What fortune makes you rich? The average net worth to make it into the top 1% and how to get there | The Kickass Entrepreneur (2023)

What fortune makes you rich? Don't look to Shawn (not his real name) for inspiration.

Shawn has a BMW 5 Series.

His wife has an Audi A7.

The lawn is perfectly manicured and he spent over $30,000 on the nighttime trim. I know how much he spent because he told me. I did not ask.

His two daughters attend the best private schools. Shawn has a large mortgage on his house and almost more debt than his net worth. I know because he told me. I did not ask.

For some reason, Shawn likes to brag about how well he's doing and how much he spends on things. He has this insatiable desire to show off. One day we were talking about investing and he happened to mention that he has $206,000 in his retirement savings account so far and that he figured his total wealth wouldn't be much more than $257,500. He gave me this number and thought I'd be impressed.

Shawn is 52 and lives big. And he has a spending problem.

In the book,The millionaire next door,Thomas Stanley describes someone like Shawn as "big hat, not cattle". That's Stanley's term for someone who appears to look like himAssets, but has accumulated well below its potential.

** That aside, The Millionaire Next Door is one of the best wealth building books I've read in the last 20 years.

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Stanley actually plugs this into an equation he calls the wealth equation that deals with age and income, and then groups people into one of three categories: ADR, AAW, or PAW.

What fortune makes you rich? let me explain.

Difference between ADR, AAW or PAW

The wealth equation suggests that you take your household's annual income, multiply that by your age, and then multiply by 10%. Someone who has that amount fits into what Stanley calls an AAW (Average Accumulator of Wealth).

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It looks like this:Annual household income X age X 10%

In Shawn's case, I can surmise from some conversations that it's around $300,000 a year, although he didn't tell me his and his wife's salaries directly. In Shawn's case, to be an AAW he should have the following net worth:

$300,000 (annual household income) x 52 (age) x 10% = $1,560,000

According to Stanley, Shawn aUAW, orUnder Accumulator of Wealth.

To put it in the category of what Stanley callsPAW(Miraculous Accumulation of Wealth), then you must have double that number, or in Shawn's case: $3,120,000.

Stanley's points on millionaires

Stanley has a few points that he discusses in his book on how to accumulate wealth, and no surprise one of his main points is that you have to spend less than you make. The number traditionally spoken is that you should save and invest at least 10% of your salary, although that alone probably won't put you in the PAW category.

I talk to entrepreneurs all the time, and I'm often surprised not only by how little they have saved and how little personal wealth they have created - especially compared to the size of their business - but even more so by the lack of financial discipline, especially related on taking profits from the business. Since then, this problem has become even more apparentpublication of my book,as I have received no fewer than 20 emails from business owners asking me how they can save more of their company's profits. They also want suggestions from me on how to strategically accumulate their dollars so they can better keep track of their savings.

To the entrepreneurs, I follow the same 10% rule discussed for individuals and it is as follows:

Set aside 10% of your earnings in a separate savings account (or holding company). This is part of a more detailed strategy that I discuss in my larger book (You can pre-register for a free copy here), and I will continue to blog about cash flow. It's not a topic I've delved into much yet, but I definitely intend to do so.

Referring to the notion of wealth accumulation, what net worth makes you rich, and after Stanley's discussion of the wealth equation, it shouldn't come as a surprise that the way to make it into the PAW category is to take on some level of risk that Investment goes beyond the stock market, and that's usually through owning companies.

I found oneinteresting chart at Visual CapitalistNet worth chart:

What fortune makes you rich? The average net worth to make it into the top 1% and how to get there | The Kickass Entrepreneur (2)

What this chart suggests is that the wealthier someone is, the more business ownership forms part of the overall wealth equation.

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The Three Contributors to Becoming an Amazing Wealth Accumulator (PAW)

According to Stanley, and based on what I've discussed, there are three main factors that contribute to wealth creation and contribute to becoming a PAW:

  1. Save as much as possible
  2. Earn as much as possible
  3. Inherit the wealth

For those who want to know where they stand on the PAW spectrum, I've created a chart showing how much you should have saved to make it into the PAW camp based on your age. I covered ages 25-65 and three income levels: $100,000, $200,000, and $300,000.

