Fewer Self-Made Millionaires Than You Think: A Problem?

Everyone aspires to be a self-made millionaire, but surprisingly, there are fewer self-made millionaires than commonly thought. Before finding out the answer, what percentage of millionaires do you think are self-made with no inheritance or significant financial help from their parents or relatives?

Here’s a Bank of America Private Bank Survey of Wealthy Americans that gives us some fascinating data about self-made millionaires and what the wealthy do. According to Bank of America, “wealthy” is defined as having $3 million in investable assets or more. Investable assets are assets outside your primary residence. At a 4% rate of return, $3 million would generate $120,000 a year in passive investment income.

The definition of wealth can be somewhat arbitrary, depending on factors such as personal desires, cost of living, health, and household size. However, for the most part, I believe anything above $1 million in investable assets is considered wealthy in America. With a paid-off home, $1 million in investments, and some passive income, most people can lead a comfortable life.

The survey conducted by Bank of America involved 1,052 participants with household investable assets exceeding $3 million, all aged 21 and above. “The aim was for the survey to be a statistically representative sample of the U.S. population meeting these criteria,” wrote the report.

Here are some key findings from the survey.

OK Boomers Are Wealthiest

To nobody's surprise, the Boomer generation had the largest percentage of wealth individuals at 62% followed by my generation, Generation X at 20%. The older you get, usually the wealthier you get. The larger the population of your generation, the greater the percentage of wealthy individuals.

Less Self-Made Millionaires Than Expected

The most surprising revelation from the survey was the following information: Only 27% of respondents claimed to be self-made (with over $3 million)! In the context of the survey, being self-made referred to individuals with a middle-class or poor upbringing and no inheritance.

Conversely, a significant 28% of respondents stated that they grew up in affluence with the benefit of an inheritance. Furthermore, 46% of respondents with over $3 million in investable assets reported growing up either in affluence with no inheritance or in a middle-class environment with some inheritance.

Growing up in a middle-class environment with some inheritance is the gray area. This could include most of us eventually.

The number of self-made millionaires is fewer than you think - Chart breaking down individuals with over $3 million in investable assets and how they got their wealth

Thought The Vast Majority Were Self-Made Millionaires

For the longest time, I held the belief that 90% of wealthy individuals were self-made, not just 27%. Even if you were to add the “Head start” category of 46% to 27%, that would still only equate to 73% as self-made.

While acknowledging the existence of those who live off trust funds and secure jobs that create an illusion of self-made success, I perceived them as a tiny minority, often associated with exclusive clubs or private universities.

However, based on this data, it appears that at least 28% (Legacy wealth), and possibly up to 74% (Legacy wealth + Head start) of these millionaires, received significant financial support to get them to above $3 million in investable assets.

I see this as a problem because the ability to generate personal wealth independently is immensely gratifying. There's a profound sense of accomplishment in realizing what one can achieve through their own efforts, especially after years of education.

With such a high percentage of affluent Americans inheriting millions, it's understandable why there is a growing sense of dissatisfaction in our nation. As the country becomes wealthier, we risk depriving people of purpose and self-satisfaction.

If you have investable assets of $1 million or more (not $3 million or more) how did you obtain it?

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Saving About $3 Million And Then Retiring Early

Bank of America's definition of wealthy—requiring $3 million in investable assets—is intriguing to me. The first reason is because I believe you need to have a $3 million net worth to be a real millionaire today due to inflation. When we think millionaire, we think of someone living a fabulous lifestyle.

$3 million is also an interesting threshold to be described as wealthy due to my own circumstance. When I left my job in 2012, my total net worth was around $3 million, with investable assets near $2 million, generating about $80,000 annually in passive income. The remaining one million was tied up in my primary residence, which I eventually sold in 2017.

The main reason why I felt wealthy was due to my newfound freedom. However, I didn't feel wealthy from a financial sense because $80,000 in passive income isn't a lot in San Francisco. If I had $3+ million in investable assets instead of ~$2 million, I probably would have felt financially wealthy.

Feel Like I'm Self-Made, But Maybe Not

Raised by middle-class federal government employees, my parents drove an eight-year-old Toyota Camry, and I commuted to school on foot or by bike. After attending a public high school, I chose The College of William & Mary partly for its affordable $2,800 annual tuition.

If surveyed by Bank of America, I would be classified as self-made. And you know what? It feels incredibly satisfying to have created my own wealth without receiving any inheritance or outside of the normal financial assistance. Building wealth involved long hours, risk taking, and luck, but I wouldn't have it any other way.

I am grateful to have two working parents who stuck together throughout my entire childhood. They were strict about education and provided supplemental education when needed.

In December 2004, I asked my grandfather for a bridge loan to help me come up with part of my 20% downpayment on a house. However, I paid back the bridge loan within three months with interest. I knew I was getting a year end bonus, but it wouldn't hit my bank account until February 2005.

Even though this wasn't an inheritance or free money, being able to get a short-term loan helped me buy a house that ended up providing for a nice profit 12 years later. Hence, this is a gray area and maybe I'm not self-made after all.

Getting Lucky With Wealth Might Be A Curse

Certainly, some individuals inevitably receive inheritances or gifts from their parents or grandparents, contributing to a significant portion of substantial wealth. A large percentage of outsized wealth is due to luck.

