Through the years, I have interviewed hundreds of millionaires with the goal of learning from their experiences and knowledge.
I’ve published these as Millionaire Interviews, featuring my specific questions and their responses.
After a few hundred interviews, I realized that there was phenomenal wisdom in several of the questions I asked, especially when the responses from different interviewees are read one after another.
I’ve decided to publish these here on ESI Money in my Millionaire Wisdom series.
Note, not every millionaire answered every and I did change around questions from time to time, that’s why every millionaire isn’t listed below.
Today we continue the series (see part 1 here to start the series) with millionaires addressing the following question:
How did you accumulate your net worth?
Here are their responses…
Millionaire 201
I think by now I’ve made it pretty obvious that the majority of our net worth has been achieved through our ability to earn a high and increasing income. (If you read my origin story, you’ll see how far I was from inheriting my “fortune!”)
I’ve always had a preference to focus on maximizing income rather than investment returns because I’m of the opinion that you have more control on what you can earn and little control over the rate of return on your investments.
I also really like the income-focused approach early on in one’s financial journey because it takes a good decade before you really start seeing the power of compounding get to work – when small numbers start turning into very large numbers.
It wasn’t a high income by itself that got us to where we are. It was a high income paired with a high savings rate. It’s a very simple path to wealth: spend less than you earn and invest the difference wisely.
Millionaire 202
My wife and I have been lucky in that we have made a very good living, invested well, and have been gifted much that has made our plans a little easier to obtain.
My wife’s grandparents were big believers in education. My wife was gifted with roughly 100k in stocks before she went to college which allowed her to get through school with no loans. It also allowed us to put 100k down on our first home.
Those grandparents continued gifting their grandkids and great grandkids with the maximum allowed gifts under IRS rules each year. These gifts funded the first of the kids’ 529 plans and allowed us to put more money to investments.
Enter my father and stepmother who came into a large amount of money due to oil and natural gas wells on my stepmother’s family land. They also setup 529s for the kids.
Then came a very unexpected gift a couple of years ago when my stepmother told me that they wanted to pay off our mortgage for a Christmas present. We had about 9 years left with a $130k balance. Needless to say, it was the only time that I have seen my wife completely surprised.
Millionaire 203
We grew the gap between our income and expenses, and then saved and invested that money consistently over many years.
We’ve had no inheritance or windfalls.
I would also add that we have been consistently generous. As people of faith, we believe in faithful giving and seeing the principle of sowing and reaping come to pass in our lives.
Millionaire 204
Our net worth was accumulated through earning a high household income over a period of 10 years and then putting that money to work for us. During that 10 years, we had an average HHI of around $190,000.
With that money, we did the following to grow our net worth to over $1,000,000 in 10 years:
- Eliminated our $30,000 of student debt and $20,000 of car debt
- Saved $150,000 for a down payment on our new home
- Maxed out my 401k from 2013 to 2020 (and received 15% employer match)
- Maxed out Roth IRA contributions for a few years
- Started an HSA savings and investment account
- Paid off our $400,000 home in less than 5 years
- Saved $100,000 so I could have a runway for my first year of entrepreneurship. (Happy to report that we haven’t had to live on any of it yet!)
My wife did receive a small inheritance of $30,000 after her Mother passed away last year. We’re using that money to create an annual celebration that can live on year after year by using the quarterly dividends earned. Our first celebration will be this summer!
Millionaire 205
The accumulation of our net worth was a result of saving consistency over a long period of time.
The consistency means always contributing to IRAs, 401ks and taxable accounts as well. We generally invested in about a 80/20 mix over many years to allow for market gains over the long run.
We also did not adjust our portfolios often as long as we felt the mix and fund selection was good.
I feel our incomes were moderate for white collared careers in today’s world. Certainly not large but reasonably good with reasonable income appreciation over time.
However, we also were very fortunate on a few fronts.
We stayed employed at good jobs and were never really involuntarily unemployed until my previous career ended in 2017.