What fortune makes you rich? The average net worth to make it into the top 1% and how to get there | The Kickass Entrepreneur (3)

What fortune makes you rich?

Based on the chart above:

  • Alter 25 = 1.500.000 $
  • Alter 35 = 2.100.000 $
  • Alter 45 = 2.700.000 $
  • Alter 55 = 3.300.000 $
  • Alter 65 = 3.900.000 $

If you're not a PAW yet, don't despair. Getting rich, or as Stanley calls it, a PAW, is territory open to anyone who either saves and invests, accumulates profits from a well-run business, and/or inherits their wealth.

Interestingly, even the highest number on the chart - $3,900,000 - wouldn't even qualify someone to be considered UHNW (Ultra High Net Worth or the 0.1%), for a total net worth of over $25 million requires, or according to the table above, more than 10 times the age/income figure from Stanley's Wealth Formula for most people.

Don't worry though, as all of this money doesn't have to be in the form of cash. It included your home, your business, your income, and the cost of every property you own.

The 8 steps to becoming Ultra High Net Worth (UHNW). What fortune makes you rich?

The difference between PAW and UHNW is extremely large.

So what net worth makes you rich?

It's a long way from $3.9 million, the highest number from the chart, to $25 million, the minimum number required to be considered UHNW. The path to UHNW must be more than just saving and running a small business. It invariably includes some or most of the following:

The 10 steps to becoming Ultra High Net Worth (UHNW). What fortune makes you rich?

  1. Taking some significant risks in business
  2. Make a lot of profit in business
  3. Invest profits strategically
  4. Sell ​​your business as a one-time cash injection
  5. Have multiple sources of income
  6. Diversifying assets across multiple asset classes (as discussed at length in my book You Candownload here for free)
  7. Invest in high-yield real estate
  8. Win the lottery or inherit a fortune from your long-lost uncle
  9. Have a strong impact on compound interest
  10. Instill financial responsibility in your future generations

I wouldn't necessarily count on the last one - lottery or inheritance - making it to the UHNW camp, leaving one of the many other, albeit not so easy, choices to help you climb the fortune ranks. Ultimately, however, it means being prudent with investments, taking strategic risks, and having the power to earn returns on assets that Einstein proclaimed to be the 8th wonder of the world.

The 7 Characteristics of PAWs: Wonderful Wealth Accumulator

Thomas Stanley identified seven characteristics of PAWs:

  1. They live below their means
  2. They allocate their money, energy and time to help build wealth
  3. They believe that financial independence itself is more important than the display of high social status
  4. The average PAW's parents weren't providing what Stanley calls "economic outpatient care."
  5. Their adult children are economically self-sufficient
  6. They know how to target economic opportunities
  7. And they choose the right profession

Of course, the ability to create wealth is never guaranteed, but these 7 traits are what Stanley found to be the most common among PAWs.

Note that of the 8 steps I listed above, some align with points six and seven on Stanley's list, specifically the individual's ability to understand how to target economic opportunities and then have the wherewithal to take advantage of them Seek opportunities, take the appropriate risk, and then capitalize on that risk.

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That's the key. Understand risk and then take appropriate action to capitalize on that risk.

Now that we understand what you need to do to get rich, let's review some basic personal net worth statistics:

15 ways to become ultra rich

There is no quick way to get rich overnight. Either you were born into an ultra-privileged family, or you have to work your way up through well-calculated strategies and continuous hard work.

Here are 15 ways to become ultra rich:

  1. Join a fast growing company and invest a percentage of your earnings.
  2. Start a business and take risks.
  3. Focus on saving your money instead of spending it.
  4. Rent out your property. It can be a car, a house, or even your garage.
  5. Invest in cryptocurrency.
  6. Sell ​​your talent. It can be anything if you know how to market your services well.
  7. Pay off all your debts as soon as possible. It's one of the main things stopping you from becoming ultra rich.
  8. Have compound interest that is tax free
  9. Develop multiple revenue streams. It's important to earn passive income while you focus on your core business.
  10. Develop a money-making mindset. Update your beliefs about money and how to save.
  11. Surround yourself with people who know the art of accumulating wealth.
  12. Have clear and visual goals for your business.
  13. Invest in improving your skills and your personal brand.
  14. Learn how to network efficiently and use it to climb the social ladder.
  15. Buy shares in a startup with the potential for massive growth in the future.

