How the top 5% do it?

[street]

Seems to be a mix of top 5% income and top 5% NW or top 5% portfolio. Which are we talking about?

I was never in the top 5% of income, never was brought up by middle class parents, poor. Worked hard saved more then I spent to get where I'm at today. Had some luck but I felt I made my luck also.

Not even sure what amount you would need to be considered top 5% in NW or portfolio

 

[tb001]

I’m always amazed at the folks who feel luck played a minimal role in their achievements. We’re in the top percent or two, depending on which parameter you measure. We’ve worked our tails off to get here and spent modestly vs our peers. Long work days/weeks were a given. But for every 60+ hour week I’ve worked, I can guarantee our current gardener has worked just as many hours in far more physically challenging conditions. Our jobs have been incredibly challenging, and demanded many, many hours of work, but we’ve been well compensated, had great benefits and vacation time and had flexibility many don’t. A combination of hard work, good genetics and stable home life as a kid goes a long way. A big chunk of that is luck of the draw.

 

[NW-Bound]

You only need 2.4 million of net worth (not even investable assets) to be the 5%.

Indeed, I saw that a statistics supposedly from the Federal Reserve shows that in 2017, the breakpoint for the top 5% in net worth is $2.378M, and for the top 1% it is $10.374M. This is household number, so a single person can qualify if he/she has 1/2 of the above.

Out of curiosity, I looked to see the same number of other developed countries. Have not found that, but saw this map for the median net worth as published by Credit Suisse.

What do you know! Canadians are richer than Americans. And Frenchmen are richer than Germans. On 2nd thought, it must be because West Germany was pulled down by East Germany after the reunification.

PS. I looked further into the numbers, and saw that Germany and the US appear to have worse wealth inequality than other countries.

Source: https://en.wikipedia.org/wiki/List_of_countries_by_wealth_per_adult

Example:

Per Adult	Median wealth	Average wealth
Canada	US$106,342	US$288,263
US	US$61,667	US$403,974
France	US$106,827	US$280,580
Germany	US$35,169	US$214,893

 

[pj.mask]

Don’t forget top 5% by age range? The numbers vary a lot between 25 and 55!

As for work, I did invest a lot of time early on to learn things. Once I felt comfortable with my knowledge base (was marketable outside the company) I typically work 40h weeks (kids help set limits - daycare has set times of operation). Occasionally I will have a big project or work trip (couple times a year) but usually my time averages back closer to 40 after some time.

 

[DrRoy]

Interesting.

I would like to see an article addressing the factors that prohibit a 'normal' person from getting out of the bottom 50%...

I recalled reading an article about how to avoid poverty, which is not exactly the above issue but is close. The 'Rules' were:

Complete your education.
Avoid teenage parenthood (mainly for women).
Keep a job.
Be in a working, long-term relationship.

87% if those who did all 4 were not in poverty.

I am not sure if this is the original source but I found -
https://www.telegraph.co.uk/news/so...ay-in-school-keep-your-job-and-find-love.html

 

[pjigar]

It was a graduate degree in electrical engineering and lot of luck to get a lucrative sales job which propelled me from negative net worth into the club in less than 20 year. Marketable education is the key to wealth in today's world. If you are already wealthy then you need basic education, cool head and humble lifestyle (without drugs and divorce) to stay wealthy.

 

[Senator]

I wonder that if they did an IQ study of these people, where it would fall.

Maybe it's the IQ of the people that makes a difference, and not necessarily the hard work.

Often slicing the data a different way yields different results. Why does a person that works just as hard doesn't make it.

One thing for sure, if everyone "made it", there would be no "Making it".

 

[Luck_Club]

I wonder that if they did an IQ study of these people, where it would fall.

Maybe it's the IQ of the people that makes a difference, and not necessarily the hard work.

Often slicing the data a different way yields different results. Why does a person that works just as hard doesn't make it.

One thing for sure, if everyone "made it", there would be no "Making it".

+1
I'm amazed at how many on this forum are willing to subjugate their hard work and success to luck. It is frustrating to read those who opine such stances. Personal examples of evidence to the contrary is frequently presented. The hard work crowd often give personal examples of siblings, friends, acquaintances who had more opportunity, better privilege, and more luck who didn't succeed.

Meanwhile the opinions of the luck crowd remain steadfast.

Could the IQ correlation be agreed upon by this crowd?

 

[dirtbiker]

Still amazed people are so self focused that they can’t understand: given the exact same situation (luck and hard work to get to point “A”) - not everyone has the capability to make decisions to get to point “$”.