While graciously accepting such financial gifts is logical, there's a risk of losing motivation to earn your own money, especially if the gift is sizable enough to cover major expenses like a house, car, or top-tier education for your children. If not careful, the Bank of Mom & Dad can be real debilitator for adult children who end up never launching.

To counter this risk, I'm committed to ensuring my kids work during every summer and winter before adulthood. Engaging in minimum wage jobs will instill a robust work ethic and foster deep appreciation for subsequent employment opportunities. By discussing the costs of things, they can easily correlate the number of hours worked to the items they already possess.

Of course, money doesn't corrupt all children. There are plenty of instances where wealthy children end up getting much wealthier due to their own self initiative. A classic example is William Henry Gates III, who grew up rich given his dad was a partner at his law firm. Now Bill is a leading philanthropist.

Such A Massive Wealth Transfer

From the report, “According to Cerulli Associations, an estimated $84 trillion is expected to transfer from baby boomers to Generation X and millennials by 2045. Of this, $72 trillion is predicted to pass to heirs, while $12 trillion is earmarked for philanthropy.”

This impending wave of wealth transfer carries the potential danger of demotivating a younger generation, leading to reduced productivity. But ultimately, this reduced productivity may potentially lead to decreased happiness.

Younger Wealthy Investors Hold Less Stocks

Another interesting finding from the survey is that younger wealthy investors and legacy wealth respondents hold less stocks.

The report says,

“Conventional investment advice suggests that younger investors hold more stocks, not fewer, than older investors. Yet the 21 to 42 age group holds just a quarter of their portfolio in stocks, compared with 55% of investors aged 43 and older.

The difference in stock holdings may be connected to confidence in traditional asset classes. Seventy-five
percent of younger people agreed that “It’s no longer possible to achieve above-average returns” on traditional
stocks and bonds alone. In comparison, only a third of the older group showed the same skepticism.”

So what are these wealthy Americans trending towards? Alternatives.

Below is a chart that shows real estate investments as the #2 post popular asset for wealthy investors after domestic equities. However, notice how investing in private growth companies, private equity, crypto, private debt, and your own personal brand/company are much higher for those ages 21-42.

Mirrors My Investing Path

Real estate has consistently been my preferred asset class for wealth-building. It stands out as a tangible asset with clear improvement potential, income generation, tax advantages, and generally lower volatility.

However, over the past fifteen years, I've diversified into alternative investments, driven in part by my aversion to the stock market's volatility. As net worth grows, so does the aversion to significant market fluctuations.

This diversification led me to invest in private growth companies through various venture capital funds and venture debt funds. Simultaneously, I've dedicated significant effort to the growth of Financial Samurai, a source of robust cash flow.

Interestingly, despite exploring various investment avenues, the S&P 500 remains one of the most compelling long-term investments. Dividend-paying stocks, in particular, retain their status as my favorite source of passive income. Consequently, I aim to consistently allocate between 20% and 30% of my net worth to domestic U.S. equities.

When It's Time To Transfer Assets To Our Children

To facilitate a smooth wealth transfer, my wife and I have established revocable living trusts and compiled comprehensive death files with clear instructions.

Our ideal scenario involves raising children who embody humility, a strong work ethic, and gratitude for their blessings. The intention is to assist them while we're alive rather than leaving everything for posthumous distribution.

However, we acknowledge the possibility of raising entitled children, in which case we're hesitant to provide financial assistance. Doing so could inadvertently reinforce a negative attitude toward work and life. We understand the need to be adaptable and flexible in these matters.

While our desire is to provide our kids with everything they need, there's a genuine concern that having everything might lead to a lack of appreciation for anything. It's a delicate balance we aim to navigate thoughtfully.

Reader Questions and Suggestions

Are you surprised by how low the self-made percentage is? with such a massive generational wealth transfer, how do we prevent generations from slacking off and becoming unproductive members of society? Or does it not really matter?

To smartly manage your finances for free, check out Empower and link all your assets. I've been using Empower (previously Personal Capital) since 2012 to track my net worth, x-ray my portfolios for excessive fees, and plan for my retirement cash flow.

To invest in private growth companies, check out the Fundrise Innovation Fund. It's an open-ended fund with only a $10 minimum. You can see what the fund invests in before committing any capital, unlike closed-end venture capital funds. Roughly 35% of the fund is invest in artificial intelligence, which will significantly alter our future.

For more nuanced personal finance content, join 60,000+ others and sign up for the free Financial Samurai newsletter. Financial Samurai is one of the largest independently-owned personal finance sites that started in 2009. 

73 thoughts on “Fewer Self-Made Millionaires Than You Think: A Problem?”

  1. “According to Cerulli Associations, an estimated $84 trillion is expected to transfer from baby boomers to Generation X and millennials by 2045. Of this, $72 trillion is predicted to pass to heirs, while $12 trillion is earmarked for philanthropy.

    This impending wave of wealth transfer carries the potential danger of demotivating a younger generation, leading to reduced productivity. But ultimately, this reduced productivity may potentially lead to decreased happiness.”

