washingtonpost.com: The Millionaire Next Door (2024)

Chapter One: Meet the Millionaire Next Door

These people cannot be millionaires! They don't look like millionaires, they don't dress like millionaires, they don't eat like millionaires, they don't act like millionaires--they don't even have millionaire names. Where are the millionaires who look like millionaires?

The person who said this was a vice president of a trust department. Hemade these comments following a focus group interview and dinner that wehosted for ten first-generation millionaires. His view of millionaires is sharedby most people who are not wealthy. They think millionaires own expensiveclothes, watches, and other status artifacts. We have found this is not thecase.

As a matter of fact, our trust officer friend spends significantly more forhis suits than the typical American millionaire. He also wears a $5,000watch. We know from our surveys that the majority of millionaires neverspent even one-tenth of $5,000 for a watch. Our friend also drives acurrent-model imported luxury car. Most millionaires are not driving thisyear's model. Only a minority drive a foreign motor vehicle. An evensmaller minority drive foreign luxury cars. Our trust officer leases, whileonly a minority of millionaires ever lease their motor vehicles.

But ask the typical American adult this question: Who looks more like amillionaire? Would it be our friend, the trust officer, or one of the peoplewho participated in our interview? We would wager that most people by awide margin would pick the trust officer. But looks can be deceiving.

This concept is perhaps best expressed by those wise and wealthyTexans who refer to our trust officer's type as

We first heard this expression from a thirty-five-year-old Texan. Heowned a very successful business that rebuilt large diesel engines. But hedrove a ten-year-old car and wore jeans and a buckskin shirt. He lived ina modest house in a lower-middle-class area. His neighbors were postalclerks, firemen, and mechanics.

After he substantiated his financial success with actual numbers, thisTexan told us:

[My] business does not look pretty. I don't play the part . . . don't act it.... When my British partners first met me, they thought I was one of our truck drivers.... They looked all over my office, looked at everyone but me. Then the senior guy of the group said, "Oh, we forgot we were in Texas!" I don't own big hats, but I have a lot of cattle.

PORTRAIT OF A MILLIONAIRE

Who is the prototypical American millionaire? What would he tell youabout himself?(*)

* I am a fifty-seven-year-old male, married with three children. About 70percent of us earn 80 percent or more of our household's income.

* About one in five of us is retired. About two-thirds of us who areworking are self-employed. Interestingly, self-employed peoplemake up less than 20 percent of the workers in America but accountfor two-thirds of the millionaires. Also, three out of four of us who areself-employed consider ourselves to be entrepreneurs. Most of theothersare self-employed professionals, such as doctors and accountants.

* Many of the types of businesses we are in could be classified asdull/normal. We are welding contractors, auctioneers, rice farmers,owners of mobile-home parks, pest controllers, coin and stamp dealers,and paving contractors.

* About half of our wives do not work outside the home. The number-oneoccupation for those wives who do work is teacher.

* Our household's total annual realized (taxable) income is $131,000(median, or 50th percentile), while our average income is $247,000. Notethat those of us who have incomes in the $500,000 to $999,999 category(8 percent) and the $1 million or more category (5 percent) skew theaverage upward.

* We have an average household net worth of $3.7 million. Of course,some of our cohorts have accumulated much more. Nearly 6 percenthave a net worth of over $10 million. Again, these people skew ouraverage upward. The typical (median, or 50th percentile) millionairehousehold has a net worth of $1.6 million.

* On average, our total annual realized income is less than 7 percent ofour wealth. In other words, we live on less than 7 percent of our wealth.

* Most of us (97 percent) are homeowners. We live in homes currentlyvalued at an average of $320,000. About half of us have occupied thesame home for more than twenty years. Thus, we have enjoyedsignificant increases in the value of our homes.

* Most of us have never felt at a disadvantage because we did notreceive any inheritance. About 80 percent of us are first-generationaffluent.

* We live well below our means. We wear inexpensive suits and driveAmerican-made cars. Only a minority of us drive the current-model-yearautomobile. Only a minority ever lease our motor vehicles.