Sure, if I look at other people’s situation - I can see what *I* would do to make their situation more like I have made mine. What isn’t obvious is how they see things (what can they endure, can they visualize long term goals, etc) and their capabilities to make the same decisions I would.

I know someone who always makes bad decisions because “I probably won’t be alive later” - they most likely think that because the results of previous bad decisions. It is cyclical. To just try and understand that mentality blows my mind.

You joined national guard (what luck you weren’t forced into any number of countries army/rebels without college benefits).

You went to war 3x (what luck you didn’t die or get a debilitating injury - what luck you had a choice to sign up for war in Afghanistan rather than have some foreign country start a war in your home town!)

You went to school at a single father while being out of country for ~2 years? (Has me scratch my head a bit - how can someone be a single father and be at war for 2 years - did you bring the kid with you in a strap on child carrier? What luck the army pays more for dependents, what luck someone took care of your kid while you were gone and in school, what luck you bypassed some of the hardest years of raising a child (0-18mo) while someone else raised your kid.

Dude, it’s awesome you were successful and it’s likely you would have been successful in any range of circumstances. But without the lucky cocktail of what makes you - you, probably 75% of others put in your situation would be able to cope and reach success.

I'll keep this civil and not say exactly what's on my mind, as it would definitely be against forum decor. Don't tell me I'm lucky that someone else raised my kids during the "hardest years" of raising a child while I was away at war. That was hell. Having raised children during those months and having also been away at war, missing my children and dealing with everything that comes with being deployed, I can tell you raising children in the comfort of my own home is much, much easier. Shame on you for this impossibly insensitive response.

 

[MichaelB]

Folks, let’s keep this thread friendly.

I think no one here is suggesting luck substitutes hard work. The whole “luck vs hard work” is a straw man argument.

What some are saying is hard work isn’t the only thing needed to get ahead, it takes hard work plus smart choices plus good fortune. Any two of those might be enough to get by, but not to get ahead in a meaningful way.

 

[mrfeh]

I thought this BI article was interesting,
Apparently Thomas C. Corley spent 5 years studying how the top 5% accomplished what they did.

https://www.businessinsider.com/how-people-get-rich-paths-to-wealth

Thought it was interesting 1/3 never got a college degree but only 15% of them did it by working less than 50hr weeks.

Over 1/2 were entrepreneurs who regularly saved 20%+ of there modest incomes.

The article gets off to a bad start, by talking about the top 5% by income, and also referring to them as the rich. High earners != high net worth, just as low earners != low net worth.

FWIW, we are top 5% net worth, but were never top 5% in salary. We did it the millionaire-next-door way.

 

[kgtest]

The article gets off to a bad start, by talking about the top 5% by income, and also referring to them as the rich. High earners != high net worth, just as low earners != low net worth.

FWIW, we are top 5% net worth, but were never top 5% in salary. We did it the millionaire-next-door way.

I think that is likely the most common, regardless of any research or data. Slow n steady, DCA/AA into the market and outta the market.

 

[GravitySucks]

The problem with self reporting studies is that we all delude ourselves some and measure against the familiar.
At night school we had a guest speaker who was the VP of Marketing for my megacorp. He told of starting off at the bottom working in the man holes as a helper. He never mentioned that was a summer job his father, a director of the company, got him. I don't consider that a real starting point,but I'm sure he did. He started after college as a second level manager. He also told how the last week he had worked over 80 hours. Failed to mention that it was at the hospitality tent of a pro sporting event he championed the company to sponsor. 80 hours of tennis, mimosas and oysters doesn't sound that awful. Again, to him he believed he was working longer and harder than others.
Personally, I consider myself self made, but I once got a $600 inheritance that allowed me to finish community college and was connected enough to get a recommendation for a minimum wage +10% job by my sister vouching for me. At night school I worked on projects with two engineers from megacorp, the well respected one mentioned me to the hiring manager, the one who was soon fired did not. Doubt I would have got the interview if the lazy one told him I was a prospect.

 

[Senator]

+1
I'm amazed at how many on this forum are willing to subjugate their hard work and success to luck. It is frustrating to read those who opine such stances. Personal examples of evidence to the contrary is frequently presented. The hard work crowd often give personal examples of siblings, friends, acquaintances who had more opportunity, better privilege, and more luck who didn't succeed.

Meanwhile the opinions of the luck crowd remain steadfast.

Could the IQ correlation be agreed upon by this crowd?

I had a boss (when I was in HS) in the restaurant business that would tell me that if you ever had a difficult job to do, you hire a lazy person to do it. They will always figure out the easiest way to accomplish the task. That was typically after he assigned me a difficult job...


