Here’s How Many Multimillionaires Are Really Self-Made

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People often stretch the definition of the word “self-made.” The rich usually like to shift the focus to their hard work and business acumen, while minimizing the impact of things like inheritances and family connections. Sometimes it borders on ridiculous, like when Kylie Jenner was declared the youngest self-made billionaire.

Despite how many wealthy people might want to call themselves self-made, comparatively few really are. A 2022 Bank of America Private Bank study surveyed 1,052 multimillionaires, and it found that many of them got a helping hand along the way.

Most multimillionaires aren’t self-made

Bank of America Private Bank surveyed people with household investable assets of more than $3 million and over the age of 21. Here’s what it found when investigating how those multimillionaires built their wealth:

• 28% are legacy wealth. They had an affluent upbringing and an inheritance. On average, 20% of their assets came from inheritance.
• 46% got a head start. This includes people who had an affluent upbringing with no inheritance, and people with a middle-class upbringing plus some inheritance. Those in the latter group got an average of 12% of their assets from inheritance.
• 27% are self-made. They had a middle-class or poor upbringing and no inheritance.

One of the main observations of the study was that “wealth is often, but not always, connected to prior generations.” It also noted that most of the younger respondents between 21 and 42 are legacy wealth, not self-made.

This isn’t exactly shocking news. It’s logical that an inheritance and an affluent upbringing are both extremely helpful for building wealth, and it’s much harder to do it entirely on your own. But this study does pour some cold water on the myth of being self-made.

When you read all the stories out there about supposedly self-made millionaires, or when you see social media influencers talk about how much money they’ve made, take those claims with a grain of salt. Some of them may be truthful, but many exaggerate or don’t mention all the assistance they had along the way. Becoming a multimillionaire with minimal help is the exception, not the norm, especially for younger adults.

What to understand about building wealth

Even though only about a quarter of multimillionaires are self-made, don’t let that discourage you. Anyone can build wealth if they follow the right steps. However, it’s important to understand that this is normally a slow, steady process.

Outside of rare cases, most people don’t become rich overnight. It’s a process that takes good financial habits that you maintain over a period of decades. The data bears that out. Here are the age ranges of the multimillionaires in Bank of America Private Bank’s study:

• Generation Z (21-25): Less than 1%
• Millennials (26-42): 9%
• Generation X (43-55): 20%
• Baby boomers (56-75): 62%
• Silent Generation (over 75): 9%

Remember also that most of those Gen Z and millennial multimillionaires are legacy wealth.

How to build wealth

So, for those of us who aren’t part of that legacy wealth group, what are the best ways to build wealth? Here are the financial strategies and habits to follow:

• Make as much money as possible. Lots of personal finance advice says that how much you save is what’s most important. But the amount you can save depends on how much you earn, and the more money you make, the more you can potentially save. Most self-made wealthy people work hard to increase their income by going for raises or building businesses that generate money for them.
• Invest in the stock market. While it can be volatile on a year-to-year basis, over long periods of time, the stock market has an average return of about 10% per year. That makes investing in it a great way to build wealth. A simple, effective way to do this is to invest in index funds that track the entire stock market or the S&P 500, an index of 500 of the largest publicly traded companies on U.S. stock exchanges.
• Be consistent about how much you save and invest. Set aside the same amount of money every month for savings goals and investing through your brokerage account. One popular strategy is to set aside 10% of your income for savings and another 10% for investing.

The amount of money you end up with will depend on how much you save and invest, how long you have until retirement, and the investments you choose. It’s not guaranteed you’ll become a multimillionaire. But if you’re diligent about saving and investing, and you try to raise your income when possible, you’ll build a sizable nest egg for yourself.

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The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Bank of America is an advertising partner of The Ascent, a Motley Fool company. Lyle Daly has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bank of America. The Motley Fool has a disclosure policy.