Bonus:Consult a financial advisor for efficient wealth management.

The average net worth by age

Theaverage net worthby age for American families:

  • Under 35 = $76,200
  • Age 35 to 44 = $288,700
  • Age 45 to 54 = $727,500
  • Age 55 to 64 = $1,167,400
  • Age 65 and older = $1,066,000
  • Average net worth of 40 = $242,000
  • Average net worth of 50 = $590,000
  • Average net worth at 60 = $920,000

High wealth by age

Considered wealthy by age group,Here's how much you needhave:

  • Alter 25 = 380.000 $
  • Alter 35 = 1.500.000 $
  • Alter 45 = 3.400.000 $
  • Alter 55 = 6.000.000 $
  • Alter 65 = 9.100.000 $

How much net worth makes you rich and what is the net worth to be considered wealthy?

To be considered "rich," or in the top 1% of wealth for Americans, you should have around $10 million. Broken down by age, here iswhat it takes of age to make it into theTop 1% of wealth in America.

  • Alter25390.000 $
  • Alter351.500.000 $
  • Alter453.400.000 $
  • Alter556.000.000 $
  • Alter659.120.000 $

Prodigious Accumulator of Wealth Calculator

The formula for amazing accumulation of wealth is: ((annual household income) X (age) X 10%) X 2

If the calculated answer matches your current net worth, you are definitely on the right track to becoming a PAW. On the other hand, if your net worth is less than the calculated number, you may be an ADR, which means you are under-accumulating.

Hopefully you now have a better understanding of what makes you rich, and more importantly, how to get there.

Here is a video you may like on how to get rich.

Good luck in your wealth creating journey.

Related posts:

  • Net Worth vs Liquid Net Worth: Calculation and Difference
  • Do you want to increase your net worth? Get those assets
  • Net Worth by Age Percentile Calculator for USA
  • Is Lean Six Sigma certification worth it?
  • 8 factors that determine how much your business is worth

And before you go, you might also like this blog post:My answer to an 18 year old who wants to be a millionaire by 30.

And this:How do you teach college students about money? A message from a father to his daughter


Would you like to learn more about me and read some of the other interesting stories I've written about small business growth, profit and prosperity?

Here is one of the first articles I wrote:My post-business sale journey as I enter a new port.

My goal is to help entrepreneurs scale their business, improve profitability, and then use those profits to create massive wealth. Subscribe to minethe blogto get my latest thoughts on scaling your business and creating wealth.

Download my book and the Amazon bestseller (#1 in business and nonfiction). You can get yoursFREE copy here.

What fortune makes you rich? The average net worth to make it into the top 1% and how to get there | The Kickass Entrepreneur (4)

Related posts:

  • Net Worth vs Liquid Net Worth: Calculation and Difference
  • Do you want to increase your net worth? Get those assets
  • Net Worth by Age Percentile Calculator for USA
  • 8 factors that determine how much your business is worth
  • Is Lean Six Sigma certification worth it?
  • Net Worth by Age Percentile Calculator for Canada with 2022 data
Related topics
  • highlighted
  • millionaire next door
  • PAW
  • Thomas Stanley
  • UAW
  • HNW
  • Assets


What net worth makes you in the top 1%? ›

Key Takeaways
  • As of 2019, the top 1% of household net worth in the U.S. starts at $11,099,166. ...
  • An individual would need to earn an average of $401,622 per year in order to join the top 1%, and a household would need an income of $570,00. ...
  • The median household income was $70,784 in 2021, and $45,470 for individuals.

