According to Anne Kadet, senior writer for SmartMoney magazine, the number of U.S. citizens with a net worth of $5 million or more has quadrupled in the past 10 years to more than 930,000. In a May 2007 article for the magazine, Anne set out to uncover exactly how people are becoming among the richest 1 percent of Americans. Jean talks to Anne about her findings and shares the qualities and strategies you need to become a multimillionaire:
Take risks and pursue your passion. When it comes to money, Anne says the rich are different in that "they take really, really big risks." However, she says the wealthy aren't just in it to make money. "They took the risk because they enjoyed it," she says. "They took risks to pursue things that they really wanted to do."
Work for a rising start-up company. Anne says 80 percent of people with a net worth of $5 million had made their money either by starting their own business or by joining a company that was small and had a lot of growth potential. "It's a feasible way to get rich if you're willing to take a job that's not a sure thing," she says. To find start-ups in your area, Anne suggests calling local venture capital firms or the local angel investing groups.
Get involved as an angel investor. An angel investor is a private person who's investing in another private firm. Anne says the downside is you need a lot of money to start—typically $5,000 to $25,000 per business—and you'll want to diversify and pick anywhere from 5 to 10 businesses to invest in. Most will probably tank, Anne says, but hopefully one will hit the jackpot. "Typical returns average out to 20 to 40 percent per year, which is pretty nice, but there's a lot of risk involved," she says.
Invest in real estate. At the same time, know that people who really make a lot of money in real estate typically have some kind of insider knowledge about a situation, Anne says. "They know if they invest in this house or this building, they can do something or they can eliminate some problem that other folks might not know how to do, and that will really add value to their property," she says.
Think positive and make your own luck. Anne says studies have shown that affluent people who call themselves "lucky" share common traits that account for their success—they're friendly, open, optimistic and willing to try new things, she says. "A lot of the things you can do to increase your chances of becoming wealthy are very similar to the things you should be doing if you want to increase your happiness," Anne says.