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The Millionaire Next Door: The Surprising Secrets of America's Wealthy Paperback – November 16, 2010
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Copyright 2001 Reed Business Information, Inc. --This text refers to an out of print or unavailable edition of this title.
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Top Customer Reviews
The majority acquired their wealth in one generation and followed these factors of wealth accumulation: *Live well below your means. *Spend your time, energy and money efficiently in ways that build wealth. *Believe that financial independence is more important than social status *Their parents didn't help. *Their adult children are economically seW-sufficient. *They know how to pick market opportunities. .They chose the right occupation.
As a group, they all have supreme confidence in their own ability. If you thought ancestry had much to do with it consider this: The highest concen-trations of millionaires by ancestry in order of rank are Russians; Scotts; Hungarians; Latvians; Australians; Egyptians. Self-employment is a major correlate of wealth.
They are frugal and their spouses even more so. Not only are they planners and budgeters, they don't shop where you might think; their two favorite stores are J. C. Penny and Sears. Most answer these questions the right way: -Does your household operate on an annual budget? -Do you know how much your family spends each year for food, clothing, shelter? -Do you have a clear, defined set of daily, weekly, monthly, annual and lifetime goals? -Do you spe'd a lot of time planning your financial future?Read more ›
The problem begins when people see this book as a recommendation: "most millionaires are frugal, hard-working, well-educated, and diligent investors - so if I will act like that I will be a millionaire". This is simply not true - and for a very simple reason discussed below.
Indeed, most millionaires ARE like that. Indeed, it is good advice to be frugal, hard-working, and well-educated as opposed to the opposite. It is also gratifying to see that sometimes "doing the right thing", the protestant work ethic, and the "nose to the grindstone" attitude sometimes pay off not only in "being a better person", but in concrete monetary success. Apparently good guys DON'T finish last after all.
But the book suffers from a double survivorship bias. "Survivoship bias" is what happens when one only pays attention to those who survive a certain activity, peril, or risk, and makes ungounded conclusions about cause and effect from that. One famous example is Neitzsche's famous saying, "what doesn't kill me makes me stronger". It is based on the survivorship bias that those who survive terrible calamities tend to be stronger than other people. But it doesn't mean the calamity MADE them stronger - it might mean simply that only those who were strong to begin with survived the calamity.
What survivorship bias do we see here? First, it interviews ONLY millionaires.Read more ›
I also recommend "The Millionaire Mind" which is different from this book. That volume allows you to peek inside the minds of millionaires; shows you how the millionaires think.
One caveat of these books is that they are dependent on income. You won't find anything in here on creating cash flow. For that I recommend "Rich Dad Poor Dad" whose ideas on staying debt free are somewhat similiar to what is recommended in Millionaire Next Door, but also provides ideas for creating wealth through additional cash flow. It is a book that should be written in addition, not in place of The Millionaire Next Door.
Also recommend More Wealth Without Risk and Financial Self-Defense which offer actual strategies on creating wealth, reducing expenses and investing.
Most Recent Customer Reviews
There is a lot of useful info in this book and was recommended to me by a coworker. I m glad I read it, I will remember a lot of the info in this book for a long time.Published 2 days ago by ChadWilliam1
Written by two persons holding PhD's, the writing can get extremely dry. That said, the information presented makes sense. Read morePublished 3 days ago by iaminthevineyard
The millionaire next door is the precursor to websites like Mr Money Mustache. The book examines the habits and attitudes of the wealthy. Read morePublished 3 days ago by Chesapeake-Engineer