{"id":30560,"date":"2012-07-02T06:25:29","date_gmt":"2012-07-02T10:25:29","guid":{"rendered":"http:\/\/countingpips.com\/forex-news\/2012\/07\/are-the-rich-smarter-than-you\/"},"modified":"2012-07-02T06:25:29","modified_gmt":"2012-07-02T10:25:29","slug":"are-the-rich-smarter-than-you","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex-news\/2012\/07\/02\/are-the-rich-smarter-than-you\/","title":{"rendered":"Are the Rich Smarter Than You?"},"content":{"rendered":"<p>Article by <a href=\"http:\/\/www.investmentu.com\/\" target=\"_blank\">Investment U<\/a> <\/p>\n<h1><a rel=\"nofollow\" target=\"_blank\" href=\"http:\/\/www.investmentu.com\/2011\/May\/are-the-rich-smarter-than-you.html\">Are the Rich Smarter Than You?<\/a><\/h1>\n<p>by\u00a0<a rel=\"nofollow\" target=\"_blank\" href=\"http:\/\/www.investmentu.com\/investment-experts\/alex-green-archives.html\">Alexander Green<\/a>,\u00a0<em>Investment U\u2019s\u00a0<\/em>Chief Investment Strategist<br \/>\nFriday, June 29, 2012: Issue #1805<\/p>\n<p>Growing up, when I got into an argument with my mother, she would sometimes resort to the nuclear option, her tried-and-true conversation stopper.<\/p>\n<p>Putting her hands on her hips and using the worst faux Southern accent imaginable, she\u2019d say, \u201cWell if you\u2019re so damn smart, why aren\u2019t you\u00a0<em>rich<\/em>?\u201d<\/p>\n<p>I never knew how to respond to this. Of course, I was 12 at the time and the deadbeats on my paper route kept margins low. Still, it ingrained in me the notion that the rich must have a little something extra going on upstairs, otherwise we\u2019d all be rolling in it. Right?<\/p>\n<p>There is, in fact, some evidence to support this. According to a recent report from the U.S. Census Bureau, there is a strong positive correlation between income and education. Over an adult\u2019s working life, on average\u2026<\/p>\n<ul>\n<li>High school graduates should expect to earn $1.2 million;<\/li>\n<li>Those with a bachelor\u2019s degree, $2.1 million;<\/li>\n<li>Those with a master\u2019s degree, $2.5 million;<\/li>\n<li>Those with doctoral degrees, $3.4 million;<\/li>\n<li>And those with professional degrees, $4.4 million.<\/li>\n<\/ul>\n<p>But here\u2019s the rub. Studies show that those who earn the most aren\u2019t necessarily the richest\u2026<\/p>\n<h2><strong>How to Determine Real Wealth<\/strong><\/h2>\n<p>To determine real wealth, you need to look at a balance sheet \u2013 assets minus liabilities \u2013 not an income statement. Just ask Dr. Thomas J. Stanley, the bestselling author of\u00a0<em>The Millionaire Next Door<\/em>\u00a0and perhaps the country\u2019s foremost authority on the habits and characteristics of America\u2019s wealthy. Many of his findings are just the opposite of what you\u2019d expect.<\/p>\n<p>For example, we generally envision millionaires as Bentley-driving, mansion-owning, Tiffany-shopping members of exclusive country clubs. And, indeed, Stanley\u2019s research reveals that the \u201cglittering rich\u201d \u2013 those with a net worth of $10 million or more \u2013 often meet this description.<\/p>\n<p>But most millionaires \u2013 individuals with a net worth of $1 million or more \u2013 live an entirely different lifestyle. Stanley found that the vast majority:<\/p>\n<ul>\n<li>Live in a house that cost less than $400,000.<\/li>\n<li>Do not own a second home.<\/li>\n<li>Have never owned a boat.<\/li>\n<li>Are more likely to wear a Timex than a Rolex.<\/li>\n<li>Do not collect wine and generally pay less than $15 for a bottle.<\/li>\n<li>Are more likely to drive a Toyota than a Beemer.<\/li>\n<li>Have never paid more than $400 for a suit.<\/li>\n<li>Spend very little on prestige brands and luxury items.<\/li>\n<\/ul>\n<p>This is certainly not the traditional image of millionaires. And it makes you wonder, who the heck is buying all those Mercedes convertibles, Louis Vuitton purses and $60-bottles of Grey Goose vodka? The answer, according to Dr. Stanley, is \u201caspirationals,\u201d people who act rich, want to be rich, but really aren\u2019t rich.