During the 2008/09 recession I was employed in a business that excelled and we were able to invest more money during a time of low market prices. This was an enormous advantage and benefit now 10 years later.
Our retirement investments increased about four fold during 2009-19 due to the market and maximizing our investments in IRA’s and 401k’s.
My wife had a good career and chose to end it in the early 2000’s but did some good consulting and contract work that was lucrative for a couple years. Also, she found the opportunity to buy her business through being a volunteer at our daughter’s school in 2012.
Millionaire 206
As I described above, about $2 million of our $3.6 million comes from our investment in five rental duplexes. The rest has been savings in our 401Ks and a cash reserve. For at least 10 years we have maxed our 401Ks out in low-cost Vanguard Index Funds.
We inherited $50,000 when my parents died, which we used as part of the down payment for our last duplex seven years ago.
My wife and I never expected to earn as much as we have. Neither of us ever primarily aimed to make a lot of money. I think there is some truth in the idea that if you find something you truly love and do it extraordinarily well, you will come out okay.
Millionaire 208
I’ve made a six-figure income for over 10 years. That’s important. My wife has had a healthy six-figure income for the last 5-7 years as well. You can’t invest money if you’re not making money.
I then invested in smart, cash-flowing real estate deals that made sense on the day I purchased them. It was never speculation. Just simple buy-and-hold. No home runs, just singles and doubles.
I live pretty hardcore by the Warren Buffett quote: “Rule #1 – Don’t Lose Money; Rule #2 – Don’t Forget Rule #1.”
Millionaire 209
I accumulated most of my net worth by working. Once I had sufficient funds, it was my investments that propelled me into the next orbit.
Buying my primary residence in the San Francisco Bay area.
Investing in the aftermath of the Great Financial Crisis. It was scary doubling down in Citigroup as it kept falling; but I persevered and got lucky. Of course, I lost my money in Bear Stearns but you win some and lose some.
Millionaire 210
Like I said earlier, 100% of our net worth is from focusing on my career, spending less than we make, and investing the difference.
We’ve had zero windfalls, which is something I am proud of.
I’d say the 2 biggest decisions I’ve made so far was buying our condo and giving up my ~$100k salaried job to try and make it again on the commission side. Both of these decisions were incredibly difficult to make and put us in a very strained financial position at the time they were made, but have ultimately been the deciding factors in where we are today.
The other thing is the financial engineering I try to employ whether it be doing cash out refinances on an interest only loan, or selling puts on margin.
Millionaire 211
My wealth came from saving and my twenty years in the military. I never planned to stay in the military but I am glad I did. I am thankful for my lifetime pension and healthcare.
I did sell a house in 2017 which netted me ~$30,000. When I think about the repairs I made during the 10 years that I owned it and the repairs I had to do to sell it, I think I broke even or lost money. You live and learn.
Millionaire 212
I started saving and investing early.
I had my first IRA at 18, and started investing in my 401k as soon as I was eligible, at 23 years of age. I started with a 3% contribution and when that didn’t hurt, quickly upped it to 5%. The following year I realized it was silly to leave free match money on the table and moved it to 6%.
It wasn’t much in those years when I was earning $18k-45k a year but that’s not the point is it? The point is that I had started, and made saving and investing a habit.
When I saw the compounding effect on my money’s growth I continued to up my contribution over the years until it got to 20%. I have only been maxing out my 401k contribution for 3 years and will continue doing so.
I have not inherited any money. My parents gifted me a home down payment match of $13k when I bought my home 16 years ago. My parents also paid for my college education so that I did not start my adult life with debt. I am very grateful to them for that and recognize that not everyone is that lucky.
Millionaire 213
My parents helped me considerably when I was right out of college – a car I inherited, a gift toward a house down payment, and a LOT of free daycare.
