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The Millionaire Next Door: The Surprising Secrets of America's Wealthy

Thomas J. Stanley, William D. Danko · 13 HN comments
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Amazon Summary
The bestselling The Millionaire Next Door identifies seven common traits that show up again and again among those who have accumulated wealth. Most of the truly wealthy in this country don't live in Beverly Hills or on Park Avenue-they live next door. This new edition, the first since 1998, includes a new foreword for the twenty-first century by Dr. Thomas J. Stanley.
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Except that 80 percent of American millionaires are first generation affluent. Source:
It doesn't surprise me that there can be a lot of movement among the lower to upper middle class brackets. I suspect where the unfairness is really apparent is the bottom 20% or so. What are expected adulthood earnings for kids that grow up below the poverty line?
Once you restrict your stats to those that stay in school and don't do drugs, I'd think it is hard to correct for other causes. Like the presence of involved parents.
What's their definition of "millionaire"? Thanks to inflation it is now possible to become one just by virtue of having a household of two white collar workers, each making 150k annually, no kids, no cars - after a decade or two you cross 1M USD net worth.

I think it is helpful to define "millionaire" in 1920s dollars ($20M today)

It's been a long time since I've read the book, but I remember the average millionaire household they surveyed only having a single income of $70k or something.
Per The Millionaire Next Door (see for the link), most wealthy are those who have a reasonable income but good financial discipline.

Which means that a shocking number of millionaires live in poor neighborhoods and have modest lifestyles.

Those aren't the super-wealthy, of course. But most wealthy people can't be identified by where they live.

> Those aren't the super-wealthy, of course. But most wealthy people can't be identified by where they live.

This is particularly true for intergenerational wealth. I grew up in a area with fair number of affluent households. You couldn't realize it until you became familiar the community.

The millionaire next door uses an artificially low threshold for wealth. It’s not a book about the wealthy, it’s largely a book about retirement. 1M is only generating ~40k per year, if that’s your savings you can’t afford to live in an affluent area without a job.
That book was originally written decades ago. Its threshold corresponds to about $1.7 million in savings in today's world. Their median was $1.6 million, or about $2.7 million in today's dollars.

And given that the people who attained that status on average lived in cheap neighborhoods, the fact that their income wouldn't stretch long in an affluent neighborhood isn't really a concern for them.

Even adjusting for inflation from 1996 half the population had 1.0 - 1.6 million.

That translates to ~$1.7M - 2.7M, or an income of ~68k to 108k which is still not that significant.

Don't forget that married filing jointly allows about $106k of long term capital gains per year taxed at 0% federally within the US.

If you had a paid off home and $68k of tax-free income per year, would you really find it difficult to live? Seems pretty cushy to me.

Where do you get half the population from?

According to the statistics that they gave, an estimated 3.5 million Americans were that wealthy. In 1996 the US population was around 270 million so we're talking about the top 1.3% of Americans by net worth.

For more about what this group looked like, read

That’s what a a median of $1.6 million and a minimum of 1.0 million means. Half of their population was 1.0 to 1.6 Million the other half was over 1.6 million.
If you want a fine take on this subject, and one that is much better than the comments so far, read The Millionaire Next Door.
absolutely not. You do not need to display security to have it, that's a large part of what I meant when I said people like us value different things.

Well none of us have eternal security. Money is just a buffer. Network is a part of it. Health is apart of it. Education is a part of it. Network and health and education are hide things to hide when living your life, but they are signals of security and that one can afford to invest time, effort and money into them.

If you met these millionaires next door, they signal this security in many different ways outside of material wealth.

please stop moving the goalpost. I stated that people like us value different things, and that remains true whether or not you want to argue that people who don't display the typical social status behavior do display behaviors of some sort (of course, but it's not interesting).
> Nobody gets rich via income.

85% of American millionaires are self-made (i.e. first generation).

"The Millionaire Next Door"

The vast majority of that is retirement savings, and the number of those folks has ballooned as defined benefit pensions have been discontinued.
From page 8, only 1 in 5 is retired. Even so, claiming that retirement savings do not count as wealth seems rather odd.

You can choose to read the book and determine how it is done, and what you can choose to do to become a millionaire yourself, or you can choose to remain a victim of fate. Your choice.