<\/p>\n<p>Many are good people, well-educated and perhaps earning a six-figure income. But they aren\u2019t balance-sheet rich because it\u2019s almost impossible for most workers \u2013 even those who are well paid \u2013 to hyper-spend on consumer goods\u00a0<em>and<\/em>\u00a0save a lot of money. (And saving is the key prerequisite for investing.)<\/p>\n<p>This notion shocks many Americans. Dr. Stanley recalls an appearance on Oprah when a member of the audience asked\u00a0<em>the question<\/em>, one he\u2019s heard hundreds of times before:<\/p>\n<p><em>\u201cWhat good does it do to have all this money if you don\u2019t spend it?\u201d<\/em><\/p>\n<p>She was angry, indignant even.\u00a0<em>\u201cThese people couldn\u2019t possibly be happy.\u201d<\/em><\/p>\n<h2><strong>Keeping Up With the Joneses and Smiths<\/strong><\/h2>\n<p>Like so many others, this woman genuinely believed that the more you spend, the better life is. Understand, we\u2019re not talking about people who live below the poverty line. (Clearly,\u00a0<em>their<\/em>\u00a0lives would be better if they were able to spend more.) We\u2019re talking about middle-class consumers and up, those who often live beyond their means and then find themselves under enormous pressure, especially in a weak economy.<\/p>\n<p>Some were overly optimistic about their earning prospects. Others didn\u2019t realize that they are up against an army of the best and most creative marketers in the world, whose job it is to convince you that \u201cyou are what you buy,\u201d that you need to outspend \u2013 to out-display \u2013 others. The unspoken message behind the constant barrage of TV and billboard ads featuring all those impossibly good-looking men and women is that you are special, you are deserving, and you need to look and act successful\u00a0<em>now<\/em>.<\/p>\n<p>According to Dr. Stanley, \u201cThe pseudo-affluent are insecure about how they rank among the Joneses and the Smiths. Often their self-esteem rests on quicksand. In their minds, it is closely tied to how long they can continue to purchase the trappings of wealth. They strongly believe all economically successful people display their success through prestige products. The flip side of this has them believing that people who do not own prestige brands are not successful.\u201d<\/p>\n<p>Yet \u201ceveryday\u201d millionaires see things differently. Most of them achieved their wealth not by hitting the lottery or gaining an inheritance, but by patiently and persistently maximizing their income, minimizing their outgoing and religiously saving and investing the difference.<\/p>\n<h2><strong>You Aren\u2019t the Car You Drive or the Watch You Wear\u2026<\/strong><\/h2>\n<p>They aren\u2019t big spenders. They just recognize that real pleasure and satisfaction don\u2019t come from the car you drive or the watch you wear, but time spent in activities with family, friends and associates.<\/p>\n<p>They aren\u2019t misers however, especially when it comes to educating their children and grandchildren \u2013 or donating to worthy causes. Although they are disciplined savers, the affluent are among the most generous Americans in charitable giving.<\/p>\n<p>Just how prevalent are American millionaires? According to the Spectrum Group, there were 6.7 million U.S. households with a net worth of at least $1 million at the end of 2009. Very few of them won a Grammy, played in the NBA, or started a computer company in their garage. Clearly, thrift and modesty \u2013 however unfashionable \u2013 are still alive in some parts of the country.<\/p>\n<p>So while millions of consumers chase a blinkered image of success \u2013 busting their humps for stuff that ends up in landfills, yard sales and thrift shops \u2013 disciplined savers and investors are enjoying the freedom, satisfaction and peace of mind that comes from living beneath their means.<\/p>\n<p>These folks are turned on not by consumerism but by personal achievement, industry awards, and recognition. They know that success is not about flaunting your wealth. It\u2019s about a sense of accomplishment\u2026 and the independence that comes with it. They are able to do what they want, where they want, with whom they want.