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 question 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 178
Our net worth is the result of earning, saving, and investing (boy do I sound like an ESI suck-up). But it is true.
I always had good income as an engineer and did what I could to follow paths to boost income (e.g. switch to commission-based consulting, switch to finance, etc.).
We also had a few strong earnings years but even without those, which were late in my career anyways, we had lived lives built around saving and compounding for decades.
We also were fortunate to have smart kids who worked hard and earned scholarships.
Millionaire 179
When I speak about saving and investing, I am mostly referring to my 401k.
I saved as much as I possibly could. What I could save, I invested.
I would always keep a certain amount of liquid cash for emergencies, but everything else went into the market.
As I mentioned earlier, I have never taken anything out of my investments since 1991. I did add some money to my taxable account over the years, but I was always more concerned about figuring out how to add the most money to my 401k.
I’m a big believer in the markets. It’s one thing to have savings, but keeping it in a savings account losing buying power because inflation is eating away at it is not the path to build wealth.
Fear of any loss can cause investors to invest too conservatively. What I had in the market was always aggressively invested and I never overreacted during any market volatility.
I never had large amounts of money to invest. It was always a slow, but steady savings strategy.
It also helped that I never worked for a company that didn’t offer a 401k plan and I always invested in the 401k plans.
When I had to buy a car, I would start another savings plan so I would have a down payment for my next car.
I kept my cars for 10+ years and other than the car I currently own, I always purchased certified used cars. The car I now have cost me $23k new.
I don’t live in the house of my dreams and I don’t drive the car that I really want, but I have money in the bank.
It’s always a choice. Homes, cars or any other big purchase can have a huge impact on your ability to save.
I see my peers driving expensive vehicles. Maybe they are leased, but regardless, my philosophy is that extra money should be going into an investment portfolio and not into a fancy car.
I will also make a comment about your credit score. Having a great credit score can save you money. Everyone should know their credit score. No excuses here. It’s now free through most banks, credit cards or you can get it through one of the free online credit companies.
I was approved for a 5 year interest free car loan. Free money! Some will say that 5 years is too long for a car loan because my outstanding loan balance might be higher than the value of my car. That’s true, but if you plan on keeping your car beyond the 5 year car loan and I do, why would you not take free money?
You will only get those types of loans with excellent credit.
Millionaire 180
No inheritance, no magic. Initially it was just steady, regular 401K savings.
Paid off my mortgage and student loans first.
Now I invest in a simple, low-cost manner.
I am also well compensated.
Millionaire 181
My new worth was created by a lot of hard work and a $250k head start given to me by my Dad. I spent a long time working and improving the parks. This allowed me to raise the rents. I refinanced the parks a few times and pulled out cash to buy additional parks.
The real trick is to put as little down as possible. Buy a property that is in the path of progress. Make sure the loan’s interest rate is lower than the cap rate you are buying the property at. Buy as many units per property as you can afford.
Millionaire 182
We are both blessed with good careers. We have done OK investing, but nothing special other than the AAPL blessing. We spend less than we make and have done so since we started our careers.
We have never carried credit card debt. We started investing right out of college. We are essentially the core profile out of The Millionaire Next Door or Everyday Millionaires.
One thing that really made a difference on Net Worth was specifically tracking it. You improve on what you watch closely, and I started tracking Net Worth monthly in a spreadsheet (from reading Your Money or Your Life) in 2012. When you look at it through that lens regularly, it changes your perspective.
When I started, we had student loans, car loans, 30 year mortgages, and more. We were at $466k in liabilities and $927k in assets for a $461k net worth – not bad. We crushed all the consumer debt and refinanced to 15 year mortgages, and at the end of 2019, we are at $283k in liabilities, $2M assets, and a $1.7M net worth.
Millionaire 183
I did the following to become a millionaire:
- Worked hard to maximize my earning potential.
- Saved as much as I could (living like a college student much of the time).
- Avoided debt.
- Invested the rest.
- Haven’t inherited anything, except a strong work ethic from my parents.
Also critical – I graduated college in 3 years to avoid going into debt. I cash-flowed my MBA while working full-time (also to avoid debt).
