MONEY Wealth

Where are Most of the World’s Millionaires?

Here's a hint for North Americans: They're not necessarily next door.

According to the World Wealth Report released by Capgemini and RBC Wealth Management, the Asia-Pacific region now has nearly 10,000 more millionaires than North America, but North America is still where the richest of the rich are. North America’s wealthy count for a combined $16.23 trillion while Asia-Pacific’s wealthy’s combined wealth is just $15.82 trillion. America and China alone are responsible for 52% of the growth in the world’s high-net-worth individuals. Strong economic and equity market performances are largely responsible for five of the six world regions. Last year, 920,000 people became millionaires.

TIME Economy

Asia Now Has More Millionaires Than the U.S.

HONG KONG-ECONOMY-PROPERTY
Alex Ogle—‚AFP/Getty Images This long exposure picture shows apartment buildings and office blocks clustered tightly together in Hong Kong's Kowloon district, with the famous skyline of Hong Kong island in the background, on October 28, 2013.

The one percent are eastward bound

The population of newly minted millionaires across Asian-Pacific nations has swelled to 4.69 million, bringing the grand total a hair above North America’s millionaires club, according to a new survey of the world’s high net worth individuals.

Capgemini and RBC Wealth Management surveyors estimate that the global economy produced 920,000 newly minted millionaires last year, who they define as anyone with investable assets exceeding $1 million in value. Asia-Pacific led the world with 8.5% growth in the population of millionaires, followed by North America’s 8.3%.

While the cumulative wealth of North America’s millionaires still led the world with $16.23 trillion in holdings, the study estimates that Asian-Pacific millionaires will hold a greater sum by the end of this year.

MONEY Kids and Money

70% of Rich Families Lose Their Wealth by the Second Generation

ARRESTED DEVELOPMENT with Jessica Walter and Portia de Rossi
Carin Baer—20th Century Fox Licensing/Everett Collection Scene from Arrested Development with Jessica Walter and Portia de Rossi

A little honesty might help preserve the family fortune.

When Stephen Lovell used to visit his grandparents as a kid, it was like entering the world of Cole Porter or The Great Gatsby.

People dressed in tuxedos and sipped cocktails. They owned boats, airplanes, a hobby farm. Not to mention a lavish mansion in Ontario, Canada, and a summer home in Southampton, New York.

He estimates that his grandfather, who founded the John Forsyth Shirt Co, had a fortune of at least $70 million in today’s dollars. But through a combination of bad decisions, bad luck, and alcohol dependency, the next generation squandered that money.

“I think about it all the time,” says Lovell, a financial planner in Walnut Creek, California.

Indeed, 70% of wealthy families lose their wealth by the second generation, and a stunning 90% by the third, according to the Williams Group wealth consultancy.

U.S. Trust recently surveyed high-net-worth individuals with more than $3 million in investable assets to find out how they are preparing the next generation for handling significant wealth.

“Looking at the numbers, 78% feel the next generation is not financially responsible enough to handle inheritance,” says Chris Heilmann, U.S. Trust’s chief fiduciary executive.

And 64% admit they have disclosed little to nothing about their wealth to their children.

The survey lists various reasons: People were taught not to talk about money, they worry their children will become lazy and entitled, and they fear the information will leak out.

When I asked financial planners why the wealthy are so poor at passing along money smarts and why second- and third-generation heirs turn out to be so ham-handed, the answers were surprisingly frank.

A sampling: “Most of them have no clue as to the value of money or how to handle it.” “Generation Threes are usually doomed.” “It takes the average recipient of an inheritance 19 days until they buy a new car.”

Yes, the statistics may be grim. But just because most wealthy families see their fortunes evaporate within a couple of generations does not mean yours will. Some strategies to avoid it:

Talk Early and Often

You may think you are encouraging hard work by not disclosing wealth to your kids, but that really just fosters ignorance.

If you have just never talked about money, get over it, and give your kids a crash course in financial literacy. Many financial institutions, including U.S. Trust, offer specialized learning materials and courses to get heirs up to speed.

