It’s almost impossible to look at someone with lots of money and not feel just a little bit of envy. These days it seems to be even easier to become stinking rich: In 2013, there were a whopping 199,235 people who were worth more than US$30 million, making them ‘UHNW’ or ultra-high net worth individuals.
The report on Wealth-X’s latest billionaire census, however, reveals that we mere mortals may have some misconceptions about that 0.003% of the world’s population who owns a combined US$27,770 billion.
Myth: They Inherited Their Wealth
While there certainly are plenty of rich people who have no concept of what hard work is, only 19% of the world’s UHNWs got their money simply by inheriting it. Among these chosen few is Athina Onassis, heiress to a healthy chunk of her shipping-tycoon grandfather’s fortune.
Fact: Most of the Richest People are Self-made
The vast majority of the richest people in the world are self-made. Some, like Paris Hilton, had a head start in life but others, including Oprah Winfrey, come from dirt-poor backgrounds.
Myth: Most Ultra-Rich People Are Investment Bankers
Brazilian banking mogul Joseph Safra is one of the richest billionaires to have made his money through banking.
Fact: The Super-Rich Make Their Money in Different Ways
Just 19% of UHNWs made their money primarily through finance, including investment banking, hedge funds, venture capital and private equity.
Myth: The Richest People Are Experts at Managing Money
When you have lots of money, you clearly know how to invest it wisely, right? Wrong. After all, many of the richest people in the world, including boxer Floyd Mayweather, made their fortune through high salaries rather than any kind of entrepreneurial spirit.
Fact: Many of the Richest People Rely on Financial Advisors
In order to invest wisely and make their money work for them, people like Mark Zuckerberg employ the services of top financial advisors.
Myth: Rich People Have High Credit Scores
Your credit score is based on your credit history. If you never use credit, you’ll automatically have a lower credit score, no matter what you earn. That is why Warren Buffett, one of the richest people in the world, has a surprisingly low credit score.
Fact: Financial Institutions Don’t Always Want to Lend to Rich People
Many rich people overspend and then can’t pay back their loans. Some, like Lindsay Lohan, end up with massive credit card debts. Others, including R. Kelly, Courtney Love, Toni Braxton and Nicholas Cage, have seen their homes foreclosed.
Myth: Rich People Never Go Bankrupt
Being declared bankrupt is the ultimate way of saying you’re broke. Many celebrities have filed for bankruptcy in the past, including Kim Basinger, Dionne Warwick, Janice Dickinson and Burt Reynolds.
Fact: Even Ultra-Rich Entrepreneurs Have Gone Bankrupt
It’s not only actors and singers who sometimes lose their fortunes. Some of the most famous entrepreneurs in history, including Walt Disney and Henry Ford, have gone bankrupt. Donald Trump, now ranked 122nd on the Forbes 400 list, filed for bankruptcy four times.
Myth: Rich People Have an Ivy League Education
A good education can help put you on track to wealth. Ivy League schools such as Harvard have quite a high number of alumni who are very wealthy indeed.
Fact: The Ivy League Isn’t the Be-all and End-all
Of all the UHNWs in the world, only 3.5% have an Ivy League education. In contrast, some of the richest people in history didn’t even make it to college or university. Andrew Carnegie, for example, dropped out of elementary school.
Myth: Technopreneurs Are All Young School or College Drop-outs
Think of technopreneurs and you probably imagine young geeks like Tumblr CEO David Karp, who dropped out of high school, or Facebook’s Mark Zuckerberg and Dustin Moskovitz (pictured) who dropped out of Harvard to work on their start-ups.
Fact: Many Technopreneurs Are Older and Highly Educated
The average age for UHNWs who made their fortune in the technology industry is 54. Some of these older technopreneurs, including Bill Gates and Larry Ellison, did drop out of university. Others, like Jeff Bezos, Jack Ma, Steve Ballmer and Charlie Ergen, have university degrees.
Myth: China’s Number of Rich Is Growing the Fastest
According to the Wealth-X report, China had 190 billionaires in 2013-14. The only country with more billionaires was the USA, with 571.
Fact: China’s UHNW Population has Declined
The fastest growing UHNW populations were actually in Nigeria, the UAE, Pakistan, Kenya and Sri Lanka.
Myth: Rich People Are Big Spenders
The classic image of the very rich is that of someone who spends their money on super-yachts, flashy cars, private jets and multiple properties all over the world.
Fact: Some of the Richest People Live Frugally
Warren Buffett famously still lives in the home he bought half a century ago, while Mark Zuckerberg’s Palo Alto home is also low-key. Carlos Slim (pictured), only behind Bill Gates and Warren Buffett in terms of net worth, bought his house 30 years ago and drives himself to work. Hobby Lobby CEO David Green flies coach.
Myth: The Rich are Selfish
Many rich people or the past, including Thomas Edison and Henry Ford, were notoriously selfish and unethical in their business practices. Even today, about two-thirds of UHNWs donate less than 1% of their wealth to charity.
Fact: The Richest People Are Often Philanthropists
The two richest billionaires, according to Forbes, are Bill Gates and Warren Buffett, who co-founded the Giving Pledge in which the ultra-wealthy give away part of their fortune to help others. Among the signatories are Mark Zuckerberg, Sir Richard Branson (pictured), Paul Allen, Dustin Moskovitz and David Green.