10 secrets that millionaires keep

By SmartMoney

1. "You may think I'm rich, but I don't."

A million dollars may sound like a fortune to most people, and folks with that much cash can't complain. They're richer than 90% of U.S. households and earn $366,000 a year, on average, putting them in the top 1% of taxpayers.

But the club isn't so exclusive anymore. Now 10 million households have a net worth above $1 million, excluding home equity, almost double the number in 2002. Moreover, a recent survey by Fidelity found just 8% of millionaires think they're "very" or "extremely" wealthy, while 19% don't feel rich at all.

"They're worried about health care, retirement and how they'll sustain their lifestyle," says Gail Graham, a wealth-management executive at Fidelity.

Indeed, many millionaires still don't have enough for exclusive luxuries like membership at an elite golf club, which can top $300,000 a year. (You don't either? See "Luxuries for the rest of us.")

While $1 million was a tidy sum three decades ago, you'd need $3.6 million for the same purchasing power today. And half of all millionaires have a net worth of $2.5 million or less, according to research firm TNS. So what does it take to feel truly rich? The magic number is $23 million, according to Fidelity.

2. "I shop at Wal-Mart."

Millionaires may not buy the 99-cent paper towels, but they know what it is to be frugal. About 80% say they spend with a middle-class mind-set, according to a 2007 survey of high-net-worth individuals, published by American Express and the Harrison Group. That means buying luxury items on sale, hunting for bargains and even clipping coupons. (See "Modest millionaires on a budget.")

Don Crane, a small-business owner in Santa Rosa, Calif., certainly sees the value of everyday saving. "We can afford just about anything," he says, adding that his net worth is more than $1 million. But he and his wife both grew up on farms in the Midwest, where nothing was wasted. His wife clips coupons to this day.

In fact, most millionaires come from middle-class households, and roughly 70% have been wealthy for less than 15 years, according to the AmEx-Harrison survey. That said, there are plenty of millionaires who never check a price tag.

"I've always wanted to live above my means because it inspired me to work harder," says Robert Kiyosaki, the author of the 1997 best-seller "Rich Dad, Poor Dad." An entrepreneur worth millions, Kiyosaki says he doesn't even know what his house would sell for today.

3. "But I didn't get rich by skimping on lattes."

So how do you join the millionaires club? You could buy stocks or real estate, play the slots in Vegas or take the most common path: running your own business. That's how half of all millionaires made their money, according to the AmEx-Harrison survey. (See "6 steps to being your own boss.") About a third had a professional practice or worked in the corporate world, and only 3% inherited their wealth.

Regardless of how they build their nest eggs, virtually all millionaires "make judicious use of debt," says Russ Alan Prince, a co-author of "The Middle-Class Millionaire."

They'll take out loans to build their business, avoid high-interest credit card debt and leverage their home equity to finance purchases if their cash flow doesn't cut it. Nor is their wealth tied up in their homes. Home equity represents just 11% of millionaires' total assets, according to TNS.

"People who are serious about building wealth always want to have a mortgage," says Jim Bell, the president of Bell Investment Advisors. His home is probably worth $1.5 million, he adds, but he owes $900,000 on it. "I'm in no hurry to pay it off," he says. "It's one of the few tax deductions I get."

4. "I have a concierge for everything."

That hot restaurant may be booked for months, at least when Joe Nobody calls to make reservations. But many top eateries set aside tables for celebrities and A-list clientele, and that's where the personal concierge comes in. (See "The $36,000-a-year personal concierge.")

Working for retainers that range anywhere from $25 an hour to six figures a year, these modern-day butlers have the inside track on chic restaurants, spa reservations, even an early tee time at the golf club. And good concierges will scour the planet for whatever their clients want, whether it's holy water blessed personally by the Pope, rare Mexican tequila or artisanal sausages found only in northern Spain.

"For some people, the cost doesn't matter," says Yamileth Delgado, who runs Marquise Concierge and who once found those sausages for a client -- 40 pounds of chorizo that went for $1,000.

Concierge services now extend to medical attention as well. At the high end: For roughly $2,000 to $4,000 a month, clients can get 24-hour access to a primary-care physician who makes house calls and can facilitate admission to a hospital "without long waits in the emergency room," as one New York City service puts it.

5. "You don't get rich by being nice."

John D. Rockefeller threatened rivals with bankruptcy if they didn't sell out to his company, Standard Oil. Bill Gates was ruthless in building Microsoft (MSN Money's publisher) into the world's largest software company (remember Netscape?).

Indeed, many millionaires privately admit they're "bastards in business," Prince says. "They aren't nice guys." (See "Does money make you mean?")

Of course, the wealthy don't exactly look in the mirror and see Gordon Gekko either. Most millionaires share the values of their moderate-income parents, says Lewis Schiff, a private wealth consultant and Prince's co-author: "Spending time with family really matters to them."

Just 12% say that what they want most to be remembered for is their legacy in business, according to the AmEx-Harrison study. (See "What really matters in retirement.")

Millionaires are also seemingly undaunted by failure. Crane, for example, now runs a successful company that screens tenants for landlords. But his first business venture, a real-estate partnership, went bankrupt, costing him $20,000 -- more than his house was worth at the time. "It was the most depressing time in my life, but it was the best lesson I ever learned," he says.

Continued: Taxes

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