That goes for grandkids, too: Instill smart money lessons in them, and you have pushed family wealth forward another 30 or 40 years.

Discuss the Will

If you are ready for true transparency, take it up a notch and bring up the elephant in the room: the will.

“Parents and grandparents should communicate the whats and whys of their will in a group setting, with all their children present, long before the will is read,” says David Mullins, a planner in Richlands, Virginia.

That way, you can hash out any issues as a family beforehand. It is better than after the fact, when the patriarch or matriarch is not around to explain or make adjustments, and things devolve into all-out legal war.

“Trust me, siblings will find out who got what,” says Mullins. “Without proper communication, this can destroy families.”

Create a Roadmap

Almost one-quarter of baby boomers think their kids will not be able to handle wealth properly until the ripe age of 40. And almost half of wealthy individuals over 70 agree.

That is why you should give your heirs a financial roadmap in the form of a family mission statement, advises U.S. Trust. You can lay out what you expect in terms of spending, saving, and giving back, as well as pass along strategies for building wealth.

Stephen Lovell wishes his mother had that kind of roadmap.

“How did my mother blow it?” he says. “She just didn’t know any better. And now we all live with that regret, every day.”

MONEY The Economy

Americans’ Net Worth Hits $85 Trillion, but Who Has the Money?

A new report from the Federal Reserve reveals how much U.S. households' wealth has risen.

The report showed net worth went up by $1.6 trillion between January and March 2015, which brings our collective net worth to $84.9 trillion. A sizable portion of the increase came from real estate, estimated at $503 billion. Household-owned stocks and mutual funds accounted for $487 billion. The takeaway from these numbers is that Americans, as a whole, are doing well. But although the report may look good, we don’t know who exactly is doing well. Job growth has, overall, come from low-wage jobs while the middle class stagnates.

TIME Economy

Most Americans Say Wealth Inequality Is a Huge Issue

McDonalds Holds National Hiring Day To Add 50,000 Employees
Justin Sullivan—Getty Images A McDonald's employee prepares an order during a one-day hiring event at a McDonald's restaurant on April 19, 2011 in San Francisco, California.

Expect it to be a 2016 campaign theme

An improving economy has done little to distract Americans from an issue sure to be a the forefront of the 2016 presidential contest: inequality.

A new poll by The New York Times and CBS News found that a majority of respondents—66%—said wealth should be more evenly distributed. 67% percent of respondents said the gap between the rich and the poor was getting larger, and 65% said the divide needs to be addressed now.

A smaller chunk of respondents—57%—said the government should do more to close the gap between rich and poor, though they split sharply along partisan lines with one-third of Republicans supporting a more active government role, versus eight in 10 Democrats, according to the Times. When asked if they wanted to raise taxes on Americans who earn more than $1 million, 68% said they were in favor of such hikes.

Democrats are trying to capitalize on Americans’ belief that the economic recovery has been uneven, benefiting high-earners the most. But inequality is far from a partisan issue. The Times reports inequality is a concern for almost half of Republicans and two-thirds of independents, which suggests it’s an issue that will persist through and beyond this election cycle. Considering these findings, it’s no surprise that both Democratic and Republican politicians are exercising their populist muscles.

TIME Banking

JPMorgan CEO Jamie Dimon Has a Brand New Title

The Davos World Economic Forum 2014
Bloomberg—Bloomberg via Getty Images James "Jamie" Dimon, chief executive officer of JPMorgan Chase & Co., pauses during a break in sessions on the opening day of the World Economic Forum (WEF) in Davos, Switzerland, on Wednesday, Jan. 22, 2014.

It's a rare achievement among bank executives

The JPMorgan Chase & Co stock is up, and along with it, so is Jamie Dimon’s wealth.

According to today’s Bloomberg Billionaires Index, Dimon is now a billionaire, with an estimated $1.1 billion in net worth. It helps that shares of JPMorgan (JPM) closed yesterday at $66.08, just pennies away from an all-time high of $66.39. The bank has been performing exceedingly well in recent months, along with many of its peers, as the American economy comes surging back.

Dimon is extremely well paid—the executive took home a reported $20 million last year in combined cash and stock, and earned the same in 2013.

