What do you imagine the typical millionaire looks like? If you guessed that they drive luxury cars, wear the latest fashion, own all the latest gadgets, and are connoisseurs of high-end products and services, you’d be very mistaken.
This stereotypical image comes from the media’s glorification of the very rare cases of millionaires who do spend a lot of their income on such ‘status’ products. Most of the time, however, the people who bother to purchase such products are simply ‘high-income earners’ – people who make a lot of money but are unable to keep any of it, and are not therefore not wealthy, and definitely not millionaires.
According to decades of research, most American millionaires (95%+) do not live an extravagant lifestyle at all. In fact, they’re extremely frugal. They drive domestic, moderately priced (often used) cars, they rarely buy new or expensive clothes, they fly economy class, and so on.
In contrast, they’re not afraid to spend exorbitant amounts of money on getting the best financial and legal advice. Their secret to wealth seems to be their ability to minimize their realized (taxable) income, maximizing their unrealized (un-taxable) income, and funnelling funds in other (legal) ways. In simple terms, they make it appear that they do not make a high income, thus avoiding income tax, and instead, defer the bulk of their wealth into their businesses, stock options, retirement savings, gifts to their children, etc.
Most millionaires are self-made, first-generation wealthy – often from immigrant families. Ironically, in an attempt to give their kids a better life, they often spoil their children, and effectively impair their ability to attain wealth for future generations.
This book offers a fascinating peek into the lives of how actual millionaires make, and keep, their money.