* Most of our wives are planners and meticulous budgeters. In fact, only18 percent of us disagreed with the statement "Charity begins at home."Most of us will tell you that our wives are a lot more conservative withmoney than we are.

* We have a "go-to-hell fund." In other words, we have accumulatedenough wealth to live without working for ten or more years. Thus, thoseof us with a net worth of $1.6 million could live comfortably for more thantwelve years. Actually, we could live longer than that, since we save atleast 15 percent of our earned income.

* We have more than six and one-half times the level of wealth of ournonmillionaire neighbors, but, in our neighborhood, these nonmillionairesoutnumber us better than three to one. Could it be that they havechosen to trade wealth for acquiring high-status material possessions?

* As a group, we are fairly well educated. Only about one in five are notcollege graduates. Many of us hold advanced degrees. Eighteen percenthave master's degrees, 8 percent law degrees, 6 percent medical degrees,and 6 percent Ph.D.s.

* Only 17 percent of us or our spouses ever attended a privateelementary or private high school. But 55 percent of our children arecurrently attending or have attended private schools.

* As a group, we believe that education is extremely important forourselves, our children, and our grandchildren. We spend heavily forthe educations of our offspring.

* About two-thirds of us work between forty-five and fifty-five hours perweek.

* We are fastidious investors. On average, we invest nearly 20 percent ofour household realized income each year. Most of us invest at least 15percent. Seventy-nine percent of us have at least one account with abrokerage company. But we make our own investment decisions.

* We hold nearly 20 percent of our household's wealth in transactionsecurities such as publicly traded stocks and mutual funds. But we rarelysell our equity investments. We hold even more in our pension plans. Onaverage, 21 percent of our household's wealth is in our privatebusinesses.

* As a group, we feel that our daughters are financially handicapped incomparison to our sons. Men seem to make much more money evenwithin the same occupational categories. That is why most of us wouldnot hesitate to share some of our wealth with our daughters. Our sons,and men in general, have the deck of economic cards stacked in theirfavor. They should not need subsidies from their parents.

* What would be the ideal occupations for our sons and daughters? Thereare about 3.5 millionaire households like ours. Our numbers are growingmuch faster than the general population. Our kids should considerproviding affluent people with some valuable service. Overall, our mosttrusted financial advisors are our accountants. Our attorneys are alsovery important. So we recommend accounting and law to our children.Tax advisors and estate-planning experts will be in big demand over thenext fifteen years.

* I am a tightwad. That's one of the main reasons I completed a longquestionnaire for a crispy $1 bill. Why else would I spend two or threehours being personally interviewed by these authors? They paid me $100,$200, or $250. Oh, they made me another offer--to donate in my namethe money I earned for my interview to my favorite charity. But I toldthem, "I am my favorite charity."

"WEALTHY" DEFINED

Ask the average American to define the term wealthy. Most would givethe same definition found in Webster's. Wealthy to them refers to peoplewho have an abundance of material possessions.

We define wealthy differently. We do not define wealthy, affluent, orrich in terms of material possessions. Many people who display ahigh-consumption lifestyle have little or no investments, appreciableassets,income-producing assets, common stocks, bonds, private businesses,oil/gas rights, or timber land. Conversely, those people whom we defineas being wealthy get much more pleasure from owning substantialamounts of appreciable assets than from displaying a high-consumptionlifestyle.

THE NOMINAL DEFINITION OF WEALTHY

One way we determine whether someone is wealthy or not is based onnet worth--"cattle," not "chattel." Net worth is defined as the currentvalue of one's assets less liabilities (exclude the principle in trustaccounts). In this book we define the threshold level of being wealthyas having a net worth of $1 million or more. Based on this definition,only 3.5 million (3.5 percent) of the 100 million households in America areconsidered wealthy. About 95 percent of millionaires in America have anet worth of between $1 million and $10 million. Much of the discussionin this book centers on this segment of the population. Why the focus onthis group? Because this level of wealth can be attained in onegeneration. It can be attained by many Americans.

HOW WEALTHY SHOULD YOU BE?

