The Middle-Class Millionaire: The Rise of the New Rich and How They Are Changing America [Hardcover]

This book starts out by stating that there are 8.6 million "millionaires" in the US--about one in 35 people. However, the recently completed "World Wealth Report 2008" by Capgemini and Merrill Lynch puts the total GLOBAL number of millionaires at just 10 million, and the number of US millionaires at around 3 million--about one in 100 people.

How to account for the discrepancy? The authors of The Middle-Class Millionaire foolishly include housing "wealth" (home equity) in determining who is or isn't a millionaire in the US. That increases the number of millionaires by nearly threefold. That must have made it a lot easier for the authors to assemble a large database of "millionares", but at the expense of meaningful information.

Since the book was published in early 2008, we can assume the surveys took place in 2006-2007, when home values were meaningfully higher. As a result it is not surprising that they found so many "millionaires" on the east and west coasts--these regions of the country contain many house-rich people who've probably seen significant home equity declines since then.

There's a reason the Capgemini study excluded home equity: you can't "eat" your house. Wealth is something you can live on; a house is something you can live in. Certainly there are individual cases where an individual may monetize considerable house wealth to become "wealthy"--imagine an elderly person selling their house for millions of dollars and downsizing. But for society as a whole, it's erroneous to think this is possible--after all, if everybody tries to monetize their home equity, the home equity goes away, as the countless foreclosures around the country are now showing.

So, already, nearly two-thirds of the authors' target group don't belong there in the first place. Another problem is comparing people with one million dollars to people with ten times as much money and pretending they are in the same group. Sorry, but an order of magnitude is a big difference. Many financial advisors will suggest a sustainable portfolio drawdown range of 3-5%. On one million dollars, that is 30-50K a year; on ten million, it's 300-500K a year.

Is it really possible those two groups are really living in the same economic world? Sure, there are many people with small portfolios who live beyond their means, just as there are many rich people who live well within their means--Warren Buffett famously still lives in the same house he bought for 31.5K at the age of 27. But in general, when you have two wealth cohorts separated by an order of magnitude (from 1mil to 10mil), there are going to be big, big differences in perceived reality and behavior. If you include the 5.6 million "house millionaires" like the author did, the disparity between the bottom and top of this so-called middle class becomes even more severe.

I'm not saying people with 10mil live like the people in "Richistan" who have their own private golf courses, yachts, and planes, but come on, you are talking about a very, very small segment of the population. Let's not pretend they are living in the same world, with the same range of choices, as the rest of us.

So, I can't help but be pretty dismissive of the authors' broadbrushed "conclusions". Having said that, this book has some amusing tidbits that made it a worthwhile read to me. Whether it would be interesting to you is a matter of personal taste. I would suggest a thumb-through at the local bookstore.

The Middle-Class Millionaire: The Rise of the New Rich and How They Are Changing America is an important book. it shatters old paradigms, shibboleths and myths about millionaires.

While on the one hand it discloses, almost like an instruction manual, how one could achieve such wealth, or, at least, how others did, it doesn't advocate paying the price necessary to achieve the objective. The authors are content to point out the myriad ways the wealthy are different from the rest of us.

I read it not as a primer or "how to" book, but as a fascinating and thoughtful description of a new and important phenomenon. At a time of greater disparities in wealth than any I can remember in my 72 years, it is useful and even important to understand just who and how some of those who have mastered the system have done it.

One doesn't read about NBA basketball players in order to become one--but one could well benefit from reading The Middle-Class Millionaire. I know I did, and I have sent copies to the young people in my life.

I recently finished reading this book and found it very interesting to learn about this subset of middle class which I never knew existed. It provided a review of the behaviors of this class after completing a survey of the 500+ people considered "Middle Class Millionaires," and contrast them against the traditional middle class. From education (which is a big investment for this group), to initial investments in high capital goods, to beliefs in work ethic, this group has discovered the traits to millionaire success. While reading I noticed that many of these traits are recurring themes I read about in other books and periodicals targeting the millionaire class. I would like to caution the authors that defining the middle class millionaire by only having a net worth of $1-10mm would include persons in California who could own one, or perhaps two homes and be highly leveraged in debt, yet still be considered a middle class millionaire. This is certainly a book which I wish more college students read earlier in life in order to demonstrate the true picture of affluence, in contrast to the misbelief of having highly leverage debt homes, high credit card debt, expensive BMW cars, and working as a slave to a corporate firm for years before they finally "get it".

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