Tags: Fidelity | millionaire | saving | invest

Fidelity Study: What It Takes to Become a Millionaire

By    |   Tuesday, 17 March 2015 08:00 AM

I'm sure we'd all like to be millionaires, but what does it take to reach that rarified air?
  • "Asset Accumulation potential." You need years to build up your wealth.
  • "High-potential professions." Many of those poised to become millionaires are in professions such as information technology and finance/accounting, the study says.
  • "High income." The median income of those poised to become millionaires stands at $125,000, well above the median for the entire country.
  • Investment acumen. "If the emerging affluent [those aged 21 to 49 with investable assets of $50,000 to less than $250,000 and household income of at least $100,000] follow a diligent savings and investment plan, they can potentially benefit from the effects of compounding over the years," Fidelity notes. "Their ability to save may also be influenced by possible inheritances."
  • Broad investment strategy. "While views on risk, return, and the complexity of specific investments remain consistent across wealth groups, investing styles evolve with wealth," the report states. "More millionaires who participated in the study include bonds, real estate investments, and managed accounts in their portfolio than the emerging or mass affluent. In addition, more millionaires include individual domestic stocks in their portfolio than all other investors."
 "The findings shed light on the true wealth potential of emerging affluent investors, showing they are well-positioned to potentially attain millionaire status," the report explains.
Meanwhile, Joanne Cleaver of U.S. News & World Report offers several tips for planning your retirement finances in case you live until 100.
  • "Don't take cues from how your parents managed their retirement resources and time," she writes. They probably retired at age 65 and lived comfortably on the income from a fixed-benefit pension, Social Security and a small investment portfolio. Nowadays, you may well have to work past 65. Most of us will receive our retirement income through 401(k)s and IRAs rather than a fixed-benefit pension. Social Security might just represent a small supplement, while our investment portfolios will account for a large portion of our wealth.
  • "Treat your portfolio like an endowment." Jan Blakeley Holman, director of advisor education for Thornburg Investments, recommends to Cleaver that you follow "smoothing" rules that calibrate each year's combination of withdrawals and hopeful portfolio growth so that you don't draw down your principal.

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I'm sure we'd all like to be millionaires, but what does it take to reach that rarified air?
Fidelity, millionaire, saving, invest
Tuesday, 17 March 2015 08:00 AM
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