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The millionaire quiz

Some of these answers might surprise you.

By Karen Datko Oct 10, 2009 1:50AM

This post comes from J.D. Roth at partner blog Get Rich Slowly.

How much do you know about millionaires?

My wife had dinner with her friend Linda, who is a high school social studies teacher. As they ate, Linda bemoaned the lack of personal-finance and economics education in the United States. She mentioned that every year she gives her economics students a short "millionaire quiz" (registration required) to see just how much they know about wealth and where it comes from. They do poorly at it, which surprises them.

Linda says they always pay attention to the follow-up discussion.

Because I asked nicely, Linda sent me a copy of the millionaire quiz in the mail. Here are the questions that give the kids so much trouble:

  • Most millionaires are college graduates.

  • Most millionaires work fewer than 40 hours a week.

  • More than half of all millionaires never received money from a trust fund or estate.

  • More millionaires have American Express Gold Cards than Sears cards.

  • More millionaires drive Fords than Cadillacs.

  • Most millionaires work in glamorous jobs, such as sports, entertainment or high-tech.

  • Most millionaires work for big Fortune 500 companies.

  • Many poor people become millionaires by winning the lottery.

  • College graduates earn about 65% more than high school graduates earn.

  • If an average 18-year-old high school graduate spends as much as an average high school dropout until both are 67 years old, but the high school graduate invests the difference in his or her earnings at 8% annual interest, the high school graduate would have $5.5 million.

  • Day traders usually beat the stock market and many of them become millionaires.

  • If you want to be a millionaire, avoid the risky stock market.

  • At age 18, you decide not to smoke and save $1.50 a day. You invest this $1.50 a day at 8% annual interest until you are 67. At age 67, your savings from not smoking are almost $300,000.

  • If you save $2,000 a year from age 22 to age 65 at 8% annual interest, your savings will be more than $700,000 at age 65.

  • Single people are more often millionaires than married people.

Here are the answers:

  • True. About 80% of millionaires have college degrees: 18% have master's degrees, 8% have law degrees, 6% have medical degrees, and 6% are Ph.D.s. I'm a firm believer in the value of a college education. These numbers bolster that belief.

  • False. Nearly two-thirds of millionaires work 45 to 55 hours per week.

  • True. Only 19% of millionaires received any income or wealth from a trust fund or estate. Only 10% inherited more than 10% of their wealth.

  • False. A total of 28.6% of millionaires have AmEx gold cards, while 43% have Sears cards. The wealthy do no choose credit cards based on status -- they choose them based on utility. They use them as tools.

  • True. This is kind of a lame question, though: 9.4% of millionaires drive Fords and 8.8% drive Cadillacs. I suspect that's different from the average for the rest of the population. Only 23% of millionaires drive a current-year car.

  • False. Most millionaires work in ordinary industries and jobs.

  • False. This one always blows my mind: 75% of millionaires are self-employed or consider themselves entrepreneurs -- 75%! Most of the rest are professionals like doctors, lawyers or accountants.

  • False. I hope this is obvious. Odds of becoming a lottery millionaire: 1 in 12 million. Odds of a woman giving birth to quadruplets: 1 in 700,000. How many quadruplets do you know? Do you know how to win the lottery? Don't play.

  • True. On average, the more education you have, the more money you'll earn.

  • True. Again, education means more money.

  • False. About 80% of day traders lose money.

  • False. Since 1926, the S&P 500 has increased at about 11% annually. There's risk, of course, and this doesn't include taxes or inflation. Still, the point is solid. Long term, stocks are likely to generate growth.

  • True. Again, this is the extraordinary power of compound interest.

  • True. This, too, is the power of compound interest.

  • False. Most millionaires are married and stay married. Divorce, on the other hand, only hurts net worth (except for that of your lawyer).

How'd you do? I got a perfect score, but that's only because I've been immersed in this stuff for the past four years. (And because I've read "The Millionaire Next Door" several times.) Most of this is burned on my brain.

For more information about the answers to this quiz, as well as a brief discussion of the problem of financial education in America, check out "Improving Economic and Financial Education: A Program for Urban Schools," (registration required) which was originally published in the May/June 2002 issue of Social Education.

Other articles of interest at Get Rich Slowly:

Published Oct. 5, 2008


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