- Paperback: 272 pages
- Publisher: Taylor Trade Publishing; Reissue edition (November 16, 2010)
- Language: English
- ISBN-10: 1589795474
- ISBN-13: 978-1589795471
- Product Dimensions: 6.1 x 0.8 x 9.1 inches
- Shipping Weight: 14.1 ounces (View shipping rates and policies)
- Average Customer Review: 4.4 out of 5 stars See all reviews (2,444 customer reviews)
- Amazon Best Sellers Rank: #775 in Books (See Top 100 in Books)
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The Millionaire Next Door: The Surprising Secrets of America's Wealthy Paperback – November 16, 2010
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How can you join the ranks of America's wealthy (defined as people whose net worth is over $1 million)? It's easy, say doctors Stanley and Danko, who have spent the last 20 years interviewing members of this elite club: you just have to follow seven simple rules. The first rule is, always live well below your means. The last rule is, choose your occupation wisely. You'll have to buy the book to find out the other five. It's only fair. The authors' conclusions are commonsensical. But, as they point out, their prescription often flies in the face of what we think wealthy people should do. There are no pop stars or athletes in this book, but plenty of wallboard manufacturers--particularly ones who take cheap, infrequent vacations. Stanley and Danko mercilessly show how wealth takes sacrifice, discipline, and hard work, qualities that are positively discouraged by our high-consumption society. "You aren't what you drive," admonish the authors. Somewhere, Benjamin Franklin is smiling. --This text refers to the hardcover edition. --This text refers to the Audio CD edition.
From Library Journal
In The Millionaire Next Door, read by Cotter Smith, Stanley (Marketing to the Affluent) and Danko (marketing, SUNY at Albany) summarize findings from their research into the key characteristics that explain how the elite club of millionaires have become "wealthy." Focusing on those with a net worth of at least $1 million, their surprising results reveal fundamental qualities of this group that are diametrically opposed to today's earn-and-consume culture, including living below their means, allocating funds efficiently in ways that build wealth, ignoring conspicuous consumption, being proficient in targeting marketing opportunities, and choosing the "right" occupation. It's evident that anyone can accumulate wealth, if they are disciplined enough, determined to persevere, and have the merest of luck. In The Millionaire Mind, an excellent follow-up to the highly successful first analysis of how ordinary folks can accumulate wealth, Stanley interviews many more participants in a much more comprehensive study of the characteristics of those in this economic situation. The author structures these deeper details into categories that include the key success factors that define this group, the relationship of education to their success, their approach to balancing risk, how they located themselves in their work, their choice of spouse, how they live their daily lives, and the significant differences in the truth about this group vs. the misplaced image of high spenders. Narrator Smith's solid, dead-on reading never fails to heighten the importance of these principles that most twentysomethings should be forced to listen to in toto. Highly recommended for all public libraries. Dale Farris, Groves, TX
Copyright 2001 Reed Business Information, Inc. --This text refers to the Audio CD edition.
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Top Customer Reviews
I grew up in a super-affluent suburb. My friends' lived in big houses and mansions with luxury cars and country club memberships. We lived in one of the smallest houses in the suburb. My mom was so frugal. I thought it was such a drag!! But when she died (too young), she'd saved enough so that my dad, who lived another 30-some years, was comfortable in retirement. I wonder now if any of my high school friends' parents were actually living on the edge in trying to keep up with the Joneses.
Years ago, I used to charge like crazy. Now I save like crazy, just like my mom.
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. It doesn't interview ALL of those who are frugal, hard-working, and concerned about education - it only interviews those of them WHO BECAME MILLIONAIRES. It could very will be (it probably is) that 99% of those who are hard-working, frugal, and concerned about education still fail to become millionaires.
This, of course, doesn't mean that being hard-working and educated is "bad"; it just doesn't mean that it is the CAUSE of becoming a millionaire. If anything, only the opposite that is true: that if you are lazy, a big spender, and a cropout, you probably will NOT become a millionaire. But that is NOT that same thing!
A second survivorship bias is the time of the survey. The people interviewed were, almost to a man, "dilligent investors" - especially in the stock market - who started investing at least 20 years before. They were interviewed in the late 1990. This means that, by sheer coincidence, they started investing in what turned out to be the largest bull market in US history. On the average, $1 invested in the stock market in 1980 would be worth about $20 when the Dow hit its high in 1999. Naturally, this significantly increased the net worth of many of these people. But was this due to any foresight on their part, or sheer luck? If the stock market had gone the other way, how many of them would still be millionaires?
Furthermore, what about all the hard-working, diligent investors who started investing at the same time (early 1980s)... but unluckily invested in the wrong companies or industries, such as the "safe" oil or car industry which tanked, ruining many people? How could you tell - BEFORE it happened - that one investing method was better than the other, that one will make you a millionaire and the other leave you broke? You coudln't.
Once again, this doesn't mean that investing is "bad". It is NECESSARY to invest well and succeed in your investments in order to become a millionaire - if you don't invest, you won't become a millionaire. But again, this isn't the same thing: you might very well invest with all due dilligence, safety, and careful planning - and still lose everything.
In summary, good book? Yes. Interesting book? Yes. Teaches you things you didn't know? Yes. Shows that the old protestant work ethics is good after all? Yes. But does it show you how to become a millioniare? NO! Buy it, by all means... follow its advice... but do so because it is generally good advice on how to live, NOT because it will make you rich. That is just an illusion based on survivorship bias.