    Let’s apply this to our beloved government. A fair amount of this transfer can actually be to the govt, in the form of estate taxes. Govt has done little to ‘earn’ it. Yes, keeping up our defenses against external invasion is important; providing for the common good is important. But most of our beloved govt doesn’t provide 24/7 services, and gives money away to those who have not worked for it.

    Take a barrel of oil. The drillers are drilling & extracting 24/7; the refineries are refining 24/7; the gasoline stations are providing pumps 24/7. They’re working to provide a good/service to us all. Yet our govt, other than common defense, is working only 8 hours a day, 5 days a week. And they take $0.50-0.70 cents for each gallon of gasoline. And additional taxes from the drillers, refiners, station owners. Even the govt regulators, thankfully, don’t usually work more than 5 days/week.

    Ignore that our present govt is trying to reduce oil use to zero. They don’t seem to recognize that raw oil is used to produce nearly everything that our ‘advanced’ civilization uses, though not necessarily needs.

    Govt wants their ‘share’ of your wealth. That’s the definition of stealing.

  2. Personally I am a true self-taught, I created my wealth alone, without inheritance and without financial help from my family. My family was poor (not to eat at every meal of the day). I helped my parents who were over-indebted, and I have never seen another case like me so far, but I don’t consider myself exceptional. Your article is totaly true.

    Thank you for your article.

    Happy New Year 2024 Sam !

  3. So, according to this study, if I have $3.0m today with no inheritance, I’m “self made”. But in 10 years my parents pass and leave me $25,000 from their middle class IRA, I’m instantly no longer “self made”, no matter that the vast majority of my net worth is self generated.

    That makes no sense. Sounds like this “self made” bar is arbitrary and silly. We should each focus more on our own wealth building and worry less about the kids in the other race lanes.

  4. I think over time, there should be less self-made wealthy people in the US – over time. Afterall, the US has enjoyed an unprecedented 70+ yrs of economic prosperity and stable politics (vs. rest of the world).

    If this survey was taken 20yrs ago, 40yrs ago, 60yrs ago, I expect to see self-made millionaires in the 50%, 70%, 90% range respectively, way above the current number of ~27%.

  5. The percentage of American self-made millionaires are less than 5 percent because analyses such as BOA conveniently omit 1) social capital, 2) human capital, and 3) non-cash economic capital.
    1) Social capital – some people are given opportunities because they are members of a certain group or network because they won the “birth lottery.”
    2) Human capital – Born to college educated parents who passed down their high-IQ genes.
    3) Non-cash economic capital – grew up in stable homes, communities, and attended good schools.

    1. This is why “self-made” is a very toxic label. It implies that some people are true heroes and others get an asterisk on their wealth. The reality is more like a lotto system. And if you were born with social capital, you get more tickets. If you were born with human capital, you get more tickets. If you were born with economic capital, you get more tickets. If you have good health, you get more tickets. Heck, if you are good looking you get more tickets. If you go to a good college, you get more tickets, etc. etc. etc. There are no guarantees to get wealthy, there is often an element of luck (even if, in hindsight, it looks like skill), and there is no singular path that guarantees or precludes wealth.

      I think if we are truly honest with ourselves, we will agree that many of us who are fortunate enough to be at the top of the game, did so through a combination of external factors, internal factors, and a bit of luck.

      1. You are right, of course. Even Donald Trump famously agreed with you that everyone is born with different amounts of luck when it comes to getting rich and that it’s just not fair. But life has never been fair, so what do we do about it? We should all try to do our best, be kind and generous, and acknowledge this fact. Even if everyone got freebies and handouts from the government, people would still be born with different amounts of everything you described. Nature is unequal – the good looks, IQ, connections, etc. are never going to go away. Be kind, generous, and work hard. Make yourself a better person. That’s what you can do.

    2. So only certain groups of people are even capable of becoming self-made wealthy? If it’s all tied to your circumstances why doesn’t everyone in the privileged groups end up wealthy?

  6. I couldn’t enter the description in “other” but parents paying for college and not having to take on student debt is easily my biggest “head start”. I’ve paid for my cars, my house, and everything else but I never had to grapple with the incredible debt that some of my college classmates are still dealing with decades later.

  7. I do think as another poster indicated, the BOA study is flawed since it appears to be BOA finance clients. My instincts are that those of us who focus on financial websites are putting forth the effort of becoming rich, which I think skews the poll that Sam’s taking as it’s a subset of people with financial importance that’s near top of mind. I would like to think that the self-made millionaire or Three-millionaire is a bigger pool than what BOA states. Given time, and a control on how much money goes out, becoming financially self-sufficient is in the grasp of quite a few middle class Americans.

      1. Yeah, I’m torn, I think your analysis and the BOA analysis are two ends of the spectrum, and I’D LIKE TO BELIEVE that the truth is more than likely closer to your analysis.

        However, what throws all this off for me is our spend culture. If we treated 401Ks as the next thing after food, shelter, clothing, our American percentage of self-made Millionaires would be way more to what you’re thinking.

  8. Interesting investment disparities between younger and older investors. It appears that both Millennials and Gen Zs prefer the get rich quick approach to acquiring wealth rather than waiting on investment returns from boring old stocks and bonds. Although real estate is equally favored among both younger and older investors.

