It seems to me that people could save a lot of time, aggravation, and money (and also limit risk) if they knew exactly how millionaires made their money.
In my Rich Habits Study , I interviewed 233 wealthy individuals (177 of whom were self-made millionaires) with at least $160,000 in annual gross income and $3.2 million in net assets.
So, what professions, industries, or businesses should people focus their energy on if they want to become rich?
Work for a big company
Twenty-three percent of the millionaires in my study were senior executives at the companies they worked for.
When I say big company, I mean multinational — preferably one that is publicly owned.
The beauty of working for a big, publicly owned company is that you don’t have to necessarily be a senior executive to become rich.
If the company offers qualified stock options or stock grants, or has an employee stock ownership program, you can buy your company’s stock at a discount.
These small discounts are not available to the general public.
Even better, big companies often make matching contributions of their stock into the company retirement plan.
So, if you purchase company stock through a 401(k) plan, it will match your contribution, increasing the amount of stock you own.
Two of the millionaires in my study were low-level employees who kept buying company stock over 35 years.
They were lucky, however, in that their company’s stock rose significantly during those 35 years.
As I’ve said many times, becoming wealthy requires luck.
Become an expert
Twenty-seven percent of the self-made millionaires in my study were professionals.
Did your mother tell you as a child that she wanted you to become a doctor?
Well, she had the right instinct.
Fifty-six percent of professional self-made millionaires in my study were doctors.
Surgeons and scientists earned the most money and were the wealthiest, according to my data.
Next up were lawyers, then engineers, then financial planners.
One CPA made the list.
Start a business
Sixty-one percent of all of the self-made millionaires in my study were small-business owners.
Of this, 22% were professionals.
So, if I were to carve out the professionals, 39% of the small business owners were non-professionals.
What type of businesses were these non-professional businesses owners engaged in?
- 19% commercial and residential real estate – This category includes rental properties, developed property, and long-term property held for appreciation and eventually sold.
- 7% distributors – These are typically distributors who sell products for big manufacturers. They control a regional area, giving them a monopoly on the sale of that manufacturer’s products.
- 5% new-car dealers – New-car dealers own a franchise that allows them to sell cars for auto manufacturers in a particular region. The set-up is similar to the distributor arrangements.
- 4% service and installation – This includes business who sell HVAC systems, pools and pool supplies, and various high-end products that require annual maintenance.
- 3% manufacturers – This category includes niche equipment manufacturers and re-manufacturers (refurbishing old equipment).
- 1% other – This category includes small businesses within some odd niche.
Eleven percent sold something either for a big company or through their small business.
They made their money from product commissions, primarily.