I have always been a bit lazy. And that is why I worked so hard, so I would not have to work as long. Maybe it's the lazy people that make it to the 5%?

 

[CaliKid]

I am some combination of entrepreneur and expert in my field. However, I would be the first to say there are many people in my field who are way smarter than me but I am considered a go-to expert. Why am I so much more successful than most of them? A lot of it is from years of extremely hard work and long hours of course but beyond that is I have a natural entrepreneur's mind that many simply do not have. I have laid out my path to success to others in my firm and, though I think they are smarter than me, they do not get close to duplicating my success. My point is some things, perhaps, can't be taught. Some people just don't "get it" when it comes to developing a business.

 

[scrabbler1]

Indeed, I saw that a statistics supposedly from the Federal Reserve shows that in 2017, the breakpoint for the top 5% in net worth is $2.378M, and for the top 1% it is $10.374M. This is household number, so a single person can qualify if he/she has 1/2 of the above.

Is that true? If it is, then I am in the top 5%, but not by much. My NW, including my residence which is a pretty small (<10%) part of it, is between $1.6M and $1.7M.

I'd say MichaelB's trio of key elements to getting ahead is a good one - hard work, smart choices, and good fortune. I had a decent combination of all 3 meshing together well to enable me to ER 11 years ago after a good career built by hard work and smart choices. The good fortune put me over the top.

 

[pj.mask]

+1

I'm amazed at how many on this forum are willing to subjugate their hard work and success to luck...



Meanwhile the opinions of the luck crowd remain steadfast.



Could the IQ correlation be agreed upon by this crowd?

Is someone IQ (or however you want to proxy intelligence) determined by luck or by hard work?

My understanding is you are born with some determined mental capabilities that you can’t significantly change. You can improve on things like an IQ test as does most of society over the generations - not specifically because we are getting smarter but because we have more practice with the types of questions that are tested on IQ tests.

If the IQ test is like typing on a keyboard - the more you practice typing, the faster you get and the better your score. However IQ test results and typing don’t directly translate into useful intelligence. I’m sure there is overlap...

 

[copyright1997reloaded]

As someone who is not white, whose parents were not born in the US, and who grew up in one of the worst ghettos in the US, I have found that forgetting that some of this "luck" comes down to taking advantage of opportunity. In many of the things mentioned, the individual was able to make a choice. Had a different choice been made, "luck" would not have happened. DW (who has a similar background to me) and I have thought of hundreds of people we have known over the years who deliberately made choices to hurt themselves... yet call our choices to not do the same thing "luck".

For example, one guy who I started college with, same background, same opportunity to go to an Ivy League school... but once he got there, chose to skip classes, party, and despite me and others willing to help him, ignored us and eventually dropped out. Today he is bitter and complains about the "institutional racism" he encountered in college hat prevented him from getting ahead... but all of us who knew him back then know the truth.

I believe in the statement "luck is when preparation meets opportunity"... and true there are some with disadvantages, but there are some who choose not to take advantage of opportunities and then complain about others "luck" who did. There are no guarantees in life, but there are things one can still choose do to improve the odds.

I just wanted to thank you for your post. I will add "Luck is when preparation meets opportunity" to my list of (mostly ignored) pearls of wisdom that I give to my students.

p.s. I was the first in my family to graduate college. Could have FIRE'd at about 40-45, did so at 51. Now working again, but by choice.

 

[pj.mask]

I'll keep this civil and not say exactly what's on my mind, as it would definitely be against forum decor. Don't tell me I'm lucky that someone else raised my kids during the "hardest years" of raising a child while I was away at war. That was hell. Having raised children during those months and having also been away at war, missing my children and dealing with everything that comes with being deployed, I can tell you raising children in the comfort of my own home is much, much easier. Shame on you for this impossibly insensitive response.

Everyone has their own challenges as a result of their own decisions.

Many people miss out on raising their kids - I know someone who gets to see their kid about every 3 months now (but missed out on the first 2 years) because they were and are (for another 5 years) locked up in prison for drug possession charges. They won’t get to spend any real time with their kid until the kid is 10 years old (and court ordered non contact with the spouse even though they were a couple because they are bad influences) They have had friends get killed in our prison system, they risk daily violence/murder - I can’t judge if their situation is any more or less difficult to cope with than you and yours.

Your post was about hard work vs luck. If you can’t see where luck played a role then you aren’t looking. There are plenty with situations worse than you and plenty with better. There are those with better situations who feel like they have it worse and those in worse spots who feel they have it better.