    1. Cheryl Schuette

      Lots of interesting comments. I’m going to ask a question instead. Given your surprise at these findings from B of A, I’m interested to know if this isn’t perhaps a reason to revisit inheritance taxes. If so many young people are inheriting so much wealth, could not these millionaires afford to help reduce our national debt?

  9. IDK…something does not add up, I went and read the BofA “study”, and I am throwing a yellow flag. Their data simply flies in the face of literally every other HNW/VHNW/UHNW study I have ever read. And I am the guy refreshing the Federal Reserve website waiting on the Survey of Consumer Finances to drop once every two years.
    BofA claims this sample is to reflect that segment over 21yo with $3+MM of the population, but in no way do I buy their self made % numbers, or that 91% of their respondents use a financial advisor (found near the end of the report). I believe they only surveyed their own existing customers, and are perhaps pandering to them, or have created some kind of wierd feedback loop.
    I would love the detailed methodology, actual questions asked, and the raw data.

    Also, they note that the “Legacy Wealth” group inherited just 20% of their assets, and some portion of the “Head Start” group inherited either 0% or only 12% of their assets.
    These are some fantastic head start inheritance numbers IMO, but inheriting $360k, and then turning it into $3MM+ is a huge accomplishment, that’s self made in my book! Even turning $600k into $3MM+ is a near miracle, especially if there is any material amout of respondents under the age of 40, which they claim there are. And it’s not like all these folks inherited at exactly age 21 and went to work immediately compounding for 20yrs?? Dunno, this info just does not compute. My 2 cents.

    PS- I’m GenX, self made, zero inheritance, passed $3MM by 40, and none of my friends have received material inheritance either, and very very few friends of mine (like 1) uses a financial advisor regularly. So I have no clue who the people are that use BofA Private Banking, apparently.

    1. Good thoughts.

      Curious though, as I see this a lot. If you and your friends were able to accumulate 3 million in investable assets by 40, why don’t you think all those people in the survey can as well?

      Shouldn’t you be more convinced? Turning $600,000 into $3 million is definitely achievable after 15 to 20 years. Just look at how much 600,000 would have made you since 2010 if you had invested in the S&P 500.

  10. Fortunately, my NW is around $15M and I am “self-made”. I come from an entrepreneurial upper middle-class family in Latin America. However, when I came to the US as a student I was for all intent and purposes just poor. My parents helped me with tuition as an international student, which is expensive relative to what Americans pay and I felt guilty they would send money to put me through school and pay for boarding. So while I went to community college and the state university I worked bussing tables, delivering Chinese food, cleaning carpets, etc. to alleviate the financial burden on my parents and to save money to backpack in Europe. The last time my parents helped me was probably during my last year in school and by the time I graduated, I had $25k in credit card debt at 24 in 1995.

    Once I graduated, I went straight to sales and did well right away. After 5 years in telecom sales, I decided to open my own business and the rest is history. This year will be my 24th year in ecommerce and I don’t foresee retiring ever. I technically could live off passive income, which gives me a great sense of security, but I run a business because that’s part of my identity now and keeps me busy enough.

  11. How should I value a government pension of $73,000/year with a max 3% COLA that I am currently drawing at age 60 for the purposes of wealth calculation?

  12. Great post, Sam. Got a lot of people commenting/sharing.

    I’m surprised most thought there would be more self-made millionaires. I thought the opposite. I’m guessing it might be FS’s self-selected audience of strivers and motivated FIRE folks. Great audience to learn from and company to be in.

    I reached some financial success to have qualified on my own before the inheritances, trusts kicked in, but nowhere near what my parents attained. The privileges I had make it hard to say I did it on my own. Maybe 60% of my current friends grew up wealthy, so I do not currently feel wealthy even though the stats say otherwise. It seems everyone has so much money, connections and a leg up that I can hardly imagine succeeding without starting off at 3rd base. Early on, I had one of those low-paying “trust fund jobs” working in a prestigious magazine back in the heyday (90s, pre-digital), where it seemed everyone went to top schools and had the “finishing” since we were considered taste makers/arbiters of style.

    This speaks to the self-segregation we have in the US. People prefer their own tribe — the self-made probably prefer to be among similar company, and those raised privileged have their own signaling. So if you’re in one group you have the distorted feeling that everyone is similar. I’m trying desperately to keep my tribe diverse so I can keep learning and stay motivated but without a corporate job to force you into contact with different folks it takes effort.

    1. “ So if you’re in one group you have the distorted feeling that everyone is similar.”

      Totally agree. The echo chamber is real and can be unhelpful.

      What did your parents do to create their fortune?

  13. Self made. Neither parent graduated HS and got no support from them financially or emotionally.

    Tough path in early years but I truly believe having a college education was the first step in both normalcy and financial independence.

  14. I must also admit I find these results very surprising. In particular for the reasons that follow. I am self-made, worth ~$4m, and I was thinking recently about my parents and my grandparents generations. For my parents, but most certainly my grandparents time, there was simply NO opportunity to even become self-made. It was the days prior to the internet. It was the days prior to being able to invest internationally. It was the days more-or-less prior to international travel – international travel, by boat, was largely a once-in-a-life-time thing, if at all. My grandparents never flew on a plane, for example. In those days you worked your job, lived a very simple life, and that was it – if you were “working-class” then that would never change. And there was not the means nor the opportunity for it to change. Heck, in those days, I don’t even think there was such a thing as lotto – for that 1 in 10 million chance to become rich by pure luck !

