How do you build wealth in turbulent times? William Danko, author of The Millionaire Next Door, is answering that question right now during the Kaseya Connect User Conference in Las Vegas. Here are some tips from Danko, which he shared with roughly 250 managed services providers this morning.
I'm blogging in real time so here are bullet-point highlights rather than in-depth paragraphs.
Among the points Danko made:
- Referring to the economy: "This is just a blip in our history," said Danko. "It's a buying opportunity..."
- Half of US households have a net worth of less than $100,000
- Seven percent of the population has a net worth above $1 million.
- Top 1 percent of Americans have net worths of $8 million or more.
- There are 1000 billionaires, but ordinary millionaires that live next door to us live on their own terms -- they can do what they want to do when they want to do it. They don't increase their lifestyle.
- "When you're young you work for money. When you're old money works for you. That's exactly how millionaires do it."
- Take 20 percent of your resources and do what you do on your own terms; that's how 3M innovates.
- Examples of people who worked hard and made it work: A Mexican immigrant worth $3 million is a piano turner and a commissioned salesman for a piano company. He tunes pianos then has private discussions with customers about their piano needs. That approach works in high-tech.
- A multi-millionaire engineer by day and a trailer park owner at night. The millionaire told Danko, "It's a business nobody wants to be associated with. I do what people don't want to do."
- A multi-millionaire vacuum cleaner developer who developed 2,700 prototypes before hitting it big with a design that caught on.
- Basic advice on how to become a millionaire: Have a good income and be a good saver; leverage your good health for long-term compounding interest opportunities; have a good marriage -- stats indicate that those who are happily married live longest.
- When you have money work for you, you get penalized the least in terms of tax rates.
- The typical millionaire dies with a $3 million net worth but their house is only worth about $180,000. Translation: Smart millionaires keep a low profile and don't live beyond their means.
- Many millionaires buy two-year-old cars. Do you want to look like a millionaire by buying a new car, or do you want to be a millionaire by living below your means.
- Self-imposed economic scarcity: Live 20% below your income. If you make $100,000, live on $80,000 and invest the difference.
- If you don't have a passion for what you're doing you'll never become a millionaire.
- The self-employed have a five-times higher net worth than someone who works for somebody else.
- The average savings rate in America is 4 percent, down from 8 percent in the mid 1900's, and not near the 20 percent that most millionaires save.
- Twenty-five percent of millionaires have zero debt when they die.
- Zero down, interest-only mortgage payments are disaster approaches.
- The borrower is a slave to the lender: That's timeless wisdom.
- To be really rich, you must also be humble and charitable: the well-adjusted millionaire gives 1.5 times more money and 3 times more time to charity.
- What really motivates the successful is the pursuit of the dollar, rather than the actual dollar.
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