The Millionaire Next Door

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The Millionaire next door
The book the Millionaire Next Door: The Surprising Secrets of America’s Wealthy entails the compilation of a research carried out by Thomas Stanley and William Danko. In the book, the word millionaire is used to represent U.S families with net-worth’s exceeding one million dollars (Keister 32). The book mainly compares the Under Accumulators of Wealth (UAW) and the Prodigious Accumulator of Wealth (PAW). As insinuated in the book any individual who wants to become a millionaire must critically study the behaviors of people who are have made it to the edge. The most surprising findings denoted in the book are that most millionaires do not drive a Mercedes as any UAW would think (Keister 32). The authors go on to add that people who look rich do not necessarily overspend on symbols of wealth, but have very modest portfolios of and have very large debts. However, actual millionaires live on middle-income neighborhoods, and own very economical cars, put on the simple watches and most of their attires are purchased off the rack (Keister 37).
Thus any intent to live as a millionaire must ascribe to the following very simple rules of living. To begin with, one needs to realize that income in most cases does not necessarily equal to wealth (Reynolds 45). It is globally agreed that higher income households are wealthier than the lower income neighborhoods. However it is also true that the size of a paycheck is only a 30% indicator of wealth in most households (Reynolds 45). As the book suggests, the only valid point is how much of the pay check is invested. Thus on average, millionaires invest almost 20% of their income (Reynolds 45). The authors provide the “simple rule of thumb” that is supposed to assist any upcoming millionaire in determining whether he is investing wisely: multiplying one’s age with the pretax annual income (Danko and Stanley 29). The income should emanate from all sources other than inheritance. Additionally, the figure is divided by 10 and later any inherited wealth is subtracted. The concluding figure gives the expected new worth of the individual (Danko and Stanley 29). The situation is a little difficult for younger adults most notably in their early and mid-twenties, but for those in their mid-forties, it is utterly applicable. Many people in the identified age group find it difficult to make the denoted savings. Danko and Stanley however note that it is very applicable and possible. The formula further assists in differentiating the mi...