This post was written by Marie.

What makes millionaires different from the merely affluent or the middle-class? The Spectrum Group set out to understand this by sifting through their ongoing quarterly research.

The Spectrum Group publishes reports about the affluent and the retirement markets. They conduct survey based research each quarter with thousands of wealthy households – targeted to networth levels of:

• the mass affluent ($100,000 to $1 million networth households );
• the millionaires ($ 1 million to $5 million networth households );
• the ultra high net worth – UHNW – ($5 million to $25 million networth households);
• and above that (more than $25 million networth households)

They found eight factors that the millionaires had in common – factors we can apply to our own lives and finances. You can see the results in their own words at The Millionaire Corner where they have outlined the eight factors and are in the process of detailing each one individually.

What are the lessons we can draw from these things that millionaires do?

Get a college education and maybe even a post graduate degree – eighty-five to ninety percent of the millionaires have college degrees as opposed to only 66 percent of the non-millionaires.  Of the younger millionaires (35 – 40 years old) 56% had advanced degrees.

Although a lot of American citizens are dis-enchanted with the collegiate educational experience these days and question its value, studies in the past have shown that on average, the college educated individuals earn half a million dollars more over their lifetime than those without post secondary education.

Put in the hours to get the job done right –  sixty-three percent of the millionaires reported working more than 40 hours a week – at least ten percent more than the non-millionaires.   The higher the networth of the household the higher the number of hours worked is reported.

Be smart about investing by:

Using a financial advisor – seventy percent of millionaire households used an advisor and of those thirty percent used a financial advisor (typically a full service broker).  Most all levels (including the mass affluent) used an accountant.

• Keeping your portfolio diversified – eighty-five to eighty-eight percent of the millionaires thought diversification was import. In contrast, only seventy-six percent of the non-millionaires thought it was.  The millionaires included alternative investments as well.
• Investing in real estate – most millionaires own their own homes, nearly half have a second home and many invest in rental or commercial real estate as well. They do so to benefit from tax savings, inflation protection and the ability to offset expenses
• Investing  in soundly researched but new ideas.

Be willing to take on some degree of risk – millionaires on average were willing to take a risk six percent more of the time than non-millionaires.

Own your business or professional practice – the very wealthiest (upwards of $25 million in net worth) reported being business owners or high level executives. Next down were the professionals who have their own practices.

Other factors (included in the Spectrum study, but outside of the eight they are highlighting) that the millionaires and above reported in common were:

• Frugality – Living below their means was included by most as important.
• Being in the right place at the right time – As Louis Pasteur said, “Chance favors the prepared mind’!
• Luck – Although we don’t control luck, we can sometimes make our own and I suspect that these millionaires did just that.
• Making their own decisions – 64% of the millionaires and above made their own decisions as opposed to letting others decide for them.

Getting an inheritance and using family connections did NOT make the list.  Only 27% of the UHNW and 29% of the millionaires reported an inheritance as a factor in their wealth.  Only 12% of the UHNW and 9% of the millionaires said that connections from their family helped them achieve millionaire status.

Which of these characteristics do you exhibit? Are there others you feel are important?