What net worth is considered wealthy in 2022? ›

Higher Hurdles to Wealth and Comfort in 2022

The average net worth respondents considered “wealthy” this year was $2.2 million, up from $1.9 million in 2021, though still notably below the $2.6 million reported in Schwab's 2020 survey, taken in the early months of the year.

What is the minimum net worth you have to have to be in the wealthiest 1% of people in the world? ›

According to Credit Suisse, individuals with more than $1 million in wealth sit in the top 1 percent bracket. The billionaire class is $2.6 trillion richer than before the pandemic, even if billionaire fortunes slightly fell in 2022 after their record-smashing peak in 2021.

Is $5 million net worth rich? ›

What is considered high net worth? A high-net-worth individual, or HNWI, might be defined differently at certain financial institutions. But in all cases, a high-net-worth individual is someone with a large amount of wealth. Typically, a high-net-worth individual will have a net worth of at least $1 million.

What net worth is considered wealthy? ›

According to the 2022 Modern Wealth Survey conducted by Charles Schwab, the average net worth of an American to be considered wealthy is $2.2 million. They also reported that to be it takes a net worth of $774,000 to be considered “financially comfortable.”

What is 500K annual income? ›

How much does a 500K make? As of Feb 8, 2023, the average annual pay for a 500K in the United States is $263,744 a year.

What percent of Americans have a net worth over $1000000? ›

The nearly 22 million millionaires in the U.S. account for 8.8% of the country's adult population and over 39% of millionaires worldwide.

Does net worth include home? ›

Your net worth is what you own minus what you owe. It's the total value of all your assets—including your house, cars, investments and cash—minus your liabilities (things like credit card debt, student loans, and what you still owe on your mortgage).

What is comfortably wealthy? ›

Prepare yourself for a figure that may be startling: Americans say it takes a net worth of $774,000 to be “financially comfortable” these days. And if you want to be “wealthy,” they say you'd need more than double that, with assets worth at least $2.2 million.

Are you rich if your net worth is 1 million? ›

A net-worth millionaire is someone who has a net worth of at least $1,000,000. Net worth is a fancy way to say 'what you own minus what you owe.

How much wealth does the 1% own? ›

Effect of stock market gains
Household Net WorthTop 1%Total
Q4 2016 ($ trillions)30.2697.26
Q2 2020 ($ trillions)34.68113.54
Increase ($ trillions)4.4216.28
% Increase14.6%16.7%
5 more rows

What does the top 0.1% make? ›

To join the top 0.1%, you would have needed to earn $2.4 million in 2017, an increase of 38% since 2011. The top 0.01% threshold has jumped 46%. Meanwhile, the top 0.001% — an elite group of 1,433 taxpayers — earned at least $63.4 million each in 2017, up 51% since the Occupy protests.

Is $2 million enough to retire at 65? ›

Following the 4 percent rule for retirement spending, $2 million could provide about $80,000 per year. That's more than average. The Bureau of Labor Statistics reports that the average 65-year-old spends roughly $4,345 per month in retirement — or $52,141 per year.

What is the top 2 percent income? ›

Across the US, the average income for the top 2% of all earners is $206,000.

What percentage of Americans have over $5 million? ›

If we use the figure to determine the percentage of households worth over $4 and $5 million, the percentage is around 3.5% and 2.8%, respectively.

What is considered upper class in 2022? ›

Upper Class Is Relative To The Median

In 2022, the national median household income is around $75,000, up from $68,000 in 2021. Therefore, as a whole, the typical upper-class household in the new decade has a median household income of over $130,000.

What is the average net worth in 2022? ›

The average net worth for U.S. families is $748,800. The median — a more representative measure — is $121,700.

How many high net worth individuals are there in the world in 2022? ›

In the first half of 2022, the global ultra high net worth (UHNW) population fell by 6%, to 392,410 individuals. This represents a sharp reversal from 2021 and the first downturn in UNHW numbers since 2018, as wealth portfolios were hit by shockwaves across the global economy, triggered by the war in Ukraine.

Is a net worth of $3 million rich? ›

In order to be a real millionaire, you will need to have a net worth of at least $3 million, not $1 million. A $1 million net worth provided a great lifestyle before 1990.

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