    But contrast that to the last 30 or so years for us. We have access to the world at the touch-of-a-button. We have had revolutionary companies that have provided the average person immense opporunity to grow wealth that the average person could invest in. The first I remember was in 1986 – Microsoft. There have been MANY since. Then we have other revolutions – e.g. Crypto. When in the history of man-kind has there ever been anything that would turn a small investment that any average person could make into $10m or $100m in 10 or so years? NEVER. On top of all of this, the touch-of-a-button provides the ability to learn from others and is game-changing too. I am pretty confident that had I been able to read Financial Samui or watch video’s with investment advice from Warrent Bugget or Charlie Munger when I was in my early 20’s, I would be WAY richer than I am today! Simply put, the opportunities to create/grow wealth for our generation and the coming one, is immense like it never has been before.

    So, with all this opportunity, it most certainly surprises me to hear that only ~27% are self-made. Maybe this figure will improve in time, as my children have the opportunity and the tools with which to grow wealth at a young age that far exceed what was ever available to me.


  15. The biggest monetary help my middle class parents provided was to pay most of the cost (room and board ) of my college education. My work-study jobs covered books and personal expenses. That puts me in the gray area I guess. I did make it into the $3m category. I credit them for always having had a savings goal which was to put their kids through college.

      1. Really? I challenge you to apply your critical evaluation skills on this topic some more. Especially at today’s cost/return value of a college education. Perhaps not so 30 years ago, but I don’t know if that holds true today.

  16. Hi Sam, Perhaps a different twist.
    We at 70 are “self made” with 3 million invested.
    We helped others along the path the last 50 years.
    The real question as a young person (teens) did you study and work to find the great gift of a vocation. Next did you solve problems with your vocation, your energy, your intellect and your experience.
    Money is the shallow end of the pool.
    Venture into the deep ocean to live an interesting life.

  17. I would have thought 75% self made.
    I had middle class upbringing. Paid my own way through college,so no debt. Worked corporate America for 19 years. Gave me an incredible education in business.
    Started my own business risking every penny I owned. 15 years later sold it.
    $8.5m investable assets.
    There is immense satisfaction doing it on your own.

      1. We just sold it this past April, so we have been on a whirlwind of travel ever since. That is one of our passions. I would expect the travel to slow down in a couple years and I would really like to teach personal finance to young people. Our schools/universities do a terrible job at it.
        As far as the money goes. I know I have enough by any analysis or Monte Carlo simulation, but there is a little voice in the back of my head that says “Do you REALLY have enough”. Saving, accumulating and planning for 20 years and now it is a switch to both preserving and spending. It is a real big change in thinking and I am struggling a little bit. It seems at times to be an irrational fear. I would think that after a couple years of seeing that the numbers are good and that we are still on plan that fear will go away.
        We haven’t made a specific plans for the money other than it going to family in the end.

  18. Of all my brothers, I’m the only one who didn’t go to college and have it paid for, have a car purchased for me or get various bailouts from divorce and other legal problems.
    Conversely I’m the only millionaire. At this point I’ve prob helped my parents financially more then they helped me.

  19. I obtained the millionaire status through hard work and saving. Through our company 401k and two defined benefit retirement plans, I retired a multi-millionaire, and I received lump sums at retirement. I know that defined benefit plans are a unicorn nowadays; however it was a benefit for persevering 38 years and 10 mos. at the company and we had multiple layoff periods over that timeframe. They also offered retiree medical and dental coverage insurance (now through an (HRA) health reimbursement account and a separate corporate rate family dental plan). They cover about half of my medicare supplement plan premiums (AARP United Healthcare Supplement Plan) through the HRA.

    I went through two divorces and they got half of one of my retirement plan money based on a formula at the time of divorce and half of my 401k monies at the time of divorce. No regrets, I helped raised kids in two families (paid all of my child support on-time) and I still came out a multi-millionaire. Now, I DIY my investments using the three bucket retirement system (one 401k and two IRAs) and I have a taxable account for my RMD withdrawals. I also invest my current wife’s portfolios, one taxable, and two IRAs.

    “Life is like a box of chocolates, you never know what you’re going to get” –Forrest Gump.

  20. Sam, your age groups for the different generations are slightly off. For example, Boomers are 1946 to 1964 or the youngest (that is me) are 59. GenX is 1965 to 1981 and Millenials 1982-1997….ect.
    Love your blog and insights into investing…THanks!

  21. My wife and I are 37 & 36, we just cracked 1m investable. We have about 250k in cash/treasuries, HYSA’s, 500k equity between 4 various rental properties, and 350k in 401k. This doesn’t include our 1.35m equity in our primary residence.

    I’m extremely proud of this, and how did we get here? Working 60+ hours a week from 21 until now. Living within our means, not taking lavish trips in our 20’s, but working 70 hours a week while our friends were traveling the world. A big one, most often overlooked, we didn’t spend a ton on our wedding. We got married in Mexico, for 20% of what it would have cost here, on a beach with 50 members of our family & friends. People often spend way too much on their dream wedding, then rent for the next 10 years.

