The New Millionaires | Millionaire Net Worth & Income | Part 4

Millionaire Net Worth

Millionaire Net Worth

Welcome back.  This is the fourth part of the series on building wealth and the new millionaires.  Today we focus on millionaire net worth.In addition, we will discuss millionaire income levels.  Before we get started, I would like to provide a quick recap of the series.


Part 1 explained the 5 key Dividends Diversify principles to Build Your Wealth.  Part 2 introduced you to the research study on the new millionaires.  It provides the basis and explanation for the entire series.  Finally, part 3 analyzed the millionaire demographics included in the study.  And, compared the demographics to the famous book, The Millionaire Next Door.

What is the point of this series?  It is to see what we can learn from the current millionaire class.  And, compare them to the households studied in The Millionaire Next Door.  In addition, are their practices similar to the wealth building principles in my first article in the series, Build Your Wealth?


The group I studied has a current average annual income from active work efforts of $305,000.  This mainly comes from their careers as Corporate professionals.  A few study participants also had income from actively managed rental properties.  However, rental income was not a large part of their earnings.

The groups’ average compensation compares to $247,000 in the book, The Millionaire Next Door.  Furthermore, the average household income in the US for 2015 was about $79,000 according to DQYDJ.  High earners pull the average up.  For those of you who like statistics, the mean annual household income in the U.S. during 2015 was $56,000.


Virtually every millionaire I studied attributes their main source of money and wealth to their professional career.  Most importantly, the compensation it has provided.  Virtually all attribute hard work in their chosen field as one important key to success.

These millionaires improve their skills, take on additional responsibility and network within their industry.  And, they demand to be paid well.  Some have stayed with one employer for many years.  Others have changed jobs frequently to maximize their opportunities.  

This group isn’t side hustling their way to wealth.  They did not just get lucky with money either.

Rather, they focus on their professional careers.  Specifically, performing at a high level, increasing their salary, maximizing annual bonuses and cashing in on company stock when offered.

Their earnings haven’t come all at once.  Rather, they have worked their way up the Corporate ladder.  Their capabilities include managing people, specialized skills valued by their employer or a combination of both.

The new millionaire’s approach to earning money is consistent with the Dividends Diversify build wealth rule number 2:  Put a laser focus on your career or business to maximize your earnings.


The study group has an average net worth of $2.8 million.  The groups’ net worth compares to $3.7 million in The Millionaire Next Door.  These figures far exceed the average household net worth in America.

Below is a breakdown of the study participants net worth.  10 ways they invest money!  I have also thrown in the Dividends Diversify household percentages (DD %) for my personal comparison.  One of the key points the study participants made is that they started saving and investing at a young age.

ClassificationDescription% of Net WorthDD %
IRAs & 401ksStocks & Funds34.3%20% 
Taxable AccountsStocks & Funds27.6%60% 
Home EquityPrimary residence13.0%8% 
Real EstateRentals & Investments9.3%0% 
CashSavings & CDs6.6%12% 
PensionsCompany Plans2.5%0% 
Stock OptionsEmployer stock2.3%0% 
LoansDirect Lending1.5%0% 
529 Savings PlansCollege savings1.5%0% 
AlternativesAutos, metals, other1.4%0% 


Here are a couple of things that jump out to me regarding the net worth figures:

  • Publicly traded stocks and funds represent almost two-thirds of total net worth.  In The Millionaire Next Door (MND), this area accounted for only 20% of household wealth.  That is a huge change.  The new millionaires invest in the public markets.  They are not self-employed.  Consequently, their wealth is not invested in their own private businesses.  In contrast, the MND millionaires net worth was mainly invested in their own private businesses.  This makes sense, two-thirds were self-employed.
  • The new millionaires have maximized the use of tax-advantaged accounts including IRA’s and 401ks.  You might have noted, the DD household falls way behind here.  In fact, that is my only regret in life.
  • Few have equity built up in company pension plans.  These plans were being phased out when this group got their professional start in life.

The new millionaires’ approach to their assets is consistent with the Dividends Diversify build wealth rule number 5:  Invest early and often.


What do you think readers?  Does anything strike you in the income or millionaire net worth data?  What conclusions do you draw?

And don’t forget to come back soon for Part 5 of this series on building your wealth and the new millionaires!  We will dive into how they spend their money.