Another way of defining whether or not a person, household, or family iswealthy is based on one's expected level of net worth. A person'sincome and age are strong determinants of how much that personshould be worth. In other words, the higher one's income, the higher one'snet worth is expected to be (assuming one is working and not retired).Similarly, the longer one is generating income, the more likely one willaccumulate more and more wealth. So higher-income people who areolder should have accumulated more wealth than lower-incomeproducers who are younger.

For most people in America with annual realized incomes of $50,000or more and for most people twenty-five to sixty-five years of age,there is a corresponding expected level of wealth. Those who aresignificantly above this level can be considered wealthy in relation toothers in their income/age cohort.

You may ask: How can someone be considered wealthy if, forexample, he is worth only $460,000? After all, he's not a millionaire.Charles Bobbins is a forty-one-year-old fireman. His wife is a secretary.They have a combined annual income of $55,000. According to ourresearch findings, Mr. Bobbins should have a net worth of approximately$225,500. But he is worth much more than others in his income/agecategory. Mr. and Mrs. Bobbins have been able to accumulate anabove-average amount of net worth. Thus, they apparently know how tolive on a fireman's and secretary's income and still save and invest a goodbit. They likely have a low-consumption lifestyle. And given this lifestyle,Mr. Bobbins could sustain himself and his family for ten years withoutworking. Within their income and age categories, the Bobbinses arewealthy.

The Bobbinses are quite different from John J. Ashton, M.D., agefifty-six, who has an annual income of approximately $560,000. Howmuch is Dr. Ashton worth? Is he wealthy? According to one definition,he is, since his net worth is $1.1 million. But he is not wealthy accordingto our other definition. Given his age and income, he should be worthmore than $3 million.

With his high-consumption lifestyle, how long do you think Dr. Ashtoncould sustain himself and his family if he were no longer employed?Perhaps for two, at most three, years.

HOW TO DETERMINE IF YOU'RE WEALTHY

Whatever your age, whatever your income, how much should you beworth right now? From years of surveying various high-income/high-networth people, we have developed several multivariate-based wealthequations. A simple rule of thumb, however, is more than adequate incomputing one's expected net worth.

Multiply your age times your realized pretax annual household income from all sources except inheritances. Divide by ten. This, less any inherited wealth, is what your net worth should be.

For example, if Mr. Anthony O. Duncan is forty-one years old, makes$143,000 a year, and has investments that return another $12,000, he wouldmultiply $155,000 by forty-one. That equals $6,355,000. Dividing by ten, hisnet worth should be $635,500. If Ms. Lucy R. Frankel is sixty-one and hasa total annual realized income of$235,000, her net worth should be $1,433,500.

Given your age and income, how does your net worth match up?Where do you stand along the wealth continuum? If you are in the topquartile for wealth accumulation, you are a PAW, or prodigiousaccumulator of wealth. If you are in the bottom quartile, you are aUAW, or under accumulator of wealth. Are you a PAW, a UAW, orjust an AAW (average accumulator of wealth)?

We have developed another simple rule. To be well positioned in thePAW category, you should be worth twice the level of wealth expected.In other words, Mr. Duncan's net worth/wealth should be approximatelytwice the expected value or more for his income/age cohort, or $635,500multiplied by two equals $1,271,000. If Mr. Duncan's net worth isapproximately $1.27 million or more, he is a prodigious accumulator ofwealth. Conversely, what if his level of wealth is one-half or less thanexpected for all those in his income/age category? Mr. Duncan would beclassified as a UAW if his level of wealth were $317,750 or less (orone-half of $635,500).

PAWs versus UAWs

PAWs are builders of wealth--that is, they are the best at building networth compared to others in their income/age category. PAWs typicallyhave a minimum of four times the wealth accumulated by UAWs.Contrasting the characteristics of PAWs and UAWs is one of the mostrevealing parts of the research we have conducted over the past twentyyears.

A good example of the difference between PAWs and UAWs isrevealed in two case studies. Mr. Miller "Bubba" Richards, age fifty, isthe proprietor of a mobile-home dealership. His total household incomelast year was $90,200. Mr. Richards's net worth, as computed via thewealth equation, is expected to be $451,000. But "Bubba" is a PAW. Hisactual net worth is $1.1 million.

