A recent article on the BBC website revealed that the number of ‘millionaire’ households in the UK has risen sharply over the last two years. According to stats from the Office for National Statistics, there were 3.6m UK households with net wealth of at least £1m as of June 2016, up 29% in just two years. Net wealth includes investments, pension savings, belongings and property minus any outstanding mortgage.
If you’re currently a member of this exclusive club, congratulations. However, if you’re not there yet – don’t despair. The chances are that it’s not too late to get there.
Let’s look at a few habits of the average millionaire that could help you achieve high-net-worth status sooner.
Multiple income streams
They say the average millionaire has seven different income streams. While this may be a bit of an exaggeration, in general, the wealthy do have multiple ways of making money.
Best-selling author Thomas C Corley spent five years studying self-made millionaires. He found that 65% of them had three income streams, 45% had four streams and 29% had five or more streams. These extra streams generally included real estate income, stock market income (dividends) and income from side businesses.
The takeaway? Start building multiple income streams today. The more streams you have, the faster you’ll get to millionaire status.
Another interesting thing that Corley discovered about the wealthy was that many had a unique expertise in a particular area. The result was that they got paid more by their company, or their businesses were able to charge more to customers or clients. Many spent time reading every day or went to night school to develop their skills. This enabled them to accumulate much larger wealth than the average Joe.
The lesson? Invest in yourself to develop a niche. Read books, listen to podcasts and take courses. It may take time and effort, but the rewards will be worth it.
A further observation of the wealthy is that many are self-employed. This means that they have the ability to determine the size of their own pay cheque. At the end of the day, unless you work for Goldman Sachs, working a 9-to-5 job is generally a slow path to prosperity. This is especially true in today’s economic environment. Wages in the UK have stagnated for a decade, and with Brexit on the horizon, wage growth could remain subdued for years to come.
Unsure how to start a business? Pursue something you’re passionate about. Start off by building a side business in your spare time that provides value to others and go from there.
Lastly, many individuals have made it to millionaire status simply because they were willing to take some risks with their capital. At the end of the day, unless you’re on an astronomical salary, it’s very hard to achieve millionaire status if your savings are all in cash, earning 1%.
To enhance your net worth, consider assets that will increase your wealth over time such as shares and property. Shares, over the long run, have generally returned around 8%-10% per year. Over a long-term investment horizon, that kind of return can really boost your wealth.