34 thoughts on “The New Millionaires | Millionaire Net Worth & Income | Part 4”

  1. Thanks for sharing, Tom.

    Interesting points – I also noticed the networking part. This is an important area, but one I often fail to focus on as much as a I should.

    The breakdown of net worth % is also helpful to see. – Mike

    • Networking never came very easy to me either Mike. For many of us, it’s like any learned skill that needs to be practiced. Some people are just naturals at it. Tom

  2. Hey Tom,

    It’s enlightening to me. In my age group (mid 30s), I know two corporate professionals. They both got MBAs and both have changed jobs frequently. Of the people I personally know, the most likely to become millionaires are doctors. They all earn $200,000+ individually and are all in dual-income marriages.


    • Hi Miguel, That seems reasonable to me that doctors would make a pretty good buck. They deserve it. Lot’s of time invested in education and it seems like difficult work to me. Tom

  3. Somewhat surprised real estate didn’t account for a higher percentage. As I think of some of the heavy hitters that I know, most own some sort of RE. Good post Tom.

  4. Very insightful stuff and a great guide. It’s clear that millionaires know how to take advantage of the benefits of 401k plans and the matching as well as tax treatment they offer. I can’t wait for the next part to see how they spend their money. My guess would be it’s not too different than non-millionaries which could be refreshing.

    • You bring up a good point SMM. There is much emphasis on using tax advantaged plans as well as any other type of employer sponsored/subsidized plans offered. Tom

  5. “This group isn’t side hustling their way to wealth. Rather, they focus on their professional careers.”

    This is exactly what I did for the 25 some years (including school years) I was an engineer. Didn’t have time or inclination for a side hustle or even investing, besides my career provided a rapid growth in income and wealth generation and this is where I was getting the most return at the time.

    It wasn’t till the later part of my career that I decided to start investing in dividend stocks to offset slow down in the career growth and eventual retirement.

    Very insightful article Tom and just shows that having a solid career path is one of the proven paths to building wealth and later financial freedom.

    • Couldn’t agree more Mr. ATM. You are truly picking up the main point and theme of the series. A lot of hard working corporate millionaires have been created over the past 20 plus years. You don’t have to start and own a business to become a millionaire. That is just one path. And, that is the path that was mainly illustrated in The Millionaire Next Door. Us Corporate folks have to focus on career and developing/leveraging one’s skills into earnings power. The earnings become fuel for investing in public markets including real estate. Tom

  6. Interesting Tom, I am surprised real estate income is so low. Most of the wealthy people I know have real estate and business interests, I guess they are old school.

    • Might be the definition of wealthy Steve. Not to minimize being a millionaire, but that’s all it took to get into the group I analyzed. Unless, an individual was in real estate as a business/professional, allocating a lot to that one asset class might not be practical or good asset allocation. I suspect if the threshold was $5 million or more, real estate might be more heavily represented beyond the roughly 10%. Tom

  7. No surprises here – the first three classifications/percentage of net worth is what I fall under. As time goes on, the first and second line items may switch places, but it all depends on the drawdown scenario I plan on using!

    • Gosh HP. Thinking about draw down scenarios already. That is some serious advanced planning and thinking. Nothing wrong with that. Tom

  8. One has to wonder if there is a paradigm shift per generation. MND being being business owners – Today’s being professionals – Tomorrows being Entrepreneurial (side hustles)? Also have to wonder of the impact of the prolonged bull market on today’s numbers versus the MND era.

    • Hello SR. You are drawing some of the same conclusions I have come to. And, I do think the prolonged bull market in financial assets has helped to propel a new millionaire class. One that is not dependent on starting a business, but merely participating in the success of others. Tom

  9. Thanks for sharing the data. I like how there is a heavy focus on the market. I would like to have my primary residence be as low as 10% of my net worth one day!

    • Hi GYM. The impact of the prolonged bull market on the numbers combined with time in the market is certainly an important factor. Tom

  10. Just got finished reading all 4 parts!

    This work you’re doing is AWESOME, especially with me being a Millionaire Next Door fanatic. I am no millionaire, but I can totally agree with your assessment of the “new millionaire” in regards to their tax advantaged retirement accounts.

    With myself just turning 26 and Mrs. FMM being 24, this is the largest % of our wealth. We currently max my Roth 401k and both of our Roth IRA’s. It wasn’t easy to get Mrs. FMM initially on board with this strategy because we are young, and she didn’t think we needed to save that much right now. As we are growing older though, she is beginning to see the sprouts from those seeds we planted! Also she sees the idea of early retirement as an actual reality now, so we recently opened our taxable brokerage account and fund that every month!