His counterpart is James H. Ford II. Mr. Ford, age fifty-one, is anattorney. His income last year was $92,330, slightly more than Mr.Richards's. What is Mr. Ford's actual net worth? His expected level ofwealth? Mr. Ford's actual net worth is $226,511, while his expected levelof wealth (again computed from the wealth equation) is $470,883. Mr.Ford, by our definition, is an under accumulator of wealth. Mr. Ford spentseven years in college. How can he possiblyhave less wealth than a mobile-home dealer? In fact, Mr. Richards hasnearly five times the net worth of Mr. Ford. And remember, both are inthe same income/age cohort. In trying to answer the above question askyourself two simpler questions:

* How much money does it take to maintain the upper-middle-class lifestyle of an attorney and his family?

* How much money is required to maintain the middle-class or even blue-collar lifestyle of a mobile-home dealer and his family?

Clearly, Mr. Ford, the attorney, must spend significantly more of hishousehold's income to maintain and display his family's higherupper-middle-class lifestyle. What make of motor vehicle is congruentwith the status of an attorney? Foreign luxury, no doubt. Who needs towear a different high-quality suit to work each day? Who needs to joinone or more country clubs? Who needs expensive Tiffany silverware andserving trays?

Mr. Ford, the UAW, has a higher propensity to spend than do themembers of the PAW group. UAWs tend to live above their means; theyemphasize consumption. And they tend to de-emphasize many of the keyfactors that underlie wealth building.

YOU OR YOUR ANCESTORS?

Most of America's millionaires are first-generation rich. How is it possiblefor people from modest backgrounds to become millionaires in onegeneration? Why is it that so many people with similar socioeconomicbackgrounds never accumulate even modest amounts of wealth?

Most people who become millionaires have confidence in their ownabilities. They do not spend time worrying about whether or not theirparents were wealthy. They do not believe that one must be bornwealthy. Conversely, people of modest backgrounds who believe thatonly the wealthy produce millionaires are predetermined to remainnon-affluent. Have you always thought that most millionaires are bornwith silver spoons in their mouths? If so, consider the following facts thatour research uncovered about American millionaires:

* Only 19 percent receive any income or wealth of any kind from a trustfund or an estate.

* Fewer than 20 percent inherited 10 percent or more of their wealth.

* More than half never received as much as $1 in inheritance.

* Fewer than 25 percent ever received "an act of kindness" of $10,000 ormore from their parents, grandparents, or other relatives.

* Ninety-one percent never received, as a gift, as much as $1 of theownership of a family business.

* Nearly half never received any college tuition from their parents orother relatives.

* Fewer than 10 percent believe they will ever receive an inheritance inthe future.

America continues to hold great prospects for those who wish toaccumulate wealth in one generation. In fact, America has always been aland of opportunity for those who believe in the fluid nature of ournation's social system and economy.

More than one hundred years ago the same was true. In The AmericanEconomy, Stanley Lebergott reviews a study conducted in 1892 of the4,047 American millionaires. He reports that 84 percent "were nouveauriche, having reached the top without the benefit of inherited wealth."

BRITANNIA RULES?

Just before the American Revolution, most of this nation's wealth washeld by landowners. More than half the land was owned by people whoeither were born in England or were born in America of English parents.Is more than half of this nation's wealth now of English origin?No. One of the major myths concerning wealth in this countryrelates to ethnic origin. Too many people think that America's affluentpopulation is composed predominantly of direct descendants of theMayflower voyagers.

Let's examine this assumption objectively. What if "country of origin"were the major factor in explaining variation in wealth? We would expectthat more than half of America's millionaire population would be ofEnglish ancestry. This is not the case (see Table 1-1). In our most recentnational survey of millionaires, we asked the respondents to designatetheir country of origin/ancestry/ethnic origin. The results may surpriseyou.