    In 2010 when everything was tough, I sold every asset I had to be able to purchase a short sale condo in So Cal. It took 9 months and almost every penny we had to buy a condo painted 6 different colors, and looted from the previous owners. I remodeled the entire place, a lot of it myself over 4 months. We have had 2 condo’s, & 2 houses (primary residences) to end up in what we consider our forever home currently, but it took 4 moves to get here.

    During those 14 years, we also have bought/sold/flipped/held 8 different rental properties. Was it easy? No. Did we leverage everything we had multiple times to take chances to do it? Yes.

    HELOC’s, non conforming loans, heck we even sold a paid off car and had 1 car we shared for a bit so we had the down payment we needed for another rental property.

    When all said and done, I know it gave us a jump start on life, but also taught us a lot.

    When people say they can’t afford a house, often times it’s their lifestyle that doesn’t allow them too. My same friends who say they can’t afford a house are driving 80k cars, with a $1500 payment and worried about their next vacation over their next promotion.

    In comparison, I do have a friend who had access to their 7 figure trust at a young age. This individual has gone through 6-7 different careers before 40, and often complains about feeling lost in life and purposeless. I hope they truly find happiness because so far I don’t think they have.

    While there are times I wish I had more free time (I know it will come as the foundation grows and our wealth grows), I’m thankful my wife and I both came from hard working middle class families where nothing was handed to us.

    We paid off my wife’s student loan debt before we were 25. As I said, nothing handed.

    Our plan from here? Keep working our butts off and try to save 100k a year after tax income and keep investing. Goal would be to retire in our 50’s ultimately.

    Unfortunately our parents are aging and at some point we will receive some sort of inheritances. Do we count on it? Absolutely not. I tell my parents to spend every $ they have. Reality is, at minimum we will inherit a few houses, and in SoCal they are worth 1.5m+ each. Again, not counting on anything, and like many here, my goal is to get to the 3m+ investable on our own. Any inheritance is a bonus, funny money, and maybe that will be our stupid purchase of a vacation home in the mountains we have always dreamed of.

  22. Dave Ramsey did a much larger study of millionaires a few years ago, over 10k surveyed. That data is more in line with your 90% estimate. About 85% I believe. I agree with your and BofA 3 million rather than 1 million threshold, but you have to hit 1 before you hit 3.

    1. If I remember it correctly his data suggest 80% received zero to little (under $100K) inheritance, while only 3% received over $1 million.

  23. JourneyIsDestination

    Am close (~2.7M) to magic figure of 3M :). No inheritance; but I got lucky as almost half it is from real-estate (rental properties) – In 2018, sold CA property did 1031 exchanged and got 4 rentals in NC.
    It’s hard to make 3M on a single income and when you’ve a family as well, unless someone is very-high earner or have their own business.

    1. Christine Minasian

      Yes, you are right. We were able to become “self-made wealthy” totally on our own by starting a business and selling it. SO hard to do it any other way. Plus college costs for a few kids will knock your disposable income down like no one’s business!

  24. I guessed in the right ballpark. One of the first lessons of finance is how much small differences can compound over long periods of time – For those with student loan debt, the average is $27k. If we say the debt averages 6.5% real dollar interest to match stock market returns, two graduates at 21 who go on to make & save identical amounts except one starts $27K in the hole, at 67 the difference is over $500K. That little up front help can easily be the difference in millionaire/multimillionaire status. And then little stuff builds up, like the one without debt being able to get money into a 401K faster for tax advantaged growth…

    I was at dinner with the other executives of a tiny tech startup and a few representatives of the purchasing firm. It was a small, meritocratic company. But we started talking about what our parents did for a living, and it was almost all professors, doctors and lawyers.

    One more example – between going to state school, getting a lot of scholarships and some significant financial support from my parents I graduated debt free in 2008. Which meant I was ready to buy in 2009 when the housing market crashed. My friends all bought in years later at much higher costs. Then in the pandemic, some birth control complexity from not being able to visit the doctor like normal led to a pregnancy. If our living expenses weren’t so low we probably would have been more careful. Turns out there were about 100,000 fewer births that year and 30,000 extra the next year. So our son will have smaller class room sizes and less selective college requirements, because our life was a little extra stable, partially all the way back from graduating without debt. If you really pay attention there’s so many little compounding advantages that add up over a life time.

  25. Make it Boil

    By the strict interpretation of the definition provided by the article I would be considered self made. In my youth, I would have been quick to proudly assert the fact. However, as I have grown older, I hesitate. My thoughts always go to a different form of generational wealth transfer. I had the great fortune to be born into a household, that while not wealthy on paper, was stable, valued education and industry. Anything was considered possible and bemoaning your station was not tolerated. If you want it, go get it. The only shortcoming was teaching of financial knowledge, which was self learned. While I will be able to transfer financial wealth to my child, I worry more about transferring the values, financial mindset, and drive my parents gifted to me. I’ve come to believe this is the true wealth transfer I can give her. As a nation, we seem to have lost the abundance mindset. I often wonder if the animosity that has grown between the have’s and have nots could be tamped down by teaching financial concepts in public school and showing almost everyone can succeed with hard work.

