Lessons
from the Richest Nation Ever
As of
June 2015, America is the richest society ever, after a strong spring in which
Americans accumulated $1.4 trillion in total assets. With the Dow and NASDAQ
recently hitting record highs and home prices finally reaching pre-bubble
levels, there's no telling what records might be broken in the future.
Not
everyone is enjoying this windfall, though, and you may be one of those who are
wondering where your gold-plated Ferrari is or why your etched crystal brandy
decanter isn't as jewel-encrusted as your neighbor's. If so, it might be
a good time to take stock of your surroundings and draw some lessons from the
country about accumulating wealth.
Who
has all that money?
A very
small number of people have a very large share of American wealth in 2015, as
many middle class families are still feeling the effects of the 2008 financial
crisis and The Great Recession. A recent Pew study found the gap between
the rich and the middle class is at a 30-year high, and most of the typical
American's net worth is tied up in their home.
While
America's total net worth is at a record high, the typical American household's
net worth is $81,200, down two percent in the last five years. The top 10
percent of households are worth about 40 times more than the typical household,
with an average of $3.3 million. The top one percent of the top one
percent of American households is even more staggeringly rich, with about
16,000 families owning 12 percent of American wealth, about $630 million each,
on average. More distressing, about half of
Americans
have a net worth of $0 or less.
Who
are the rich people in the country?
The rich
tend to be older than the country as a whole, with millionaires being 57 years
old on average, while the typical American is in his or her late 20s.
Millionaires typically come from more humble backgrounds, with about 80
percent being first-generation millionaires. They are likely to be
married, have two children and live in middle-class neighborhoods. In
other words, millionaires look a lot like the middle class, except a few years
older and wiser.
What
do I need to do to become a millionaire by my 50s?
The first
steps to accumulating wealth are the things you'd expect: Spend less than you
earn, save the rest, invest patiently and own your home. It might seem
obvious, but those four steps can be difficult and the difference between
understanding the concepts and achieving them can be daunting. If you're
looking for some guidance, Pen Air can help. Our Money Manager feature and online calculator tools make budgeting a
breeze and we offer a variety of savings products for members of any financial
background. We have home-buying specialists who can guide first-time
homebuyers through the process, from putting together a down-payment to
securing one of our competitive mortgage rates.
What
might be more surprising is that the rich tend to own their own businesses,
with about 4 out of every 5 American millionaires identifying as self-employed
or retired from self-employment. There are 28 million small businesses in
the United States, defined as companies with 500 or fewer employees, and small businesses
have created nearly 2 out of every 3 net jobs in the last 20 years, currently
employing more than half of all working Americans.
Owning a
piece of the American economy is a clear path to wealth, and with the knowledge
base that comes with 21st century technology, that path is more well-worn than
it has been in the past. Seven out of 10 new small businesses with more
than one employee survive for at least two years, half last for at least five
years, and a quarter of those new small businesses are expected to still be
going strong in 2030. Over half of the small businesses created this year
will operate out of their owners' homes, often starting as an extension of
their founder's favorite hobby.
If you're
thinking of starting your own business, give us a call. We've got great
small business loan rates, and lots of money to help you ditch the rat race,
avoid the morning commute, and build wealth. Even if your dreams are more
modest, we can get you the venture capital to start out strong. If you're looking for something
outside your garage, the most popular startups for the last few years have been
auto repair shops, beauty salons, and dry cleaning businesses, any one of which
we can help you launch. For now, though, all you need is an idea and some
ambition.
Are
there any other ways to grab the brass ring?
If you're
not interested in starting a business, you can still build a comfortable
savings account by putting away part of each paycheck. It may be difficult, but
it's not impossible. Of course, there are other options too. One woman in
Las Vegas won the lottery four times in the last 25 years, so you might want to
borrow her lucky rabbit's foot.
Sources:
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