How exactly are millionaires made? Well, it can happen one of two ways: you can make yourself one, or you can pick the right parents. I’ll bet you didn’t know that 88% of today’s millionaires are self-made1,2. Sadly, only 12% of us were smart enough to pick the right parents. So, yes you can become a millionaire on your own, but you have to have a plan, prioritize savings, and make diversification part of your strategy2. So, it’s not as much about luck, as it is about hard work.
Financial freedom and stability are top priorities for most people. One day we all want to retire and not have to rely on others financially as we age. At Webb Investment Services, we know that this is an important goal, but we also understand you have to start where you are.
How to Think & Act Like a Millionaire
It starts with where you are mentally. So, how do millionaires think? Surveys show that millionaires share many traits including: ambition, the value of time, not being afraid to fail (failure is where crucial learning occurs), and they also know when to ask professionals for help (and they understand it’s likely worth paying for the professional help)1.
Now that you understand how millionaires think, what exactly do they do with their money? When it comes to investing, self-made millionaires put more of their money into equity investments (stocks), while born millionaires typically have more real estate investments1.
Self-made millionaires put a portion of their money (aside from their primary residence) into retirement accounts, stock, and mutual fund investments1. They focus on putting their money where it is likely to grow. They are careful to not invest large sums into depreciating assets, like a car for everyday driving that will most likely lose its value over time. They understand the principle of saving money before they spend it1. It’s easy to have your lifestyle increase as your salary increases, but if you don’t make savings a priority, it won’t be there when you need it.
Millionaires also diversify their incomes; they don’t put all their eggs in one basket, as the saying goes. They seek income from multiple sources including salaries, dividends from investments, and income from rental properties, to name a few. This way, if one stream of income is slowed, they have others to rely on2. The most common theme among self-made millionaires is that they SAVE, SAVE, SAVE. They hold on to their money and do not spend above their means. Not all people of significant means and assets are savers; they can spend too much, and then their lifestyles are unsustainable. But the flipside is also true. When people with fewer resources are diligent in their savings, they have the potential to go on to have fruitful retirements and become self-made millionaires. It’s all about understanding one’s means and goals and the savings it’s going to take to get there. Side Note: It is important to recognize the value of putting money in investment accounts where it has the potential to earn interest over time, and remember, even at low rates, it still adds up3.
Wealth Building Takes Time
At Webb Investment Services, we know it takes time and effort to design a plan to achieve your financial goals. Our clients understand we can’t just “make them rich’ without their contribution. The potential to build wealth is a team effort. We are a high-touch wealth management and investment consulting team. In order to deliver that high level of service to our clients, we have set initial investment asset minimums. You can learn more about the clients we serve and our asset minimums in our “Ideal Client Profile”. We do understand that those just starting out may not be able to reach our minimum quickly. It takes time to build your portfolio and you need help getting there. In response to this, we have opened a “Building Client Program” to help people who are just beginning to build their wealth those who are trying to become millionaires.
Our Wealth Building Process:
- We follow our simple, comprehensive 5- step approach including: a Discovery Meeting, Investment Planning Meeting, Mutual Commitment Meeting, 45-day Follow-up, and Regular Progress Meeting. Please follow this link to learn more.
- The product of the Discovery Meeting, delivered in the Investment Planning Meeting, is the Core Financial Plan and requires a minimum initial engagement financial planning fee to build. This plan will answer the questions of how much to save, where to save it, and your current strategy in regards to your long-term goals. Once an individual determines they are ready to move forward with the recommendations of the plan and become a building client, they have the option to become a client by transferring their assets for us to manage based on their plan findings, suggested investments and savings levels. Because our Building Clients start well below the stated minimums, in order for us to deliver high value and service to all of our clients, we charge a minimum annual financial planning fee. This annual planning fee is separate from the annual advisory-based fee associated with the assets under management.
- The Building Client annual financial planning fee includes:
- One annual review of progress, investment results, and financial plan (changes are made as their situation and goals progress).
- Financial planning outside of the annual review
- Asset Allocation review
The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete, it is not a statement of all available data necessary for making an investment decision, and it does not constitute a recommendation. Any opinions are those of Webb Investment Services and not necessarily those of Raymond James. Expressions of opinion are as of this date and are subject to change without notice. There is no guarantee that these statements, opinions or
forecasts provided herein will prove to be correct. Investing involves risk and you may incur a profit or a loss regardless of strategy selected. Past performance does not guarantee future results.
Holding stocks for the long-term does not insure a profitable outcome. Investing in stocks always involves risk, including the possibility of losing one’s entire investment. Dividends are not guaranteed and must be authorized by the company’s board of directors.
Real estate investments can be subject to different and greater risks than more diversified investments. Declines in the value of real estate, economic conditions. Property taxes, tax laws, and interest rates all present potential risks to real estate investments.
Every type of investment, including mutual funds, involves risk. Risk refers to the possibility that you will lose money (both principal and any earnings) or fail to make money on an investment. Changing market conditions can create fluctuations in the value of a mutual fund investment. In addition, there are fees and expenses associated with investing in mutual funds that do not usually occur when purchasing individual securities directly.
Contributions to a traditional IRA may be tax-deductible depending on the taxpayer’s income, tax-filing status, and other factors. Withdrawal of pre-tax contributions and/or earnings will be subject to ordinary income tax, and if taken prior to age 59 ½, may be subject to a 10% federal tax penalty.
In a fee-based account clients pay a quarterly fee, based on the level of assets in the account, for the services of a financial advisor as part of an advisory relationship. In deciding to pay a fee rather than commissions, clients should understand that the fee may be higher than a commission alternative during periods of lower trading. Advisory fees are in addition to the internal expenses charged by mutual funds and other investment company securities. To the extent that clients intend to hold these securities, the internal expenses should be included when evaluating the costs of a fee-based account. Clients should periodically re-evaluate whether the use of an asset-based fee continues to be appropriate in servicing their needs. A list of additional considerations, as well as the fee schedule, is available in the firm’s Form ADV Part II as well as the client agreement.
The Financial Planning or Consulting services listed are generally those offered under the Wealth Advisory Services Agreement. However, fees and services are customized with each client agreement. For a complete list of fees and available services, please consult the most current Form ADV Part 2A and the Wealth Advisory Services Agreement that you may obtain from your Investment Adviser Representative.