  26. Great post! I came from very humble origins low level UC school was able to go to an elite veterinary school but had to take on massive amount of debt. I was able to take out loans to start my veterinary practice pay off the loans and invest heavily. I have been grinding for the past 15+ years but it is not for the faint of heart. There is no magic formula except a very high savings percentage and high income unfortunately. Goal is to grind a few more years I’m in my early 40s then take my foot slightly off the accelerator.

  27. 1M, sure. However, the 3M number is a bit deflating. 2M should be doable though w/o an inheritance.

  28. I am astounded at how few self made people there are according to the survey.

    I would be I interested in a future post about what you think the best path is to becoming self made.

  29. Engineer By Day

    I think I would need more data to draw the conclusion that too few people are self-made millionaires.

    – Does the demographic data consider people who become self-made millionaires then receive an inheritance later?

    I am in my 40s, came from a middle-class household, have ~$1M in investible assets and have never received financial aid from family or any sort of inheritance. In the next 20 years, I will likely have investible income over $3M and then receive an inheritance. Would that remove me from the self-made millionaire pool despite having become a millionaire on my own before the inheritance?

    – Only people from the middle class (with no inheritance) and people from the lower-class are eligible to be called self-made. What percentage of the total population falls into that category? If the percentage of the overall population that possibly could be called self-made millionaire is small, I would expect the overall percentage of self-made millionaires to also be small.

    – The survey draws the line at 12% of wealth coming from inheritance for the middle-class. I assume this means that if you have more than 12% of your net worth coming from inheritance you are not in consideration for being self-made. Why 12% and not 20% like the wealthier class?

    People who grew up in a wealthy household, but received no direct wealth transfer are also removed from consideration. Personally, I would still consider those people self-made. In this scenario, a person would have left home with a net worth of ~$0 and earned the money to become a millionaire, although likely from a well-paying job.

    I think it comes down to how “self-made” has been defined. If the categories are divided in such a way that you have eliminated a large portion of the population from consideration, the numbers will always skew low.

    1. All good points.

      “ In the next 20 years, I will likely have investible income over $3M and then receive an inheritance. Would that remove me from the self-made millionaire pool despite having become a millionaire on my own before the inheritance?”

      Yes, you would still be considered self-made with $1 million and then self-made with $3 million. The spirit is that you made the millions yourself, where’s the Legacy wealth category is that a lot/most was given to them to get to $3+ million.

      Reality is, anybody with an Investing net worth of over $3 million probably got some help somewhere.

      1. Hi Sam, Perhaps a different twist. We at 70 and “self made” with 3 million invested. We helped others along the path the last 50 years. The real question as a young person (teens) did you study and work to find the great gift of a vocation. Next did you solve problems with your vocation, your energy, your intellect and your experience.
        Money is the shallow end of the pool.
        Venture into the deep ocean to live an interesting life.

    2. Yeah I agree here, I consider “self-made” anyone who was not given a large financial gift, inheritance, or loan from family or friends. So really comes down to the inheritance/wealth transfer not economic status of family. If someone was raised up in an upper middle class family, but put themselves through school, and bought their first house on their own and then became a millionaire then I don’t think anyone could argue they were not “self made”. So for the survey I would include the head start in self made group.. so breakdown comes to:
      28% Legacy/Inheritance Wealth and 72% Self Made. That sounds pretty accurate to me.

      I know of many very wealthy parents who have not left significant sums to their children, specifically because they want them to work and make it on their own. I don’t know what that would feel like, but seems like would lead to some resentment early on, but perhaps acceptance or thanks in later years if the child became successful. Such a hard decision, as even within a set of siblings in a wealthy family some may do very well, while others end up estranged/destitute.. so just comes down to the person.

      As far as “millionaire” status, it used to be 1M obviously, but now with inflation I think $2.5M in assets outside of primary home, or $1M of liquid capital in a bank is the new mark, and likely similar to what a millionaire was in the 90s.

      1. Speaking from experience, of having parents who had money but didn’t provide to the level of their wealth, so I grew up with a scarcity mindset, it does lead to resentment. And it’s a long life so you have to find other things to bring you together and look for the other non monetary things they gave you whether they meant to or not.

        I had considerable student loan debt but my wife did not. Wasn’t my wife’s paid for education a transfer or wealth? I’m not sure I really believe in “self-made” given what we are taught and raised on. Given the societal structures that we depend on for help like public education, Medicaid, and a mostly progressive tax system. Given the breaks I received like getting an internship or a first job.

        Sure I’ve had to make thousands, probably tens of thousands of financial and life decisions that have led me to have a reasonably high investable net worth (still sub $3 mil, but on track to meet or exceed pending good luck and grace of God before retirement). But the luck to have been born into a family with loving parents, even with their dysfunction and hang ups, without substance abuse, and with food and shelter in low crime areas cannot be taken for granted.

        With my own kids I am trying to find more balance in providing for them some of the comforts I wish I had had, eliminating the scarcity mindset and trying to instill a cautious abundance mindset, but also suggest that some hardship is actually how we learn and grow and even though I had it harder than them, there were lessons I learned that they can still benefit from.

