A 2019 Investopedia article, 7 Millioinaire Myths, which has been widely copied makes the claim that "Millionaires Just Inherited Their Money" is a false preconception:

According to Thomas J. Stanley's book, "The Millionaire Next Door: The Surprising Secrets of America's Wealthy," only 20% of millionaires inherited their riches. The other 80% are what you'd call nouveau riche: first generation millionaires who earned their cash on their own.

Is this true?

  • 5
    Does the book include case definitions? I.e., what exactly causes someone to be classified as "inherited their riches" vs. "earned their cash on their own". Wealth transfer is complicated. The case definition is going to be important here.
    – De Novo
    Feb 6 '20 at 18:49
  • 4
    This claim seems to be playing on fact that the term "millionaire" is still used by the public in its original sense to evoke the notion of an extremely rich person, while inflation over the last century means the technical definition now includes many millions of American households that would merely be considered well-off.
    – Oddthinking
    Feb 6 '20 at 22:59
  • @Oddthinking From what I remember of reading the book years ago, they meant it in the literal sense of having a net worth of at least $1M, in the mid-1990's. So that would be about $1.6M in today's money
    – rjzii
    Feb 6 '20 at 23:06
  • @rjzii: That would reduce the count, but I dare say there are still millions of such individuals/households, and it is much more reasonable to suggest they are "self-made" (as troublesome as that word is) compared to billionaires (which is what a 1920's millionaire would be equivalent to now).
    – Oddthinking
    Feb 6 '20 at 23:18
  • @Oddthinking A million isn't "do whatever you want"-money anymore, but it's still "never have to work again (given reasonable investment & spending)"-money. I think the question what "earned the cash on their own" means is more important & difficult. If I inherit 999999 dollars and through wise investments and hard work increase that to a million, did I earn the million? Probably not. What about 500 thousand? 5 thousand? Nothing (but my education & housing is payed by my parents)? What about an initial loan by my parents, with which I make a million and pay back the investment via interest?
    – tim
    Feb 7 '20 at 19:23

The 1985 book Wealth, Poverty and Inheritance: The Voice from the Coffin says:

Thomas Stanley's study of millionaires, supra note 13, reports that of the millionaires surveyed more than half received no inheritance. Only 20% inherited a substantial portion of their wealth.

So this is based on a study Stanley did in the early '80s.

  • 5
    In The Millionaire Next Door he says this study was carried out shortly after 1980, and was paid for by an investment bank rather than a scientific organization, which is why it was never published. The citation is to Ed Bean, “Riddle: Why Won’t a Typical Millionaire Take You for a Ride in His Fancy Car?”, The Wall Street Journal, Friday, May 10, 1985, p. B1.
    – Avery
    Feb 8 '20 at 0:44

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