I came across a very interesting article on Yahoo today.  Its title is 10 Things Millionaires Won’t Tell You, and it lists some particularly revealing thoughts and ideas about so-called “millionaires.”  It discusses everything from the fact that a lot of millionaires shop at Wal-Mart and clip coupons to the idea that an education isn’t the most important asset in building wealth.

I wanted to point out the three most important things I took from this article, all of which are related to posts I have written on this blog:

1) Millionaires Build Their Own Business.  The “most common path” to becoming a millionaire, claims the article, is “running your own business.”  I couldn’t agree more.  You can buy stocks, invest in mutual funds, save a whole bunch of money, and even buy real estate, but none of that will get you into the millionaires’ club.  (Well, real estate will, but it will take you some time.)  Instead, building your own business will get you there, and it will get you there quickly.

About “half of all millionaires made their money” by building their own businesses, states the article.  As for the rest: “About a third had a professional practice or worked in the corporate world; only 3 percent inherited their wealth.”   

2) Millionaires Pay Less Taxes.  Since millionaires build their wealth through ways other than regular employee income (e.g., building a business), they gain certain tax advantages. 

First, they make the majority of their money through capital gains and dividends.  Thus, they pay less taxes on their income (i.e., long-term capital gains taxed at 15% vs. middle-class employee wages taxed at 25%).  And because they pay less taxes, they keep more of their money . . . and build wealth faster. 

Second, because the rich own their own businesses, they can deduct everything related to it.  One such example, which I have written about on this blog: ”Landlords can . . . depreciate their commercial properties and expenses like mortgage interest.”   In addition, ”there are . . . tax shelters, trusts and other mechanisms the superrich use to shield their wealth.” 

It’s amazing how much money you can make when you don’t have to pay as much taxes as employees do.

3) Education is Overrated.  “According to the book ‘The Millionaire Mind,’” states the article, “the median college grade point average for millionaires is 2.9, and the average SAT score is 1190.”  Hardly Ive League material.  “In fact,” notes the article, “59 percent of millionaires attended a state college or university.”

That doesn’t mean that you should ditch school.  The point is that an education may get you a great job, but then what?  You can earn a large salary, but that alone won’t make you rich.  Building your own business, on the other hand, will.  And you don’t necessarily need an education to build a business. 

Get the education, but don’t rely solely on it.  Develop your entrepreneurial mentality, follow your passions, and take some risks.

Read the rest of the article here.  It’s very insightful.

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