        Do I wish I had had more help early on? Of course. Would I be who I am today if I had had a lot more help? Probably not. But I bet there’s some sweeter spot in between, where some help makes you know you are supported and loved. And it’s understood that to get more security and more comforts you’ll have to both take some risks and make some sacrifices to realize them. Hard work. Smart work. Lots of good little decisions. Time. Luck. And love will pull you through.

  30. What is included in investable assets: cash, 401k, roth IRA, brokerage account, crypto, private company investments, home value, equity share in a company? I am essentially asking if investable assets are liquid non-retirement funds.

  31. Wow fascinating data points. My guess was going to be that roughly 20% were rich based on inheritance and what not, and that 80% were self-made. I was way off.

    The question you raise on “how do we prevent generations from slacking off and becoming unproductive members of society” is an important one. And so is breaking down the entitlement mentality and this belief among so many young adults that older generations need to be pushed out or not even considered for jobs at all these new slick companies. Younger generations are better at innovation, but the older ones have the wisdom and can also smack some common business sense and respect into the aloof leaders that are running so many startups into the ground.

    Anyway, I think it’s very important for all adults, both young and old, to be humble enough to realize that just because you have wealth now doesn’t mean things will stay that way. Money smarts, hard work, discipline, and frugality play a large part in making wealth last for the long run.

  32. The thing that stands out to me is the 21-42 investment group commitment to crypto assets. I think that speaks volumes to its future success. These things tend to be self-fulfilling.

    Sam, haven’t read much from you on crypto. Is it something you dismiss on the basis of risk? Do you think it is a fraud? Do you think btc goes to 0 eventually?

    Curious if you have any exposure?

    I buy the mining stocks off and on and have done well – typically holding months at a time. If you time it decent you can ride strong trends both up and down. MARA particularly interesting.

    1. I have tiny positions in crypto related assets. They are not significant enough to move the needle for my net worth.

      Remember, I’m a relatively conservative investor with two kids, dual no job household, in SF. Hence, I can’t afford to take big swings.

      I’m focused on the bread and butter, real estate, the S&P 500. Then I’ve allocated 10% to private equity/VC.

      How about you?

      1. My core investment asset holdings (95%) are stock ETFs, bond ETFs, and money market. I own my house outright if you want to count that (real estate). I am 59 so don’t want to risk much in crypto when the outcome still debatable. Like you I have a tiny bit – about 2-3% of my investable assets – that I “swing trade” with. With that I often expose myself to crypto by buying the stocks of the bitcoin miners.

        I’m conservative too, being my age and love the mantra…you only need to get rich once! With that I love boring.

          1. I am am not retired. I was invited into partnership of a relatively small engineering firm about 10 years ago. We buy restricted stock from other partners that are leaving the firm, which is mandatory at age 65. The restricted stock principal value has increased on average of 10% a year every year and thrown off a distribution (dividend) of 25% every year. So, for example, if you own 1M worth of stock you realize about 250k of dividend/distribution a year (K-1).

            I have a 6.5M net worth. About 4M is result of owning a business. About 2.5M is inheritance. The inheritance came started about 20 years ago and was a the IRS amount allowed for children each year and definitely made it easier for me to invest in my business, which in turn compounded. Hard to tell how much effect it had on my overall approach. My sense if that if you have a child that looks like they could really “make it” talk to them and if dropping a million on them will free them up to take the risk necessary do it. I am not a big fan of trusts, revocable or otherwise. I think you know your hildren better than anyone and money is only a vehicle to get from one place to another.

            1. Can you talk about your $2.5 million inheritance 20 years ago? How old were you then and how was the $2.5 million distributed? Was it tax free too?

              I’ve been wondering how people who receive million dollar inheritances feel after. I THINK I’d feel less motivated to earn my own wealth, but am not sure because I’ve never inherited anything yet.

              Thanks for the perspective. I’m trying to figure out whether I should give my kids money, and at what age. I’m thinking earliest is age 30.

              1. i married “well”. when i got married at age 30 my in-laws would give us the IRS child gift each year. back then it amounted to about 20k per year. it is now 68k because we had 2 kids since. so over the last 30 years it probably adds up to about 2 mill. However understand that when they started giving the money it in no way was enough to substitute for me/us working. it was a nice augment to our earnings and allowed them to distribute while alive. my wife and i plan to gift similarly to our kids while alive. they are 22 and 25 and i see no reason to wait till we’re dead to give them money. enough to help them but not enough to substitute for a job. i never viewed their gift as a reason not to excel in my chosen field. and obviously it didn’t impact me. in fact if that extra money wasn’t there i likely would not have bought into my company and still making 100k instead of 500k the last 10 years.

                1. I really like this method of giving. Gifting while alive but not gifting so much that it changes the decision matrix for the younger generations. With a little luck and good health and genes, by the time my parents and/or in-laws depart I’ll probably be in my late 60s or early 70s. That’s a really long time from now. So long that my kids (their grandkids) won’t even have that money change the course of the their lives. Getting inheritance at 70 or 40 doesn’t seem like it would help as much as at 26-30 when that money could be invested and compound with time on your side in a business or at least in equities.

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