But that kind of pay, on its own, isn’t enough to create a billionaire. Nearly half of Dimon’s estimated wealth comes from his $485 million stake in JPMorgan, which he helped build into the world’s biggest investment bank. The rest comes from a strong investment portfolio derived from selling 2.3 million shares of Citigroup in 1998 when he left that company.

It’s rare for a retail bank executive to achieve the billionaire mark. Typically, it’s hedge fund managers that obtain such high net worth. As Bloomberg notes, this news puts Dimon in rare company along with titans like George Soros as well as Dimon’s own mentor, Sandy Weill.

 

MONEY Wealth

5 Secrets of Self-Made Millionaires

man peering over fan of cash
Erik Dreyer—Getty Images

#3: Avoid time wasters.

When I finished my five-year study on the habits of 233 self-made millionaires, I made a breakthrough discovery. Nearly every one of the millionaires attributed their success in life to habits they learned primarily from their parents or some mentor in life. The secret to success is our daily habits. I thought this was a secret that needed to be shared with everyone so I began writing books about these habits. To date, I’ve identified more than 300 of what I call Rich Habits — and here are a few of them.

1. They Create Multiple Streams of Income

Self-made millionaires do not rely on only a single source of income. They develop multiple streams. Three seemed to be the magic number in my study. Sixty-five percent had three or more streams of income that they created over time. Diversifying your sources of income allows you to weather the economic downturns that always occur in life. These downturns are not as severe to the rich as they are to the poor. The poor put “one pole in one pond” and when their single income stream is negatively impacted in some way, they suffer financially.

Conversely, the rich have “several poles in several ponds” and are able to draw income from other sources when one source is temporarily impaired. Some of the additional streams might include: real estate rentals (each rental unit = a stream of income), REITs (each one = a stream of income), tenants-in-common real estate investments (each one = a stream of income), triple net leases, stock market investments, annuities (each one = a stream of income), seasonal real estate rentals (beach rentals, ski rentals, lakefront rentals), private equity investments, part ownership in side businesses (each one = a stream of income), financing investments, ancillary products or services and royalties (patents, books, oil, timber etc.).

2. They Dream-Set Before They Goal-Set

Dream-Setting is the act of clearly defining a dream. Sixty-four percent of the millionaires in my study were pursuing one single dream. Here’s the two-step process to Dream-Setting:

  • Step One – In 500 words or less, write down what you’d like your ideal life to be 10, 15 or 20 years out. Include specific details of your ideal future life: the income you earn, the house you live in, the boat you own, the car you drive, the money you’ve accumulated, etc.
  • Step Two – Using this script of your ideal future life, make a bullet-point list of each one of those details that represent your ideal life. These would be the income you earn, the house you live in, the boat your own, etc. These details represent your wishes or dreams.

Only after you’ve defined your wishes or dreams does the Goal-Setting process begin. Fifty-five percent of the millionaires in my study set goals around their dreams. This Goal-Setting process requires you to build goals around each one of your wishes or dreams. In order to build goals around each wish or dream, you need to ask yourself two questions:

  • Question #1: What would I need to do, what activities would I need to engage in, in order for each wish or dream to come true?
  • Question #2: Am I capable of performing those activities? Do I have the necessary skills and knowledge?

If the answer to Question #2 is yes, then those activities represent your goals. Goals are only goals when they involve physical action and you have the capability to perform the action required.

Let’s summarize this process:

  1. Paint a picture with 500 words or less of your ideal life.
  2. Define each wish or dream that must be realized in order to have that ideal life.
  3. Establish specific goals around each one of your wishes or dreams.
  4. Take action. Pursue and achieve each of the specific goals that will make each wish or dream come true.

You then repeat this process for every other wish or dream. When you realize each one of your wishes or dreams, your ideal future life will then become your actual life.

