Many of us may not live to be as wealthy as George Soros or Donald Trump, but there are habits that we can learn from affluent people in order to achieve financial freedom, and possibly, become millionaires as well.
1. They give back to charity. The wealthy tend to give away more, as a way of paying it forward for the financial success they reaped. Households with assets worth at least $500,000 donated 6% of their incomes in 2004, while those having a net worth of more than $5 million gave away 6.1%.
2. They own businesses. Surprisingly, the Federal Reserve estimates that over 12% of American families own all or part of a privately-held enterprise. The wealthy tend to own closely-held or family-owned businesses, and go forward with diversification once their wealth becomes too concentrated in a single investment.
3. They borrow strategically. The extremely rich tend to owe less money than the average person or owe installment debt. They are more likely to have mortgages than average households and carry more real estate loans than the general population. Although most of them own their homes, they nonetheless invest in real estate expecting higher rates of return.
4. They do not blow a lot of money on cars. With a few exceptions, the rich spend only a small proportion of their wealth on vehicles, roughly 2.4% of their net worth according to the Federal Reserve.
5. They are almost always homeowners, and many own investment property, too. Almost all people in the upper 10% own their homes. Almost 40% of them invest in real estate, but the bulk of their wealth comes from investments. The rich apportion their wealth as thus: 46% (stocks and bonds, managed accounts, IRAs, mutual funds, deposits and alternative investments); 10% (pensions and defined-contribution plans like 401(k)s); 6% (insurance and annuities).
To achieve a richer life, one must take strategic risks, give back, live within your means, and invest.
You can read up on other prominent financial leaders in my other site, Private Equity and Finance News.