    We also keep it as simple as possible now…

    Roth 401k – Vanguard Institutional Index Fund (S&P 500 Index Fund w/ 0.02% expense ratio)
    Roth IRA’s & Brokerage Account – Vanguard Total Stock Market Index Fund

    Hopefully these 2 funds keep it up over the next 30 – 40 years!

    I look forward to the next chapter of this work!

    • Hi Sean, Thanks for the very comprehensive reply. You and your wife are doing great. I know you are on a mission to FI. Maxing out tax advantaged accounts and then doing more with taxable accounts is a great strategy. Stick to it. Tom

  11. Very revealing! I need to pick up my income game. Too much sitting on the sideline of late.

    Curious – what stage of life were your subjects in when achieving that net worth? Were they in their 40s, 60s?

  12. Interesting observation around the proportion of publicly traded stocks and funds being so much higher. This is definitely true here in Australia following the introduction of the compulsory superannuation scheme in the early 90’s. Those high earning corporate workers especially have much more in super / retirement funds during their peak earning years than those who started 30 or 40 years ago.

    Cheap brokerage has also probably made investing in shares more accessible for most people, particularly the younger generation – although I have no idea if younger people overall are saving and investing more these days! Seems to be too many fun things for them to spend money on, especially if you’re trying to keep up with everyone on Facebook / Instagram / etc etc.

    Nice work on the study Tom, always love some good factual analysis!

    Cheers, Frankie

    • Hello Frankie, The movement to self directed 401ks and away from pension plans is another reason here in the states. I think technology and the internet as well as the growth in mutual funds and ETFs has brought self investing to many more people than in the 80s and 90s. Tom

  13. Lots of good info here. I wonder if the reason that the % of public markets has increased is that more and more people who earn a lot these days are getting stop options especially in the tech world.

    • Could be part of it Time. I think the growth in mutual funds, ETFs and online access to stock and fund trading as well as online information has brought investing to so many more people than back in the 80s and 90s. Tom

  14. I’m a little shocked how much is attributed to corporate wealth/income. I would have expected larger real estate portfolios or income attributed from owning their own business. Man it is crazy how time has changed since the Millionaire Next Door, right? It doesn’t shock me that so few have pension plans anymore because that is clearly a thing of the past.

    Take care,


    • I agree that a lot has changed Bert. I think mutual funds, ETFs, easy to set up online brokerage accounts and real time transactions have opened up investing in public businesses to so many more people than the 80’s and 90’s. If you are not already, you will be a new millionaire soon and will have done it the same way. Targeted education, hard work in a good paying corporate job and smart consistent saving and investing. Tom

  15. “This group isn’t side hustling their way to wealth. Rather, they focus on their professional careers. Specifically, performing at a high level, increasing their salary, maximizing annual bonuses and cashing in on company stock when offered.”
    I believes this best describes my path, so it resonated with me, Tom.
    The net worth percentages shown for the millionaires is interesting. I might have expected a higher percentage for the IRAs and 401(k)s, maybe closer to 50%. With the thought that there will be fewer pensions, and perhaps less benefits from Social Security, I would expect the newer generation to conclude they might need to take care of themselves in the future, and use tax-deferred savings to get there.
    I’m enjoying the series, Tom, and will continue to follow along.

    • Hi ED, The only thing I can think of on the IRA/401k percentage is that because the government limits the annual contribution rate, it limits the amount of wealth a person can build in that category. Not sure, just a thought. No argument that we all need to look out for ourselves. I continue to wonder how long our government can continue deficit spending before something goes tilt. Tom

  16. We hit the 2-3 M club but still live frugally …. though like kings compared to most folks back home … but it is cheaper overseas for a maid and private cook/chef? … – Michael CPO

    • Hi Michael, Congrats on your personal financial accomplishment. Great job. Oh for a maid and private chef. That sounds like really living like a millionaire! Tom

  17. Great article! I’d like to share this with others. Do you mind giving us some info on the depth of your study (sample size, methodology, etc)?

    • Thanks, Andy. Totally unscientific. Looked at a number of millionaire case studies plus other sources that did some similar work. Used some math and judgement to put it together. This article in the series explained a little more. Tom

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