3. They Avoid Time-Wasters

When most people think of risk, they think of it in terms of some financial investment they make: investing money in a new business; investing money in stocks, mutual funds, bonds etc.; playing the lottery, gambling or lending money to someone. But financial risk is not the greatest risk most take. You can always earn more money. Money can be recouped. But there is another risk almost everyone takes for granted. This is a risk that, when made, can never be recouped. It’s gone forever. What is it? The greatest risk we all take is time. When we invest our time in anything, it’s lost forever. It never gets renewed or returned to us. Yet, because we are all given what seems to be an abundance of time, it has very little value to us. So we spend an enormous amount of our time engaged in wasteful activities such as sitting in front of a TV, on Facebook, watching YouTube videos, sitting at a bar, lying in bed or engaged in some other time-wasting, non-productive activity. And when we waste time, it’s gone. It will never return. We don’t consider how precious time is until we are older and we realize our time is running out.

Time needs to be invested wisely in pursuing goals, dreams or some major purpose in life. Any investment we make of our time should pay dividends down the road in the form of happiness events, financial security, creating a legacy or in helping improve the lives of others. When you see time as the greatest risk of all, it forces you to become more aware of exactly how you invest your time. Invest it wisely, because you will never get it back. Sixty-seven percent of the self-made millionaires in my study watched less than one hour of TV each day and 63% spent less than one hour a day on the Internet (recreation-related). This freed up time for them to pursue their dreams, goals, read, learn, exercise, volunteer and network.

4. They Found at Least One Success Mentor in Life

The average net liquid wealth of the 233 rich people in my research was $4.3 million. If you do the math, finding the right mentor in life is like someone depositing $4.3 million into your bank account. Ninety-three percent of the self-made millionaires in my study who had a mentor in life attributed their wealth to their mentors. Sixty-eight percent said that the mentoring they received from others was the critical factor in achieving success.

Success Mentors do more than simply influence your life in some positive way. They regularly and actively contribute to your success by teaching you what to do and what not to do. They share with you their mistakes and valuable life lessons that they learned either from their own mentors or from the school of hard knocks. Finding a success mentor in life is one of the least painful ways to become rich. It can put you on the fast track to success. In my research, I discovered five types of Success Mentors:

  1. Parents – Parents are often the only shot any of us have at having a mentor in life. This is why parenting is so important. Parents need to be success mentors to their children. They need to teach their children good daily success habits. If they don’t, it is likely their children will struggle in life.
  2. Teachers – Good teachers = good mentors. Teachers can reinforce the mentoring children receive at home from their parents, or step in to provide the success mentoring absent at home.
  3. Career Mentors – For those not fortunate enough to have had parents or teachers who provided success mentoring, finding a mentor at work can lead to success in life. Find someone at work who you admire, trust and respect and ask them to be your mentor. This person will be at least two or three levels above you in the pecking order at work.
  4. Book Mentors – Books can take the place of actual mentors. Sometimes the best source for mentors are found in books, particularly books about successful people. Fifty-eight percent of the self-made millionaires in my study read biographies of other successful people.
  5. The School of Hard Knocks – When you learn success habits through the school of hard knocks, you essentially become your own mentor. You teach yourself what works and what doesn’t work. You learn from your mistakes and failures. This is the hard path to success because those mistakes and failures carry significant costs in both time and money. But this is also the most powerful type of mentoring you can get because the lessons you learn are infused with intense emotion, and thus never forgotten.

5. They Never Quit on a Dream

Self-made millionaires are persistent. They never quit on their dream. They would rather go down with the ship than quit. Twenty-seven percent of the self-made millionaires in my study failed at least once in business. And then they picked themselves up and went on to try again. They persisted. Persistence requires doing certain things every day that move you forward in achieving your goals or life dream. Persistence makes you unstoppable. No obstacle, mistake or momentary failure can stop you from moving forward if you keep at it. These millionaires learned to pivot and change course, growing in the process. Persistence allowed them to learn what didn’t work and continuously experiment until they found what did work. Persistence is the single greatest contributor to manifesting good luck. Those who persist eventually get lucky. Some unintended consequence emerges, something unexpected and unanticipated happens to those who persist. Sometimes, those closest to you will urge you on and encourage you. But more often, those closest to you — those directly impacted by the obstacles, mistakes and failures that are part of the success journey — will try to stop you from persisting. It takes superhuman effort to continue to pursue success when there are so many forces fighting you. That’s what makes successful people so special — and also so rare. If you want to be successful in life, you must persist in the face of unrelenting adversity. Successful people are successful because they never quit on their dream.