<\/p>\n<p>They may not be smarter than you, but they do know something priceless: It is how we spend ourselves \u2013 not our money \u2013 that makes us rich.<\/p>\n<p>Good Investing,<\/p>\n<p>Alexander Green<\/p>\n<p><strong>Editor\u2019s Note:<\/strong>\u00a0This column was excerpted from\u00a0<em><a rel=\"nofollow\" target=\"_blank\" href=\"http:\/\/www.amazon.com\/dp\/1118027612\/ref=nosim\/?tag=wwwinvestme00-20\">Beyond Wealth: The Road Map to a Rich Life<\/a><\/em>, by\u00a0<em>Investment U<\/em>\u00a0and\u00a0<em>Oxford Club<\/em>\u00a0Investment Director Alexander Green.<\/p>\n<p>The book \u2013 endorsed by Pulitzer Prize-winner Daniel Walker Howe and Whole Foods Founder and CEO John Mackey \u2013 is a fascinating exploration of the intersection between money, personal fulfillment and successful living.\u00a0<em>Beyond Wealth<\/em>\u00a0is available at bookstores nationwide.\u00a0<a rel=\"nofollow\" target=\"_blank\" href=\"http:\/\/www.amazon.com\/dp\/1118027612\/ref=nosim\/?tag=wwwinvestme00-20\">Or you pick up a copy from Amazon here<\/a>.<\/p>\n<div>\n<a rel=\"nofollow\" target=\"_blank\" href=\"http:\/\/feeds.feedburner.com\/~ff\/InvestmentU?a=ycn-IDbnNiE:AvHM_hjvGHc:yIl2AUoC8zA\"><img decoding=\"async\" src=\"http:\/\/feeds.feedburner.com\/~ff\/InvestmentU?d=yIl2AUoC8zA\" border=\"0\" \/><\/a> <a rel=\"nofollow\" target=\"_blank\" href=\"http:\/\/feeds.feedburner.com\/~ff\/InvestmentU?a=ycn-IDbnNiE:AvHM_hjvGHc:V_sGLiPBpWU\"><img decoding=\"async\" src=\"http:\/\/feeds.feedburner.com\/~ff\/InvestmentU?i=ycn-IDbnNiE:AvHM_hjvGHc:V_sGLiPBpWU\" border=\"0\" \/><\/a> <a rel=\"nofollow\" target=\"_blank\" href=\"http:\/\/feeds.feedburner.com\/~ff\/InvestmentU?a=ycn-IDbnNiE:AvHM_hjvGHc:qj6IDK7rITs\"><img decoding=\"async\" src=\"http:\/\/feeds.feedburner.com\/~ff\/InvestmentU?d=qj6IDK7rITs\" border=\"0\" \/><\/a> <a rel=\"nofollow\" target=\"_blank\" href=\"http:\/\/feeds.feedburner.com\/~ff\/InvestmentU?a=ycn-IDbnNiE:AvHM_hjvGHc:gIN9vFwOqvQ\"><img decoding=\"async\" src=\"http:\/\/feeds.feedburner.com\/~ff\/InvestmentU?i=ycn-IDbnNiE:AvHM_hjvGHc:gIN9vFwOqvQ\" border=\"0\" \/><\/a> <a rel=\"nofollow\" target=\"_blank\" href=\"http:\/\/feeds.feedburner.com\/~ff\/InvestmentU?a=ycn-IDbnNiE:AvHM_hjvGHc:F7zBnMyn0Lo\"><img decoding=\"async\" src=\"http:\/\/feeds.feedburner.com\/~ff\/InvestmentU?i=ycn-IDbnNiE:AvHM_hjvGHc:F7zBnMyn0Lo\" border=\"0\" \/><\/a>\n<\/div>\n<p><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/feeds.feedburner.com\/~r\/InvestmentU\/~4\/ycn-IDbnNiE\" height=\"1\" width=\"1\" \/><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/feeds.feedburner.com\/~r\/SyndicationFeed\/~4\/vFzf4H2-r4M\" height=\"1\" width=\"1\" \/><\/p>\n<p>Article by <a href=\"http:\/\/www.investmentu.com\/\" target=\"_blank\">Investment U<\/a> <\/p>\n","protected":false},"excerpt":{"rendered":"<p>Article by Investment U Are the Rich Smarter Than You? by\u00a0Alexander Green,\u00a0Investment U\u2019s\u00a0Chief Investment Strategist Friday, June 29, 2012: Issue #1805 Growing up, when I got into an argument with my mother, she would sometimes resort to the nuclear option, her tried-and-true conversation stopper. Putting her hands on her hips and using the worst faux &hellip; <\/p>\n<p class=\"link-more\"><a href=\"https:\/\/www.investmacro.com\/forex-news\/2012\/07\/02\/are-the-rich-smarter-than-you\/\" class=\"more-link\">Continue reading<span class=\"screen-reader-text\"> &#8220;Are the Rich Smarter Than You?&#8221;<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-30560","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/posts\/30560","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/comments?post=30560"}],"version-history":[{"count":0,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/posts\/30560\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/media?parent=30560"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/categories?post=30560"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/tags?post=30560"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}