Wednesday, July 25, 2012

How does most millionaire get rich?

millionaire and CFA
how does millionaire become millionaire
Most of millionaires today built their own wealth and did not inherit it, according to a new research.

The study was done by Fidelity Investments and shown that 86% of millionaires consider themselves as born from non-wealthy families. The average millionaire is 61 years old and has on average $3.06 million in assets (in that case it would be more interesting to look at the median amount of assets as some super rich millionaires make this average higher and give us a false idea of what most of the millionaire really own).

About 3/4 of these millionaires feel wealthy, but for most them they said that assets of at least $5 million will make them feel really wealthy.
The self-made ones said their top sources of assets are investments, stock options, on the other hand those who were borned from wealthy family are more likely to tell that inheritance, real estate and entrepreneurship as a major source of assets. Moreover the self-made rich were more investing in stocks and equity, while the rest was saying they had more real estate investments.
Amongst the millionaire, 30% of them are only concerned with capital preservation such as protecting wealth from inflation and risk, and only 20% were focusing on increasing their wealth.I guess the current economic situation has really pushed most investors into a high level of risk-aversion.

The actual investment trends for millionaires:
-Certificates of deposit and Money Market accounts (less than one year maturity) investing
-Equity exchange traded funds (ETF's) investing are becoming more and more common
-Domestic Bonds and equity mutual funds investing

Millionaire are usually good investors and use efficient portfolio management and diversification protecting them against risk.
The study  a was based on surveys of more than 1,000 millionaire investors.


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