There are many other Rich Habits, but I think these are some of the most powerful.

Habits, I learned from my research, dictate your circumstances in life. They unconsciously program us for success, failure or mediocrity in life. They can determine our social status – rich, poor or middle-class. Habits, I also learned, can be changed. The key to habit change is awareness and tracking. You need to become aware of the habits you currently have and would like to change and then you must track your new habits until they take hold. It takes an average of 66 days to replace an old habit with a new one. When you eliminate old bad habits and adopt new good habits, your life will begin to change for the better. It takes time, but it’s worth the effort.

More From Credit.com:

 

TIME Wealth

Beyonce Just Made the Ultimate 1% Statement

And people are pretty upset about it

What does it take to rile the 99%? Letting an expensive bottle of bubbly go to waste by pouring it out in your hot tub, apparently.

At least that seems to be the case judging by reactions on Twitter to the singer’s most recent video. Beyonce and Nicki Minaj released the music video for “Feeling Myself” on Monday. In it, Beyonce can be seen pouring out an iridescent bottle of Armand de Brignac—also known as Ace of Spades—into a hot tub. Bottles of the champagne range in price, sometimes into the hundreds of thousands of dollars, according to Yahoo! Celebrity. (It isn’t clear how much the particular bottle shown in the video costs.)

Nevertheless, some Twitter users were not amused:

According to a report released earlier this year by Oxfam, the combined wealth of the world’s richest 1% will overtake that of the other 99% next year unless current inequality trends go unchecked. Then again, Beyonce’s husband Jay-Z bought a stake in the company, reports Fortune. So maybe the pop star got a decent discount?

MONEY Wealth

10 States With the Biggest Income Inequality

150507_EM_StateInequality
iStock

The difference between what the richest and poorest earn is the widest in these U.S. states.

The wealth gap between America’s highest earners and the rest of the U.S. population has never been greater, and it’s a discrepancy poised to continue growing, according to various studies done on the topic. In 2013, upper-income Americans had a median net worth 6.6 times greater than their middle-income counterparts, according to the Pew Research Center.

In that analysis, a three-person household with an income greater than $114,300 qualified as upper income, and the same size household with at least a $38,100 annual income was classified as middle income. By these measurements, 46% fell into the middle income group, 33% were lower income and 21% were upper income in 2013. The Pew figures compare families’ overall net worth, meaning the difference between their assets (income, investments and so on) and debts.

If you set aside debts and savings, there’s still a great gap between Americans’ financial situations on either end of the spectrum. The least wealthy Americans likely have more debt and less savings than those with a higher net worth, but their incomes are significantly lower, as well. The highest earners in the U.S. made 5.02 times more than the lowest earners in 2013, according to data from the U.S. Census Bureau. Nationwide, the top 20% of earners had an annual household income of $106,096 in 2013, while the bottom 20% had an annual household income of less than $21,160. The Corporation for Enterprise Development used this data to show how income inequality varies across the country — here are the areas where the disparity is greatest.

10. Connecticut

Top 20% annual household income: Greater than $138,034
Bottom 20% annual household income: Less than $26,599
Income inequality factor: 5.19

9. California

Top 20%: Greater than $124,936
Bottom 20%: Less than $23,980
Income inequality factor: 5.21

8. New Jersey

Top 20%: Greater than $141,057
Bottom 20%: Less than $27,002
Income inequality factor: 5.22

7. (tie) New Mexico

Top 20%: Greater than $90,478
Bottom 20%: Less than $16,927
Income inequality factor: 5.35

7. (tie) Alabama

Top 20%: Greater than $88,967
Bottom 20%: Less than $16,625
Income inequality factor: 5.35

5. Mississippi

Top 20%: Greater than $79,596
Bottom 20%: Less than $14,509
Income inequality factor: 5.49