Here are all of the books, without the affiliate links:

- The Millionaire Next Door []

- On Writing Well []

- The Life-Changing Magic of Tidying Up []

- Why Men Love Bitches []

- The Low Down on Going Down []

- Blow Him Away []

I haven't seen anything about posting affiliate links on HN, but thank you for giving people another option.
Apr 21, 2017 · gk1 on Survivorship Bias
You may like reading The Millionaire Next Door. It explains that the majority of millionaires in the US are like those you describe, and not like the flashy movie ones we see in the media.

Edit: Link for convenience:

The bar for 'millionaire' is significantly lower than it once was. Inflation, combined (in some markets) with huge raises in property values, basically means that anyone who's paid their house off is likely to qualify.

A total net worth (including real estate etc.) of more than a million dollars doesn't imply that someone's particularly wealthy the way it once did.

The home you live in is usually not included when classifying high net worth individuals. A common definition at least here in Australia is:

"a HNWI defined as having more than US$1 million in investable assets, excluding their primary residence, collectibles and consumables"

Huh, I'd missed that point. Thanks.
Have anything to add on top of that besides just the link? Have you read the book?
Criminals and marketers already know how rich you are based on where you live.

Not true.Read this:

The fact is that most rich people live without showing off. They enjoy having the freedom to do in their lives what they want but they do not want other people kidnapping their children or blackmailing them. Or just people behaving different with them because of the money.

You know Bill Gates used to park his car like everybody else in MS, until it became impossible for him to park without having 1 or 2 people ask him for money(on the tens of thousand of dollars each time).

Or ask me. I am not Bill Gates, but for people in my environment I have "made it".

Just putting my name in my HN account will significantly change how people react to my comments.

(Depressing news: in spite of the "economic miracle" that college is supposed to work, but hasn't for a long time, the #1 predictor of whether someone will be wealthy is having wealthy parents.)

That might be "the #1 predictor," but out of how many predictors? What "percentage" is it, if that term is even meaningful here? How do we decide what counts as "wealthy?" Is it income or assets? If income, what happens to people making $300,000 a year but spending it all (I have met these people). What happens to the Millionaires Next Door ( ; it has done more to shape my thinking about wealth than any other book. One surprising fact: most millionaires don't have extraordinary incomes but do consistently live below their means and save their extra money)?

If having "wealthy" parents is the #1 predictor and accounts for, say, 20% of the likelihood of the next generation's wealth, and, say, education accounts for another 10%, what happens if 40% is noise / randomness? Then noise accounts for twice as much as wealth! Most of the actual peer-reviewed studies I've read about this topic come to the conclusions they do through some dubious data decisions.

I'm not trying to pick a pointless, semantic fight here, but I see a lot of statements that try to compress a complex set of issues and questions into a single metric. As usually happens with this sort of thing, there's also an element of anecdote here: I have seen kids from wealthy families piss it all away and kids from poor families do the opposite. My own grandparents had virtually nothing and didn't speak English.

but I see a lot of statements that try to compress a complex set of issues and questions into a single metric

This needs to be posted over and over again under each posting pretending to know how "things" work. Social life is incredibly complex, and anyone pretending to have found the single, all explaining causality is flat out dishonest.

Sorry, down-voted by accident. Agree 100%.
There are, in fact, metrics that show social mobility by comparing generational incomes.

The repeated "citation needed" refrain is exhausting.

As though declining social mobility is news.

Your link is the third hit my quick search.

Took less time to do a quick fact check than to comment.

It's ALMOST as if geeks would rather go full pedant on tangental points rather than face uncomfortable worldviews.

> It's ALMOST as if geeks would rather go full pedant on tangental points rather than face uncomfortable worldviews.

I hesitate to say this aloud, but I... I think geeks might be human. o.O

Personally, I prefer the book Millionaire Next Door. Helped me develop some effective money saving ideas:
I think you are mixing up Guy Kawasaki (The Art of the Start and other books like the ones given away free here) with Robert Kiyosaki (Rich Dad, Poor Dad)
Oh gosh - PLEASE don't purchase or recommend anything to do with Robert Kiyosaki!
or Guy Kawasaki
That book's not even by Kiyosaki, so it's a doubly random link.
The Millionaire Next Door: The Surprising Secrets of America's Wealthy by Thomas Stanley
Thanks for the suggestion, but you should post the full link (not a url shortener). It's just a HN-etiquette thing.
Sure - No problem. Link updated; Thanks for the heads up.
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