Those designating "English" as their ethnic origin accounted for 21.1percent of the millionaire population. People of English origin account for10.3 percent of the United States household population in general. Thus,American millionaires of English origin are more prevalent than expected,given their numbers in the entire U.S. population (10.3 percent versus21.1 percent). In other words, this group has a millionaireconcentration ratio of 2.06 (21.1 percent of all millionaire householdsdivided by 10.3 percent of all households headed by persons ofEnglish origin), meaning that people of English origin are about twice aslikely to head households in the millionaire category than would beexpected from their portion of all households in America.

And yet, what percentage of the English ancestry group in Americais in the millionaire category? Would you expect the English group torank first? In fact, it ranks fourth. According to our research, 7.71percent of all households in the English category have a net worth of$1 million or more. Three other ancestry groups have significantlyhigher concentrations of millionaires.

How can it be possible that the English ancestry group does not havethe highest concentration of millionaire households? After all, they wereamong the first Europeans to arrive in the New World. They were onthe ground floor to take economic advantage in this land of opportunity.In 1790 Colonial America, more than two-thirds of households wereheaded by a self-employed person. In America, the achievements ofthe current generation are more a factor in explaining wealthaccumulation than what has taken place in the past. Again, mostAmerican millionaires today (about 80 percent) are first-generation rich.Typically, the fortunes built by these people will be completelydissipated by the second or third generation. The American economyis a fluid one. There are many people today who are on their way tobecoming wealthy. And there are many others who are spending theirway out of the affluent category.

WINNING ANCESTRY GROUPS

If the English ancestry group does not have the highest concentration ofmillionaire households, then which group does? The Russian ancestrygroup ranks first, the Scottish ranks second, and the Hungarian ranksthird. Although the Russian ancestry group accounts for onlyabout 1.1 percent of all households in America, it accounts for 6.4percent of all millionaire households. We estimate that approximately 22of every 100 households headed by someone of Russian ancestry has anet worth of $1 million or more. This is in sharp contrast to the Englishancestry group, in which only 7.71 in 100 of its members are in themillionaire league. How much wealth does this Russian Americanmillionaire group have in total? We estimate approximately $1.1 trillion, ornearly 5 percent of all the personal wealth in America today!

How can one explain the economic productivity of RussianAmericans? In general, most American millionaires are manager-ownersof businesses. Russians in disproportionate numbers are manager-ownersof businesses. Further, this entrepreneurial spirit seems to translate fromone generation of Russians to the next.

The Hungarian ancestry group also is entrepreneurially inclined. Thisgroup accounts for only 0.5 percent of all households in this country. Yetit makes up 2 percent of the millionaire households. Contrast this with theGerman ancestry group, which accounts for nearly one in five households(19.5 percent) in this country. Only 17.3 percent of all millionairehouseholds are headed by persons of German ancestry, and only about3.3 percent of German households are in the millionaire league.

THRIFTY SCOTS

The Scottish ancestry group makes up only 1.7 percent of all households.But it accounts for 9.3 percent of the millionaire households in America.Thus, in terms of concentration, the Scottish ancestry group is more thanfive times (5.47) more likely to contain millionaire households than wouldbe expected from its overall portion (1.7 percent) of Americanhouseholds.

The Scottish ancestry group ranks second in terms of the percentageof its clan that are in the millionaire league. Nearly twenty-one (20.8) in100 of its households are millionaires. What explains the Scottish ancestrygroup's high ranking? It is true that many Scots were early immigrants toAmerica. But this is not the major reason for their economic productivity.Remember that the English were among the earliest immigrants, yet theirconcentration numbers are far lower thanthose of the Scots. Also consider that the Scots did not enjoy the samesolid economic status that the English enjoyed during the years the nationwas in its infancy. Given these facts, one would think that the Englishancestry group would account for a higher concentration of millionairehouseholds than those in the Scottish group. But just the opposite is thecase. Again, the Scottish ancestry group has a concentration level nearlythree times that of the English group (5.47 versus 2.06). What thenmakes the Scottish ancestry group unique?