4. Massachusetts

Top 20%: Greater than $134,004
Bottom 20%: Less than $24,181
Income inequality factor: 5.54

3. New York

Top 20%: Greater than $120,906
Bottom 20%: Less than $21,159
Income inequality factor: 5.71

2. Louisiana

Top 20%: Greater than $94,740
Bottom 20%: Less than $16,322
Income inequality factor: 5.8

1. District of Columbia

Top 20%: Greater than $151,132
Bottom 20%: Less than $20,151
Income inequality factor: 7.5

Income has no direct bearing on a consumer’s credit standing, but higher earnings can make it easier for consumers to pay their bills and make on-time loan payments. Such behaviors are crucial to keeping credit reports free of debt collection accounts or other negative information, which is important if you want to access credit products at low interest rates. No matter how much money you make, it’s a good idea to regularly check your credit scores — you can get two credit scores for free every 30 days on Credit.com.

More from Credit.com

This article originally appeared on Credit.com.

TIME Economy

Low Wage Workers Are Storming the Barricades

Activists Hold Protest In Favor Of Raising Minimum Wage
Alex Wong—Getty Images Activists hold protest In favor of raising minimum wage on April 29, 2014 in Washington, DC.

A few weeks back, when Walmart announced plans to raise its starting pay to $9 per hour, I wrote a column saying this was just the beginning of what would be a growing movement around raising wages in America. Today marks a new high point in this struggle, with tens of thousands of workers set to join walkouts and protests in dozens of cities including New York, Chicago, LA, Oakland, Raleigh, Atlanta, Tampa and Boston, as part of the “Fight for $15” movement to raise the federal minimum wage.

This is big shakes in a country where people don’t take to the streets easily, even when they are toiling full-time for pay so low it forces them to take government subsidies to make ends meet, as is the case with many of the employees from fast food retail outlets like McDonalds and Walmart, as well as the home care aids, child caregivers, launderers, car washers and others who’ll be joining the protests.

It’s always been amazing to me that in a country where 42% of the population makes roughly $15 per hour, that more people weren’t already holding bullhorns, and I don’t mean just low-income workers. There’s something fundamentally off about the fact that corporate profits are at record highs in large part because labor’s share is so low, yet when low-income workers have to then apply for federal benefits, the true cost of those profits gets pushed back not to companies, but onto taxpayers, at a time when state debt levels are at record highs. Talk about an imbalanced economic model.

A higher federal minimum wage is inevitable, given that numerous states have already raised theirs and most economists and even many Right Wing politicos are increasingly in agreement that potential job destruction from a moderate increase in minimum wages is negligible. (See a good New York Times summary of that here.) Indeed, the pressure is now on presidential hopeful Hillary Clinton to come out in favor of a higher wage, given her pronouncement that she wants to be a “champion” for the average Joe.

But how will all this influence the inequality debate that will be front and center in the 2016 elections? And what will any of it really do for overall economic growth?

As much as wage hikes are needed to help people avoid working in poverty, the truth is that they won’t do much to move the needle on inequality, since most of the wealth divide has happened at the top end of the labor spectrum. There’s been a $9 trillion increase in household stock market wealth since 2008, most of which has accrued to the top quarter or so of the population that owns the majority of stocks. C-suite America in particular has benefitted, since executives take home the majority of their pay in stock (and thus have reason to do whatever it takes to manipulate stock price.)

Higher federal minimum wages are a good start, but it’s only one piece of the inequality puzzle. Boosting wages in a bigger way will also requiring changing the corporate model to reflect the fact that companies don’t exist only to enrich shareholders, but also workers and society at large, which is the way capitalism works in many other countries. German style worker councils would help balance things, as would a sliding capital gains tax for long versus short-term stock holdings, limits on corporate share buybacks and fiscal stimulus that boosted demand, and hopefully, wages. (For a fascinating back and forth on that topic between Larry Summers and Ben Bernanke, see Brookings’ website.)

Politicians are going to have to grapple with this in the election cycle, because as the latest round of wage protests makes clear, the issue isn’t going away anytime soon.

Read next: Target, Gap and Other Major Retailers Face Staffing Probe

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