Customer Reviews

The Middle-Class Millionaire: The Rise of the New Rich and How They Are Changing America

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This book starts out by stating that there are 8.6 million "millionaires" in the US--about one in 35 people. However, the recently completed "World Wealth Report 2008" by Capgemini and Merrill Lynch puts the total GLOBAL number of millionaires at just 10 million, and the number of US millionaires at around 3 million--about one in 100 people.

How to account for the discrepancy? The authors of The Middle-Class Millionaire foolishly include housing "wealth" (home equity) in determining who is or isn't a millionaire in the US. That increases the number of millionaires by nearly threefold. That must have made it a lot easier for the authors to assemble a large database of "millionares", but at the expense of meaningful information.

Since the book was published in early 2008, we can assume the surveys took place in 2006-2007, when home values were meaningfully higher. As a result it is not surprising that they found so many "millionaires" on the east and west coasts--these regions of the country contain many house-rich people who've probably seen significant home equity declines since then.

There's a reason the Capgemini study excluded home equity: you can't "eat" your house. Wealth is something you can live on; a house is something you can live in. Certainly there are individual cases where an individual may monetize considerable house wealth to become "wealthy"--imagine an elderly person selling their house for millions of dollars and downsizing. But for society as a whole, it's erroneous to think this is possible--after all, if everybody tries to monetize their home equity, the home equity goes away, as the countless foreclosures around the country are now showing.

So, already, nearly two-thirds of the authors' target group don't belong there in the first place. Another problem is comparing people with one million dollars to people with ten times as much money and pretending they are in the same group. Sorry, but an order of magnitude is a big difference. Many financial advisors will suggest a sustainable portfolio drawdown range of 3-5%. On one million dollars, that is 30-50K a year; on ten million, it's 300-500K a year.

Is it really possible those two groups are really living in the same economic world? Sure, there are many people with small portfolios who live beyond their means, just as there are many rich people who live well within their means--Warren Buffett famously still lives in the same house he bought for 31.5K at the age of 27. But in general, when you have two wealth cohorts separated by an order of magnitude (from 1mil to 10mil), there are going to be big, big differences in perceived reality and behavior. If you include the 5.6 million "house millionaires" like the author did, the disparity between the bottom and top of this so-called middle class becomes even more severe.

I'm not saying people with 10mil live like the people in "Richistan" who have their own private golf courses, yachts, and planes, but come on, you are talking about a very, very small segment of the population. Let's not pretend they are living in the same world, with the same range of choices, as the rest of us.

So, I can't help but be pretty dismissive of the authors' broadbrushed "conclusions". Having said that, this book has some amusing tidbits that made it a worthwhile read to me. Whether it would be interesting to you is a matter of personal taste. I would suggest a thumb-through at the local bookstore.

The Middle-Class Millionaire: The Rise of the New Rich and How They Are Changing America is an important book. it shatters old paradigms, shibboleths and myths about millionaires.

While on the one hand it discloses, almost like an instruction manual, how one could achieve such wealth, or, at least, how others did, it doesn't advocate paying the price necessary to achieve the objective. The authors are content to point out the myriad ways the wealthy are different from the rest of us.

I read it not as a primer or "how to" book, but as a fascinating and thoughtful description of a new and important phenomenon. At a time of greater disparities in wealth than any I can remember in my 72 years, it is useful and even important to understand just who and how some of those who have mastered the system have done it.

One doesn't read about NBA basketball players in order to become one--but one could well benefit from reading The Middle-Class Millionaire. I know I did, and I have sent copies to the young people in my life.

