Top 5 Myths Most Investors Believe About the Ultra Rich
When it comes to the investment world, there are your average investors, and then there are your ultra-rich. The ultra-rich control a hugely disproportionate portion of the world economy, with roughly just over 200,000 individuals who can be classified as “ultra-high-net worth” individuals, or UHNWIs; these are people with assets of at least $30 million.
For most of us, the gulf between the average investor and a UHNWI makes it too difficult to understand them as people. Because of this, there are many false myths and beliefs that we have over UHNWIs. Here are the top 5 myths most investors believe about the ultra-rich:
1) They Don’t Give Back
One common perception of the ultra-rich is that they are all a modern-day version of Scrooge—they don’t give back and they don’t care about others. But truthfully, this isn’t the case: UHNWIs donate over a hundred billion dollars a year to charities and foundations. In one study, it was found that the average UHNWI donates around $30 million over their entire life.
So where do these philanthropists come from? The same report found that the majority of generous UHNWI donors come from the UK, followed by the US and Hong Kong.
2) They All Come From Top Universities
It can be easy to discredit the success of UHNWIs by saying that they all had an advantage that most of us didn’t, which is Ivy League (or top school) education. While it’s true that a handful of universities are popular candidates for UHNWIs, this isn’t necessarily the case: amongst all college educated UHNWIs, only 5% of them come from the top 10 universities in the world. UHNWIs don’t mostly come from Ivy League schools, but can be found all over the world from various universities and countries.
It is also important to note that 88% of UHNWIs have a bachelor’s degree (or higher education), while just 12% did not continue their education beyond high school.
3) They Inherited Their Wealth And Grew From There
This is one misconception that won’t die down, simply because of the fact that it makes sense. Many of us believe that the super-rich are just products of legacy wealth, or money that was inherited from their parents or grandparents who ran giant family businesses.
But the truth is much more surprising: one of the most common characteristics that UHNWIs share is their natural entrepreneurship. Out of all UHNWIs, only 17.4% of them inherited their wealth from their family, while 64% of them are completely self-made. The rest, at 18.8%, can pinpoint their wealth to a combination of family inheritance and their own businesses.
4) They Don’t Save
When you think of UHNWIs, most of the time you envision giant mansions, yachts, and touring on the moon. But UHNWIs don’t become ultra-rich by spending every dollar they ever make. To become ultra-wealthy, they were forced to develop an attitude where every dollar counts, and this attitude doesn’t change just because they’ve finally “made it”.
In a survey, it was found that over half of UHNWIs live below their means. Most of the time, you would never even notice that someone is an UHNWI until they pull out their credit card. Who knows—your neighbor might be one of them.
5) They Own Trophy Properties
And a final general misconception about UHNWIs is that they have several mansions and properties around the world, ready to jet around and spend a month in Europe, South America, Asia, or wherever they please.
But there is a distinction that most people fail to notice: UHNWIs and billionaires. Billionaires are the individuals who create the image of the multi-mansion livelihood, whereas UHNWIs live much closer to the average person than you would think. On average, UHNWIs own 2.7 properties, while the average billionaire owns four properties.