None of my net worth was inherited. However, I did inherit good money management and giving practices from both of my parents.
Millionaire 184
I have inherited a bit of stock, but not much — from my father’s investment club. He in turn, inherited it from his father. A total value of perhaps $4,000.
I gained my wealth the old fashioned way: saving and not buying something unless I really needed it.
I still drive an older car, I shop at Walmart and Costco and clip coupons. I buy generic whenever possible (and have found that many times the quality of generic oftentimes exceeds name brand).
Consistently investing in the market, living below your means and asking ourselves, “do we really need it?” before we make a purchase has helped us maintain our net worth.
I will reemphasize what I’ve read here on ESI in the past that marrying someone who isn’t a big spender and shares in your financial views helps A LOT!
Millionaire 185
I have primarily built my earnings myself.
My parents and extended family paid for my undergraduate degree at a time when that was easier to do, and I’m thankful for that. I worked for a company that supported me for most of my MBA experience and I paid for the rest. That was a tough 3 year period, but it paid immediate dividends when I nearly tripled my income the year after I graduated.
I’ve always been big on self-education and have taken a number of development programs over the years which have helped me to become a better professional.
I view my career as having been a bit of a snowball rolling downhill, where my income has increased as I’ve worked to enhance my skill set and learned from my experiences.
Millionaire 186
I grew my financial net worth through all three ways (earned, saved, and invested).
In a nutshell, I majored in a high-paying field and got a really good job out of college.
I performed well at work and also got really good yearly bonuses to go with a high salary. The yearly bonuses went directly into investments as soon as I got them.
My company also has a really good 401k match of 9% which I do not factor into my AGI.
I have also had at least two side hustles throughout the same period which tend to be higher-paying side hustles as they require technical skills as well.
Savings-wise, I have saved at least 85% and as much as my primary job’s salary (since I can easily live off my secondary gigs).
Investment-wise, my portfolio has mirrored the performance of IVV (I also have large stock holdings in AAPL and MSFT separately) and 8% yielding real estate investments.
My home has appreciated by 22% total return (not annualized) over the past 5 years of purchasing it but I have not realized those gains and I do not plan to any time in the near future since I believe in the location and I am content with a 8% annual cash-on-cash return.
So, I think it has been a combination of all 3 so far but saving comes the easiest.
I have not inherited anything and I hope I don’t have to for at least for the next 30 years so I can spend more time with my parents. If I do inherit something at that time, I will simply try to build it and pass it on to the next generation and I am sure my brother will as well.
Millionaire 187
I think I have been very good with “underspending” – estimating my budget and then finding bargains to save.
But getting that insurance payment at 24 definitely made getting started in property easier, and definitely getting a redundancy pay out in 2013 set me on a good path. It was about USD $100,000 in my hand – and I think I did really well to grow it from there.
Taking value from one property to add to a deposit of my savings worked well to get each new property.
In regards to rental property purchases – I try not to buy emotionally – it’s not about what I like, or where I want to live. It’s about the industry in the area, the area, and the people. Having said that, the last place I bought would do me just nicely as a retirement studio.
Millionaire 188
All of the above, as explained above.
Maybe half the money I initially had to invest was money saved from growing up and the rest of my net worth has come from earnings and further investment growth.
Millionaire 189
We’ve never received an inheritance. Everything we have we earned and subsequently invested.
I was raised in a middle-class household, and my wife grew up in a lower-middle class home. We never wanted for the basics – food, shelter, etc. – but we grew up surrounded by people who always seemed to have more.
We are both extraordinarily driven. Part of that drive comes from wanting to be able to achieve some level of success beyond what we experienced in our upbringing.
We worked hard through our college years to put ourselves in a good position to achieve as young professionals. We were also clear early on about our career goals. It’s very disappointing to see the all-American advice, “You can be anything you want to be when you grow up,” play out in the form of so many 20-year-olds wandering college campuses, accumulating $50k a year in debt in order to find themselves.
In tandem, we’ve done our best to avoid the temptations of lifestyle inflation (it wasn’t until I was a millionaire that I finally got rid of my car with hand-crank windows).
The combination of strong earnings and a high savings rate is what put us in the position we’re in today.
