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Saturday, February 13, 2010

Will You Get Rich One Day?

About a third of us think we will. And more than a few of us believe a ticket out of our workaday financial worries will have lottery numbers printed on it.

In this land of opportunity, Americans may believe that it's harder to get rich than it used to be. But when asked about the likelihood of getting rich personally, about one-third say it's very or somewhat likely that they will attain wealth because of their work, investments, inheritance or good luck.

On the other hand, 63% say it's not too likely or not at all likely they'll get rich. Just 2% volunteered that they're already rich.

What is rich, anyway?
Most people don't equate wealth with a yacht in the Mediterranean and a house on every continent. A meager 7% of respondents define "rich" by possessions such as houses, cars and boats.

Instead, for at least 33% of Americans, rich means having enough money not to worry, according to the survey. That's a subjective definition that varies with lifestyle and attitude. An additional 26% define rich as having enough money to quit their jobs.

"I think there is a paradox about it. People could live smaller than they do. There are a lot of McMansion inhabitants who could do that if they wanted to, but they slide on the golden handcuffs, and that is part of what keeps you from feeling rich," says Peter Rodriguez, an associate professor of business administration at the University of Virginia's Darden School of Business.

Few people put dollar amounts on the definition of wealth. Just 17% say that being rich means having a net worth of $1 million or more, and 11% say a six-figure annual income makes someone rich.

Most people who are rich don't consider themselves rich. It's a relational feeling, Rodriguez says.

"For example, you take someone who has been earning $40,000 a year and bump them up to $100,000 -- they feel rich," he says. "Even if they increase their lifestyle, they don't have to worry about their old bills anymore. But if you take someone who is making $150,000, they feel poor unless they make $300,000."

How to get rich
One-fifth of Americans believe that starting a business is the most likely way to get rich today.

History supports that belief. Most self-made millionaires are small-business owners, says Greg McBride,'s senior financial analyst.

Choosing a high-paying job or career comes in second (19%) as the most likely path to getting rich.

Unfortunately for most people, having a high-paying job is the ticket to an expensive lifestyle and nothing more lasting, says Todd Tresidder, a financial coach at FinancialMentor and self-made millionaire.

Surprisingly, just 9% of survey respondents say real-estate investments offer a likely path to wealth. Though U.S. real-estate investors have gotten creamed in the past year, it's been a major moneymaker for some over the years, though it's by no means a sure thing.

"You do have to have deep pockets to play the game," says Dan Danford, the CEO of the Family Investment Center in St. Joseph, Mo.

Real estate offers a couple of advantages.

"The research shows that owning your own business and real estate are two of the most common paths to achieving wealth and financial security," Tresidder says. "There is a reason for that. Owning your own business and real estate have two principles: They have leverage and tax advantages."

Surprisingly, perhaps, 15% of people say that getting lucky via the lottery or an inheritance is the most likely road to riches, while another 15% point to living frugally and saving money as best.

Though living frugally may not have you living like a Rockefeller, it's a more likely route to wealth than winning the lottery.

"Living frugally and saving money are helpful, sure, but winning the lottery isn't even a plan. That's called hope," Tresidder says.

Motivations for becoming rich
Despite what advertising messages might convey, most people don't pursue wealth for material reasons. Only 11% of those surveyed say they want to be rich to afford material things and pursue leisure activities.

Instead, 41% of Americans say they wish to become wealthy so they can provide a better life and future for their children. And 18% say they'd like to be rich in order to take care of parents or other family members.

Americans sometimes sabotage themselves or are too anxious about current economic conditions to take steps toward prosperity. Danford has a fatalistic point of view when it comes to getting rich.

"I work with a broad spectrum of people, and one of the truisms I've come up with is: People who have money will always have money, and people who don't (have money) won't ever have money."

The majority of Americans appear to agree, according to Bankrate's poll. But optimism prevails with at least a third of Americans who aspire to be wealthy.


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