If an ancestry group has a high concentration of millionaires, whatwould we expect the income characteristics of that group to be? Theexpectation is that the group would have an equally high concentration ofhigh-income producers. Income is highly correlated with net worth; morethan two-thirds of the millionaires in America have annual householdincomes of $100,000 or more. In fact, this correlation exists for all majorancestry groups but one: the Scottish. This group has a much highernumber of high-net worth households than can be explained by thepresence of high-income-producing households alone.High-income-producing Scottish-ancestry households account for lessthan 2 percent of all high-income households in America. But rememberthat the Scottish ancestry group accounts for 9.3 percent of the millionairehouseholds in America today. More than 60 percent of Scottish-ancestrymillionaires have annual household incomes of less than $100,000. Noother ancestry group has such a high concentration of millionaires fromsuch a small concentration of high-income-producing households.

If income does not come near in explaining the affluence of theScottish ancestry group in America, what factors do shed light on thisphenomenon? There are several fundamental factors.

First, Scottish Americans tend to be frugal. Given a household'sincome, there is a corresponding mathematical expectation of level ofconsumption. Members of this group do not fit such expectations. Onaverage, they live well below the norm for people in various incomecategories. They often live in self-designed environments of relativescarcity. A household of Scottish ancestry with an annual income of$100,000 will often consume at a level typical for an American householdwith an annual income of $85,000. Being frugal allows them to save moreand invest more than others in similar income groups. Thus the same$100,000 income-producing household of Scottish descentsaves and invests at a level comparable to the typical Americanhousehold that annually earns nearly $150,000.

In the chapters that follow, we reveal the highest prices typicalmillionaires reported paying for suits, shoes, watches, and motor vehicles.A significantly greater number of millionaires with Scottish ancestryreported paying less for each item than the norm for all millionaires in thesample. For example, more than two-thirds (67.3 percent) of Scottishmillionaires paid less for their most expensive motor vehicle than thenorm for all millionaires surveyed.

Because they accumulate wealth, the Scottish-ancestry affluent havewealth to pass on to their offspring. Our research reveals that Scottishoffspring typically become economically and emotionally independenteven as young adults. Thus, they tend not to drain their parents' wealth.

Members of the Scottish-ancestry group have been able to instill theirvalues of thrift, discipline, economic achievement, and financialindependence in successive generations. These values are also typicaltraits among most self-made millionaires.

SMALL POPULATIONS

Often small-population groups are underrepresented in studies of theaffluent. Yet many contain high concentrations of wealthy households.What small groups in particular? We estimate that all of the fifteensmall-population ancestry groups shown in Table 1-2 have at least twicethe proportion of millionaires than the proportion for all U.S. households.Only about 3.5 percent of all U.S. households are in the million-dollar networth league. All the groups listed in Table 1-2 are estimated to contain atleast twice this proportion. (In total, all fifteen account for less than 1percent of all affluent households.) In fact, there is compelling evidenceof an inverse relationship between the size of an ancestry group and theproportion of its members that are wealthy. In other words, largerancestry groups contain smaller proportions of millionaires on averagethan smaller groups.

What about the number of years that an average member of anancestry group has been in America? The longer the time here, the lesslikely it will produce a disproportionately large percentage of millionaires.Why is this the case? Because we are a consumption-based society. Ingeneral, the longer the average member of an ancestry group hasbeen in America, the more likely he or she will become fullysocialized to our high-consumption lifestyle. There is another reason.First-generation Americans tend to be self-employed. Self-employment isa major positive correlate of wealth.

This is not to suggest that self-employment and/or being first-generationAmerican ensures membership among the ranks of millionaires. Mostself-employed Americans will never accumulate even modest levels ofwealth. The same is true for most first-generation Americans. Buttwenty-three million people in this country today were born elsewhere.That is a large gene pool. Note also that 12 percent of INC. magazine'stop five hundred business entrepreneurs are first-generation American.

One might expect that the sons, daughters, grandsons, andgranddaughters of these people would automatically become even moresuccessful economically than they. Not really. We will discussintergenerational transfers in more detail in Chapters 5 and 6, but allow usat this juncture to explain why the "next generation" is often lessproductive economically than the last.