I recently finished reading this book and found it very interesting to learn about this subset of middle class which I never knew existed. It provided a review of the behaviors of this class after completing a survey of the 500+ people considered "Middle Class Millionaires," and contrast them against the traditional middle class. From education (which is a big investment for this group), to initial investments in high capital goods, to beliefs in work ethic, this group has discovered the traits to millionaire success. While reading I noticed that many of these traits are recurring themes I read about in other books and periodicals targeting the millionaire class. I would like to caution the authors that defining the middle class millionaire by only having a net worth of $1-10mm would include persons in California who could own one, or perhaps two homes and be highly leveraged in debt, yet still be considered a middle class millionaire. This is certainly a book which I wish more college students read earlier in life in order to demonstrate the true picture of affluence, in contrast to the misbelief of having highly leverage debt homes, high credit card debt, expensive BMW cars, and working as a slave to a corporate firm for years before they finally "get it".

I have read several of Russ Alan Prince's books. These books could be summed up by saying if you want to capture high net worth people as clients for your financial planning business, wine and dine their accountants and attorneys to gain access to them as clients. High net worth people all seem to have accountants and attorneys.

This book has a different focus. It attempts to compare the non-millionaire group with a head-of-household income of $50K to $80K with the millionaire group having a net worth between $1M and $10M. As other reviewers have pointed out, I was surprised to see the authors include house value in net worth. Because of housing differences in the U.S., most studies of net worth do not include housing values.

Growing up in Illinois, I was surprised to learn about some aspects of the hybrid seed corn study. Before hybrid seed corn, farmers kept the best corn from harvest to plant the next year. Hybrid seed corn offered higher yields and better resistance to insects and weather, but it meant becoming dependent on a seed corn company every year versus using your own corn for seed corn. Since this transformation occurred in the 1930's, this probably explains why I never heard of the trade-off decision between independence and reliance on the seed corn company each year. It is an interesting case of the adoption rate of new technology.

The author repeats the long known marketing strategy of selling new technology to the rich first at high prices, then lowering the price and selling to the masses. Automobiles, TV's, VCR's, and computers all used this approach. The author's latest addition is the $100K Tesla roadster, an all electric car as fast as a Porsche.

The U.S. financial planning industry is currently based upon charging about 1% of assets under management for fees. For a client with $500K in investable assets, the financial firm receives $5,000 annually. For a client with $10M, the firm receives $100K annually. There is no appreciable difference in the cost of servicing the $500K client versus the $10M client. The authors repeat the common strategy of trying to find 50 or 100 millionaires as clients versus hundreds of non-millionaire clients.

The authors also point out that fractional ownership has spread from jets to many different asset types.

The authors conclude with the 10 ways to become a middle class millionaire:

1. Get a coach
2. Tip the work-life scale to career versus family, friends, religion, hobbies
3. Focus on finding a job you can make money at and don't focus on careers that make you happy
4. Focus on ownership versus being a wage-slave
5. Don't diversify, focus your efforts
6. Play to win
7. Take calculated risks
8. Don't be afraid to fail
9. Network
10. Get help from other millionaires

The authors point out that wealth has become more concentrated in the last 20 years. They argue that the wealthy really control the amount of consumer spending, not the non-wealthy. They argue that the retirement of the Baby Boomers won't crash the stock market, because the wealthy own most of the stock market and have no need to sell. They also argue that one should not buy stock in Wal-Mart, but instead should buy stock in companies that focus on selling goods to the rich.


All-in-all, not as informative as The Millionaire Next Door or as entertaining as Richistan, but it does make a few interesting points.

In this age of full disclosure, it can be noted that I am the author and publisher of the book INDEX MUTUAL FUNDS: HOW TO SIMPLIFY YOUR LIFE AND BEAT THE PROS. This book is an introduction to the concept of index funds is and is sold on Amazon. I am also a contributing author to the book THE BOGLEHEADS GUIDE TO RETIREMENT PLANNING available from Amazon with an estimated release date of October 2009. I have also written 21 short stories on investing which are also available on Amazon.


If you are interesting in learning more about how to join the wealthy group, I would suggest reading some of the books noted below.