I have tracked my net worth the since 2013 when I got divorced. Here is my net worth at the end of each year:
- 2013 = $273k
- 2014 = $392k
- 2015 = $470k
- 2016 = $600k
- 2017 = $781k
- 2018 = $898k
- 2019 = 1,201k
- 2020 = 1,391k estimated
The way I did this was tracking every penny from 2013 through 2019. I cut costs relentlessly on things that didn’t matter to me so I could put my money where it mattered most – security for me and my family.
Millionaire 214
Majority of our net worth has come from my job. As I mentioned earlier, I’ve worked hard to be high performer at work which has resulted in higher salary increases and bonuses.
We still have multiple areas in our spending that can be cut further to optimize savings but I think we’re doing a good job in prioritizing saving for retirement, paying off our mortgage a little faster, not buying expensive toys or cars, and being intentional with most of our spending.
Including:
- We own 2 compact cars in a world where seemingly everyone needs an SUV/crossover
- Public school for kid
- Bought house in lower income neighborhood (not low income, but none of my colleagues live here)
- Have no interest in expensive clothes, jewelry, home furnishings
- I don’t drink coffee! And don’t have another daily expensive habit
Millionaire 215
Investing into mutual funds, saving.
First $20k was when I was when I was about 26 years old…always extending myself…working 2nd jobs…’moonlighting’.
My dad would call it….”8 hours is just breaking even…”
Millionaire 216
My parents were young adults in the Great Depression, and though my father was a physician, we ALWAYS lived below our means as a family.
I chafed at this as a teen, but then heard a 74 y/o woman give a presentation to my classmates about how her only income was as secretary, due to a sudden divorce in her 60’s. She told us all women need an income and savings of their own. I swore to myself I would not be poor in old age.
I graduated from college and then masters degree with no debt, then got a Ph.D with very little debt thanks to my father’s insistence that my parents help me with the expenses, so I could stay in school full time.
In my first job post grad education, I saved like a fiend — first 15%of pre-tax salary, later, as my income grew, but my expenses didn’t, I saved 25-30% of pre-tax income.
I invested in stock and bond funds, not California real estate, which went through deep recessions while I worked there.
I also move my investments from a full service broker to, first Schwab, then Vanguard for the lower fees.
I bought compact cars new, then drove them until they died, then bought another one paying cash.
I was never, and still am not interested in spending big for toys.
Millionaire 217
We live below our means, don’t let our lifestyle expand as we earn more money, stay frugal, and consistently invest in Index funds.
My Father passed away in 2018 from lung cancer, a horrible disease that I do not wish on anyone. He left his three kids with the balance of an old 401k that was valued at 116k in 2018, as well as 50k in a small life insurance policy.
We donated a chunk of the cash to some of the organizations that helped my Father fight his cancer over the year and a half battle, and everything else was immediately invested into Index Funds (the inherited IRA and the cash into the brokerage account).
Outside of the inheritance, everything has been earned through income, maintained through smart spending that translated into a high savings rate, and has grown through steady investment.
Millionaire 218
No lucky stock picks, large inheritance/windfalls or magic here (though we did get a modest $10k when my wife’s mother passed, used to help pay down debt). Just straight forward earning, saving and investing.
The biggest key to growing net worth is to spend less than you make. It’s simple, but true. No matter your income level, growing that gap is the only way to get and stay ahead.
We probably could have (and could now) grow our net worth faster by continuing to spend less, but our focus is on balancing enjoying life today while setting ourselves up to enjoy it in the future.
Millionaire 219
I consistently saved a high percentage of my income.
I’ve never inherited anything or made any phenomenal investments. Just kept plugging every free dollar into index funds after paying off the house.
Millionaire 220
In the interview notes for this question it asks: ‘Did you make a lot of money, invest well, inherit it, or what?’ I did all four — made a lot of money, invested it well, inherited some — and that fourth? I married into some money, too.
I inherited some of my net worth. I’m estimating $250k (original principal) was inherited, most of it recently. The oldest inheritance was that $58k land that is now a vacation house ($325k) and a rental condo ($216k). I haven’t spent any inheritance, and I put it to work in investments.