VICTOR AND HIS CHILDREN

Take the case of Victor, a successful entrepreneur who is first-generationAmerican. Entrepreneurs like him have typically been characterized bytheir thrift, low status, discipline, low consumption, risk, and very hardwork. But after these genetic wonders become financial successes, thenwhat? What do they teach their children? Do they encourage them tofollow Dad's lead? Do their children also become roofing contractors,excavation contractors, scrap metal dealers, and so on? The chances arethey don't. Fewer than one in five do.

No, Victor wants his children to have a better life. He encourages themto spend many years in college. Victor wants his children to becomephysicians, lawyers, accountants, executives, and so on. But in soencouraging them, Victor essentially discourages his children frombecoming entrepreneurs. He unknowingly encourages them to postponetheir entry into the labor market. And, of course, he encourages them toreject his lifestyle of thrift and a self-imposed environment of scarcity.

Victor wants his children to have a better life. But what exactly doesVictor mean when he says that? He means that his children should be welleducated and have a much higher occupational status than he did. Also,"better" means better artifacts: fine homes, new luxury automobiles, qualityclothing, club membership. But Victor has neglected to include in thisdefinition of better many of the elements that were the foundation stonesof his success. He does not realize that being well educated has certaineconomic drawbacks.

Victor's well-educated adult children have learned that a high level ofconsumption is expected of people who spend many years in college andprofessional schools. Today his children are under-accumulators ofwealth. They are the opposite of their father, the blue-collar, successfulbusiness owner. His children have become Americanized. They are partof the high-consuming, employment-postponing generation.

How many generations does it take for an ancestry group that todaycontains thousands of Victors to become Americanized? Only a few.Most move into the "American normal" range within one or twogenerations. This is why America needs a constant flow of immigrantswith the courage and tenacity of Victor. These immigrants and theirimmediate offspring are constantly needed to replace the Victors ofAmerica.

THE AUTHORS AND TODDY AND ALEX

Several years ago we were asked to conduct a study of the affluent inAmerica. We were hired by Toddy, a corporate vice president of asubsidiary of a large corporation. Toddy's ancestors were English. Hisforefathers were in America before the Revolutionary War. Morerecently, they owned steel mills in Pennsylvania. Toddy, their directdescendant, attended an exclusive prep school in New England. Later hegraduated from Princeton University. While in college, he played varsityfootball.

Toddy, like many people in this country, had always believed thatwealthy people inherited their fortunes. Toddy also believed that mostwealthy people had English roots. So what happened to Toddy's long-heldopinions after he joined us out in the survey field, meeting America'smillionaires? Most of the millionaire respondents Toddy met werefirst-generation affluent. And most were not of English origin. Most ofthem attended public schools; they drove American-made automobiles; theypreferred club sandwiches to caviar. And, unlike Toddy, most were frugal.

Toddy's education was enhanced by another event. During the courseof our assignment, an entrepreneur named Alex approached Toddy andthe other senior officers of the corporation. Alex wanted to buy the firmthat employed Toddy. Who was this Alex fellow, anyway? His father hadimmigrated to this country from Russia before Alex was born. His dadwas a small business owner. Alex had graduated from a state university."How could it be possible," Toddy asked, "that this fellow wants to, andhas the resources to, buy the company?" Alex's dad answered thequestion quite succinctly:

Russians--they are the best horse traders.

Alex is a self-made multimillionaire. His is the prototypical Americansuccess story. Conversely, Toddy and others like him are an endangeredspecies. Someday, they may even be extinct. This is especially true forthose who spend a lot of time reminiscing about how their late ancestorsfounded steel mills, railroads, and pony express services long, long ago.

FNT(*) Our profile of the typical millionaire is based on studies ofmillionaire households, not individuals. It is, therefore, impossible in mostcases to say with certainly whether our typical millionaire is a he or a she.Nevertheless, because 95 percent of millionaire households are composed ofmarried couples, and because in 70 percent of these cases the male head of thehousehold contributes at least 80 percent of the income, we will usually referto the typical American millionaire as "he" in this book.