While the Patriotic Millionaires and Warren Buffett are busy lobbying for higher taxes, let’s take a peek behind the curtain and see how the rich got that way. Six in 10 Americans with a net worth of at least $25 million have followed five basic paths in life, according to a Spectrem Group survey.
The super-rich in the Spectrem survey comprise a more elite group than those signing the patriots letter asking for higher taxes for the good of the country. You need have only $1 million to be a “patriot,” a group that includes many lawyers and entertainers. The $25 million threshold breaks out like this:
- 27% are entrepreneurs
- 15% are corporate executives
- 7% are managers
- 6% are investors
- 6% are doctors and dentists
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These paths seem to be how you get rich. Yet within these groups there is a split on the kinds of qualities that lead to wealth.
Spectrem found that 75% of wealthy entrepreneurs and business owners attribute their success to prudent risk taking. This group is also most likely to cite serendipity, or “being in the right place at the right time.” Just 58% of professionals including doctors and lawyers attributed their success to risk taking.
An overwhelming 96% of professionals attribute their success to education while 81% of entrepreneurs feel that way. Professionals are also most likely to credit frugality as a significant factor in building their wealth. Nearly all (99%) corporate executives, meanwhile, cite “hard work” as a significant wealth creation factor.
The five groups seem to agree on one thing: 80% say smart investing is a great way to join the millionaire’s club. Yet this path promises to be more difficult going forward; President Obama is seeking potentially stiff tax increases on investment income to go along with the higher income tax rates that the Patriotic Millionaires and Buffett propose. Buffett wants to redefine wealthy as households with about $500,000 of annual income as opposed to Obama’s $250,000 threshold. Still, what the rich seem to be saying is that once you have made it into the club, a tax hike is no big deal. The trick is getting into the club in the first place.