I don’t count my husband’s assets in my net worth, but I married a wonderful man who was well paid (before he retired), had investments (401k and taxable, mostly index funds), and notably he bought our beautiful, mortgage-free home. Two incomes and a mortgage-free house allowed me to save more.
The rest of my net worth is from me, by having a high paying career, maximizing savings, being frugal/intentional with the spending, and investing as much as possible, as soon as possible. That’s $4.9M or so (pats self on back).
How did I do it? I stood on the shoulders of those before me: kudos to my relatives who left their homeland and took the risk of coming to America, to my father who grew up *dirt* poor yet graduated from Harvard, to my parents who stretched to raise us in a wealthy town (better schools!).
I wasn’t born sick or disabled, I wasn’t born into war or famine or a dictatorship, I wasn’t the victim of a crime. I wasn’t discriminated against because of the color of my skin and I wasn’t persecuted for my religion. I wasn’t pregnant at 18. All this, and million other things too, had to go right so I could have what we all consider a ‘neutral’ start.
I have not had it easy (ex: my mother died when I was young), but I would be remiss if I didn’t acknowledge the privileges bestowed on me by my ancestors and just by being (a white) American. And by luck.
Ok, what did *I* do from this so-called neutral start? After all, I didn’t sit back and eat bon-bons.
- I went into the field of computers even though it was ‘hard’, and despite it being an exceedingly and excessively and unnecessarily male-dominated field, especially back when I was in college. I got into the early years of an incredibly growing field that pays really well. I studied hard and worked hard. I switched companies for better opportunities. I am the person a boss turns to when something needs to get done: I will make it happen. I get paid very well for this skill.
- I am risk averse. This capped how much I earned (I never took that job at the hot start-up in Silicon Valley…), but also kept me from reckless and risky investments and behaviors.
- I am debt averse. I’ve had zero consumer/credit-card debt, zero auto and HELOC debt, zero student loans (credit for this to my Dad and going to a state school). Many experts would advise me to leverage the rental properties for better returns. I need good-enough returns, which I’m getting, and I sleep very well at night knowing I have no mortgages to pay.
- I married the right person. We get along, not just financially, but emotionally too. It isn’t just that I avoided the negative of a spouse that overspends, or a divorce, it’s that I also got the huge positive of someone who actively helps me. We pull in the same direction, and we enjoy each other’s company. This is huge.
- I didn’t squander inheritances and bonuses and stock grants. I looked at them as fresh investment capital.
- I looked for ways to spend less. I do-it-yourself everything, fridge repairs to sewing covid face-masks to repairing the gas gauge on my old clunker. I’ll try to fix just about anything. I traded in my 16 year old, 300k mile rusting SUV because the engine finally died, and bought a new-to-me-but-used SUV with cash. I loved that old SUV. It held everything. I’ve made trade-offs and lived well, but frugally.
- I looked for ways to invest, even when I couldn’t afford to. I did a DRIP (dividend reinvestment plan, with no purchase/reinvestment fees) and bought $60 worth of a specific stock twice a month since ~1991. I chose $60 because (as I recall) it was around what one share cost, and because I figured I wouldn’t miss it. I reinvested all dividends and occasionally added extra cash, too. I just divested early this spring, because I’m moving out of individual stocks, and because their fundamentals have changed. I haven’t calculated my return (and need to dig through a lot of old paperwork to do that), but I sold ~$120k of stock. Did I miss that $120/month? No. Did I end up with $120k of stock, painlessly? Yes! Do I recommend you do this too? Yes, but automated-buy into an index fund instead of a single stock.
- I don’t time the market. I invest non-stop, now in low cost index funds. I’ve always invested automatically every paycheck and I still invest any extra cash I get. Every bit helps. $20? Invest it. $200? Invest it. Does it matter if the stock market is at an all-time-high, or doing a Covid-Crash? Nope. Stock market money is in it for the long haul, these drops all end up being blips in the chart when you zoom out far enough.
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Lots of good stuff, huh?
Stay tuned, we’ll be adding to this series in upcoming future posts.