Millionaire 190
- I made good money in the last 10+ years.
- We haven’t inherited anything.
- Starting from an early age, I invested in my 401K and IRAs and then as my income increased, taxable brokerage accounts.
- Also was debt averse since my early 30s. I figured out that making payments to a bank on assets that depreciate (cars, boats, etc.) was a losing game.
- I paid off all consumer debt by 35 years-old and then paid only cash for cars, etc.
- I got really aggressive in my 40s with paying of the mortgage on our house.
- Then in my 50s starting paying down the mortgage on our commercial property, paying it off completely at 58 years-old.
Millionaire 191
As I said, my dad was a CPA and a big believer in retirement accounts. He was not lucky enough to have a defined benefit plan so his retirement savings was what he had accumulated on his own in an IRA.
When I left the first job that had a 401K, he told me to roll it over and not be tempted into spending the money. That was great advice.
As a saver, I always “paid myself first” so just always saved a lot and didn’t like debt. I made the usual investment mistakes (tech bubble, etc) but just kept plodding along and accumulating savings.
We bought one investment real estate property to house my husband’s CPA practice. We made a nice profit when we sold it but everything else we acquired was cash investments.
I did inherit around $200K when my mother died and other than spending some to buy the investment real estate, that money stayed invested in mutual funds.
Millionaire 192
I’m humbly proud of the fact that I was able to build my net worth without the help of any inheritance. God has blessed my family and I in immeasurable ways and I hope to pay this forward by inspiring others to achieve their financial goals.
All of my net worth came from my job income, saving a portion and investing it in various areas. I have tried to be as tax efficient as possible so I could maximize the dollars working for me.
Millionaire 200
- I went to college to get a degree in a field that had very good job prospects and paid well. This followed my four rules for choosing a college major even though I hadn’t come up with those rules at the time. Those rules are: 1. What are you good at? 2. What do you like (NOT what are you passionate about)? 3. What has good job prospects? 4. What pays an amount that you would be happy to live on?
- I worked my butt off in college and performed exceptionally. Only one other period in my working life did I work as hard as I did in college, and that was during the start-up.
- I got two really good internships that were based almost exclusively on my college performance. In the first instance, I didn’t even know the company was on campus until a friend told me. I had no time to prepare so I walked in where people were dressed in suits with portfolios. I was wearing jeans, a T-shirt, and only had a copy of my transcript with no resume. I felt a little like Will Smith’s character in “The Pursuit of Happyness” movie when he only had an undershirt on for his interview. I didn’t even have the skill they were hiring for, but they told me if I took that class during the coming semester, they would hire me on the spot. I guess the right shirt is over-rated.
- I parlayed my second internship into a great job paying a good wage.
- I worked hard at that job getting larger raises and bonuses than my peers.
- I switched jobs to a better paying market and saw considerable jumps in salary.
- I spent reasonably and saved 100% of the rest in stock funds.
- I maxed out retirement savings vehicles (401-k, Roth IRA).
- I took a risk with a start-up venture that resulted in lower income, but I eventually sold my interest to my partner for about a 7-figure sum. The payouts were spread out over a 10 year period with the vast majority of it payable in a balloon at the end, so it was not immediately impactful. I call it the slow boat to China. It was a long and somewhat painful trip but worth the journey. It required getting a lawyer involved to get the final payment (in 2015, 10 years after I sold), but I made sure I had an iron clad contract giving me rights to all company assets and intellectual property, so there was no getting out of it unless the company was bankrupt. My lawyer was confident enough that he actually asked me at one point how I felt about owning the company. They eventually paid. It is one thing in my life that I look back on and say I am glad I did that, but I don’t ever want to do something like that again.
- After the 2008 housing crash I dipped my toe in the real estate investment market. After getting my feet wet and learning the ropes for about a year, I dived in head first. I cut my retirement savings back to get just the company match. Everything else went into real estate. This was all made possible because of 15 years of solid earnings and savings that I was able to use to set up this venture for success. This choice alone is responsible for the majority of my net worth growth and almost all of my current cash flow.
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Lots of good stuff, huh?
Stay tuned, we’ll be adding to this series in upcoming future posts.
