2008-05-06

Lessons from the Millionaires — What Makes Up PFBloggers’ Net Worth? (Part 3)

This is the third and last part of a post for which I’ve grabbed data on 25 personal-finance bloggers’ net worth, mostly from NetWorthIQ, to try to see if there is anything we can learn from them. After all, these are folks who are often blogging about their net worth—and how they are trying to increase it!

In Part 1 of this post, I went through what made up the data set and some of the ranges and distributions of net worth; in Part 2, I went through what assets and debts made up the bloggers’ net worth; and in this part, I’ll try to go through the subgroups among the bloggers, to see if there are lessons to be learned.

The subgroups are broken out by ranges of net worth. Although there are various reasons to exclude the equity in one’s primary residence from net worth, for simplicity here, I am including it.

With the usual caveats—this is a small and arbitrary data set, I have a very small brain, and I got a C- in statistics in college—here are some conclusions (also known, as leaps of faith, wild speculations, and unfounded extrapolations).

I didn’t actually get a C- in statistics. Mostly because I was at least smart enough not to further damage my GPA by taking the class.

As expected, net worth had some positive correlation with age. The more time you have, the more income you have had a chance to earn, and the more opportunity you have to save and invest and take advantage of the power of compounding:

PFBLOGGERS NET WORTH SPREADS
BY AGE RANGE

Net Worth

25-29

30-34

35-39

40-44

45-49

$1,000,000+

-

-

1

1

2

$750,000-999,999

-

1

1

1

-

$500,000-749,999

-

2

3

1

-

$250,000-499,999

-

1

3

1

1

$100,000-249,999

3

1

-

1

-

<$100,000

1

-

-

-

-


(Note: There was one personal-finance blogger in the data set who was actually in the 50-54 range, in the $100,000-249,999 net worth category, who is “counted” in the 45-49 column—as he otherwise did not fit in our table!)

As net worth went up, there was a greater concentration in non-retirement stock investments. The NetWorthIQ categories included one called “Stock” and one called “Retirement”—so it appears that the former is stock investments outside retirement accounts and the latter is all retirement-account investments (stocks and others). The data below shows that the non-retirement stock investments go up as we look at the higher net worths—much more sharply than the corresponding rise in retirement-account investments:

PFBLOGGERS (MEAN) AVERAGE
RETIREMENT VS. NON-RETIREMENT
(BY NET WORTH)

Net Worth

Stocks

Retirement

$1,000,000+

$547,925

$312,582

$750,000-999,999

$360,786

$244,117

$500,000-749,999

$61,980

$165,857

$250,000-499,999

$36,867

$187,631

$249,999 (and less)

$2,409

$80,509


Real-estate investments showed few or no patterns in this group. Although 11 of the 25 personal-finance bloggers in the data set owned investment property (meaning other than their home), there were no themes that came out in relation to their net worths. Four bloggers seem to be the most invested in real estate, with investment property values totaling over $300,000—and they were spread, with two with net worths in the $500,000-749,999 range, one in the $250,000-499,999 range, and one in the under-$249,999 range. These folks were all heavily leveraged; and they may have simply been chasing what had been the real-estate boom.

There was only one notable commonality among the millionaires. The millionaire personal-finance bloggers were a varied group. Of course, there were only four (three if you were to exclude equity in the primary residence). Two of the four were 100% debt-free—and both of them were retired. Two of the four had investment real estate—both relatively modest (the equity making up less than 4% of net worth). Two of the four owned their own homes—the other two appeared to rent, perhaps not coincidentally, the same two who were debt-free. The two who owned their own homes had high-value homes (listed at over $800,000)—one with quite a bit of equity (over 50%), the other with considerably less. Only one of the four had bonds. In the end, there was only one thing I was able to identify that held true for all four. Every one of the millionaires had over $250,000 in stocks (outside retirement accounts) and over $250,000 in retirement accounts.

There you have it. That’s all I had time to do. If you have questions or an idea on something else to look for within the data, please holler.

Related Posts

What Makes Up PFBloggers’ Net Worth? (Part 1)

Where’s Their Money—What Makes Up PFBloggers’ Net Worth? (Part 2)


(Editor’s Note: Please let me know if the table gridlines are not showing up properly for you. They show up fine for me in Mozilla Firefox, but there may be an issue in other browsers.)

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