The Richest Man in Babylon
Bogle on Mutual Funds: New Perspectives for the Intelligent Investor
The Millionaire Next Door
The Four Pillars of Investing: Lessons for Building a Winning Portfolio
A Random Walk Down Wall Street: The Time-Tested Strategy for Successful Investing, Ninth Edition
The Coffeehouse Investor: How to Build Wealth, Ignore Wall Street, and Get On With Your Life
The Bogleheads' Guide to Investing
Wealth: Grow It, Protect It, Spend It, and Share It
Retirement Income Redesigned: Master Plans for Distribution: An Adviser's Guide for Funding Boomers' Best Years

The Middle-Class Millionaire: The Rise of the New Rich and How They Are Changing America was a totally welcome surprise. Normally books of this type put me to sleep (Freakonomics, Who Stole My Cheese, anything by Suze Orman). This book however was full of fascinating personal stories of success and failure, a trip back in time to the life of Benjamin Franklin as well as compelling research about what makes these individuals so special. It is also very well written in a style that's not too "business-y".

As a person in the creative marketing field I need to stay ahead of American consumer habits. The Middle-Class Millionaire has given me greater insight to a rising influential group of successful Americans with values and professional ethics that mirror my own but who take far more risks to go after the dream than most. These are directed and highly motivated individuals who know what they want and go for it.

This is an amazingly well-written and thoughtful book about the face of wealth in America today. Using lots of real examples, the authors discuss the habits and values of the pragmatic, family- and safety-oriented self-made millionaires that dot the landscape and make up a large part of our consumer culture. For anyone thinking about starting a small business, this book is a must-read, not to mention anyone wondering what it really takes to get ahead in 21st century America.

This is a great companion to an earlier book I also enjoyed, The Millionaire Next Door. Would recommend The Middle-Class Millionaire to any marketer who wants to understand what makes affluent people tick, as well as to anyone who wants to see how affluent people actually become that way.

Very interesting thesis presented in a smart, insightful read. Would recommend to anyone interested in living out "the american dream" - or at least attempting to understand the dreamers who achieve the ultimate financial success.

The authors of this book talk about middle class millionaires as people with between $1 - 10 million including their home(s). Interest on one million dollars invested in 2 year CDs in 2010 might get you $20K per year, which isn't exactly living the high life. Yet the authors go to great lengths to discuss how these middle class millionaires spend money on expendable items like concierge medical services and life coaches. This seems to me to conflict greatly with the findings of the Millionaire Next Door authors, who found that most millionaires are rich exactly because they are pretty tight with a dollar, clip coupons and shop at Costco.

The authors also have an anecdotal story of a guy who becomes rich by managing millionaires' money for them and calling himself a wealth manager. Interesting, this wealth manager only takes on clients that allow him total control of their money and don't bother him with questions about how their money is invested. The wealth manager even threatens to drop a client worth $20 million for investing $200K of his money on his own without his wealth manager's approval. In the book they are holding out this wealth manager as some shining example of a successful business man, but his wealth management style sounds a lot like Bernie Madoff. I wouldn't give a wealth manager who didn't want to answer questions about where my money was invested a single nickel.

If you want to read better books on millionaires, I would recommend The Miillionare Next Door and its successor books by Thomas Stanley, plus Richistan. Those worth all pretty good and they simply made for much more logical and credible reading.

This book tells two parallel stories about people who have worked for, and achieved, wealth in the range of $1 to $10 million. Coming from middle class backgrounds, and bringing middle class values with them into their wealthier status (hence the title), Prince and Schiff look at what traits contributed to these people's financial success, and what they do with their money.
I appreciated that the actual statistics of their research was presented. Too often these "10 traits of successful people" type books read as if you are getting someone's hypothesis or opinion, with no evidence backing it up. This book offers a mix of anecdotal examples with actual research data. There is also an index and a notes section offering not only journal and research sources but also websites for more details.
This book may be of most interest to those aspiring to the ranks of the working wealthy. That reader will find helpful and reassuring information on how others have gotten there. And, as the majority of the country's wealth is now concentrated in the hands of a small minority of the wealthy, their spending habits and preferences become disproportionately significant. So people who are interested in what that market is shopping for will also benefit from this book.
Readable, informative, and well documented.