I’m not angry with you and I’m not attacking you. I’m not sure why you choose (or maybe unlucky and don’t have a choice?) to get angry over observations based solely on a paragraph of text.

Edit: sorry if you felt this was a personal attack, while I’m certainly not calling you lucky in a general sense (you obviously endured hardship) I was trying to illustrate that things could be worse and that delta from realistically worse to your situation was the luck component I was talking about.

 

[PatrickA5]

At my megacorp, either you got anointed as "corporate promotable" early on, or you were permanently out of the running. Both the existence of The List and the criteria for getting on it were secret.

Of course, judging by many of the senior execs I encountered, I suspect the key requirement was a high bladder-to-brain ratio which enabled them to endure lengthy meetings of mind-numbing tedium without a break.

Oh man. Nailed it on the head about the LIST. In my megacorp you were placed on the list right out of college. If you made it into the "professional development program" you were pretty much guaranteed a high level position within 5 years.

One time I had a kid report to me right out of college. He was in the program. Never showed up on time. Left early. Rarely did the job he was asked to do. When it came time for his first review, I gave him an "average" review - even though he was well below the rest of the department. My bosses boss made me change it to excellent. It was so political. Fast forward 5 years and he was in Senior Management making around $300K (back when that was a lot of money). Of all of the kids that went through that program, I only recalled one that flamed out and that was because he was having an affair with his bosses secretary. Seems she was off limits. The boss and the secretary got married soon after. Divorced a few years later. Oh the life of megacorp!

 

[copyright1997reloaded]

I’m not angry with you and I’m not attacking you. I’m not sure why you choose (or maybe unlucky and don’t have a choice?) to get angry over observations based solely on a paragraph of text.

Edit: sorry if you felt this was a personal attack, while I’m certainly not calling you lucky in a general sense (you obviously endured hardship) I was trying to illustrate that things could be worse and that delta from realistically worse to your situation was the luck component I was talking about.

No, but you are being rude. The fact that you don't see it speaks volumes.

 

[kgtest]

I had a boss (when I was in HS) in the restaurant business that would tell me that if you ever had a difficult job to do, you hire a lazy person to do it. They will always figure out the easiest way to accomplish the task. That was typically after he assigned me a difficult job...


I have always been a bit lazy. And that is why I worked so hard, so I would not have to work as long. Maybe it's the lazy people that make it to the 5%?

LOL! Perhaps you are onto something Senator!

I remember when I was in the Airforce one of the first motto's they told us was "work smarter, not harder!" or something like that. I was sitting with a group of 60 guys getting assigned general tasks around the barracks. First they took volunteer's, then they decided to like split the room and use an honor system. Well, I knew my dorm chief and I was like dude, somehow I never got assigned a task...he just said, it's cool no worries. Sooo, I sort of ad-hoc helped guys for the 7 week duration, rather than having a real task assigned to my name...I was literally the epitome of "work smarter, not harder" still am!

 

[pj.mask]

No, but you are being rude...

Wait - isn’t it rude to call someone rude? Kind of hypocritical for this comment

...The fact that you don't see it speaks volumes.

Never said anything about this.

 

[street]

Indeed, I saw that a statistics supposedly from the Federal Reserve shows that in 2017, the breakpoint for the top 5% in net worth is $2.378M, and for the top 1% it is $10.374M. This is household number, so a single person can qualify if he/she has 1/2 of the above.

Out of curiosity, I looked to see the same number of other developed countries. Have not found that, but saw this map for the median net worth as published by Credit Suisse.

What do you know! Canadians are richer than Americans. And Frenchmen are richer than Germans. On 2nd thought, it must be because West Germany was pulled down by East Germany after the reunification.

PS. I looked further into the numbers, and saw that Germany and the US appear to have worse wealth inequality than other countries.

Source: https://en.wikipedia.org/wiki/List_of_countries_by_wealth_per_adult

Example:

Per Adult	Median wealth	Average wealth
Canada	US$106,342	US$288,263
US	US$61,667	US$403,974
France	US$106,827	US$280,580
Germany	US$35,169	US$214,893

Thanks for those graphs and numbers.

 

[copyright1997reloaded]

Wait - isn’t it rude to call someone rude? Kind of hypocritical for this comment

Perhaps I was. So, for the civility of the ER site I apologize for calling you rude.

Having said that, your first post implied his several deployments meant nothing. In your follow up post you acted surprised that he might be a tad upset, and then doubled down by compared his deployments to the bad 'luck' of someone who committed crimes and as a result was incarcerated.