that surveys Americans with high net-worth, who are described as having $3 million or more in investable assets.
Even if you are not part of this elite group – yet – you can take a page from their playbook.
Do any of these traits surprise you?
Most built wealth by working & saving early
- A majority came from middle class backgrounds, although 1 in 5 respondents grew up poor.
- On average, only 10% of their wealth is inherited, while 50% is from earning income…revealing the significance that work rather than born into a rich family builds wealth.
- Almost 80% said their parents stressed academics, naming financial discipline (68%) and work participation (63%) as other values important to their parents.
- On average, the respondents started saving money by age 14 and earned money outside the home by age 15.
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Nearly 2 out of 3 investors with high net-worth consider credit an important wealth-building strategy.
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About 8 in 10 are confident they know how – and when – to use credit to strategic financial advantage.
- Giving back is a priority, with nearly 3 in 4 considered financial donations to be the greatest contribution to society.
Do the wealthy take more risk when investing?
- About 4 in 5 say their largest investment gains are from smaller wins, over time rather than taking big risks. However, more of the younger respondents succeeded by taking big chances or using market timing.
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Nearly 3 in 5 keep more than 10% of their portfolios in cash, because they want liquidity to act fast when investment opportunities arise.
- Almost 50% own tangible assets – real estate, farmland, timber – which is up from 41% in 2014 and increasing.
Entrepreneurship is a calling rather than a job?
- While most considered running a business tougher than working for someone else, 8 in 10 preferred to own the business. In fact, 77% founded a business compared to 2% inheriting one.
- A family affair? Roughly 4 in 10 business owners involved their family in the business.
- Their businesses outweighed personal needs and financial matters, but 6 in 10 do not have a business exit plan.
- For 50% of owners, most of their income and financial assets are tied to their businesses.
All these results boil down to 3 basic keys for financial success:
- Start early to instill a work ethic and savings habit.
- Learn to invest, but you don’t need to be a big risk taker.
- Build a business to create a path to wealth.
U.S. Trust, a division of Bank of America, surveyed almost 700 and has reported data since 1993. Respondents had $3 million or more in invest-able assets. (In 2016, about 2 million households in the U.S. had $3 million or more.) You can see the entire survey here.
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