A reporter recently asked me about the changes I have noticed among the American millionaire population since the current economic meltdown. She wanted to know if the millionaire market is dead given the recent reversals in the market value of stocks and homes. I replied that the millionaire next door is still alive and kicking even today in this recession. Since 1980 I have consistently found that most millionaires do not have all of their wealth tied up in their stock portfolios or in their homes. One of the reasons that millionaires are economically successful is that they think differently. Many a millionaire has told me that true diversity has much to do with controlling one’s investments; no one can control the stock market. But you can, for example, control your own business, private investments, and money you lend to private parties. Not at any time during the past thirty years have I found that the typical millionaire had more than 30 percent of his wealth invested in publicly traded stocks. More often it is in the low-to-mid-20- percent range. These percentages are consistent with those found in studies conducted by the Internal Revenue Service, which has the best data set on millionaires in the world.
Consider the profile of a millionaire-next-door-type couple, Ms. T and her husband. To most, this couple’s lifestyle is boring, even common. This millionaire’s brand of watch is a Timex; her husband’s is a Seiko (number one among millionaires). The couple buys their clothes at Dillard’s, J.C. Penney, and TJ Maxx. They have purchased only two motor vehicles in the past 10 years: both Fords. The current market value of their home is approximately $275,000. Ms. T’s most recent haircut cost $18. Yet they are uncommon in the sense that they are financially independent.