We all recognize “Who Wants to be a Millionaire?” as not just a popular game show, but also a ridiculous question.
The obvious answer to the show’s title is, yes, everyone wants to be a millionaire, but few contestants or audience members can answer the requisite questions to achieve fast, televised wealth.
A recent study by Fidelity Investments focused on what it takes to become a millionaire without the help of a game show, and found that many people have the ability to accrue tremendous wealth, but that their windows for such financial success are closing, often before they ever really take steps toward becoming rich.
Fidelity’s seventh “Millionaire Outlook” study looked at the potential investors have for moving up toward millionaire status. The key group in the study was the “emerging affluent,” which would be the people who seem to have both the resources and the interest/ability to live out their seven-figure dream.
The key finding in the Fidelity study is that the millionaire-wannabes have six wealth-building factors on their side, factors that Fidelity showed were shared by people who had already reached and surpassed the million-dollar dream level.
Those six wealth-building factors are: time horizon, career, income, self-made status, long-term focus and investing style.
My initial reaction when I saw those factors was that plenty of people with big-dollar dreams are at a disadvantage in making it happen, because they picked or settled on a career that doesn’t pay exceptionally, or they put off saving and investing for themselves in order to fund the kids’ college educations. (Another recent study, by T. Rowe Price, showed that many parents short-change their savings plans to save for tuition bills.)
But when I analyzed the factors, and recognized that many people forfeit their ability to reach the seven-figure club early, and readily, it’s clear that their best shot at millionaire status actually is something like a game show or the lottery.
Here’s how and why that happens:
Time horizon: Emerging affluent investors, according to Fidelity, average 40 years old and have 27 years left before reaching the normal retirement age. If you’re older than that and haven’t reached the level of the affluent, then the clock is working against you. (Fidelity defined “mass affluent” investors as ages 21 to 54 with investible assets of $250,000 to $1 million.)
Career: Given their age, the emerging affluent still have time to climb the corporate ladder, and if they are in the “right” professions — (read, mostly, as “information technology, finance and accounting”), that climb can make them rich. It’s not that people outside those businesses are stuck, but the idea here is pretty simple: If the people at the top ends of your business are not millionaires, it’s a sign that it will be tough for you to do better.
Income: The emerging affluent have a household income of $125,000, roughly 2.5 times the median U.S. household. The millionaires, according to Fidelity, have an income of $200,000 annually for those who are still employed. Obviously, someone whose salary is closer to the national median has a lot more work to do if reaching seven figures and crossing into millionaire territory is their goal.
Self-made status: The class of emerging affluent has, according to Fidelity, worked to make themselves richer, rather than relying on inheritances and the generosity of their families. Roughly 80 percent of the emerging affluent have earned or increased their assets on their own.
Long-term focus: Seemingly every study ever done of wealthy Americans says they are focused on the long-term and making their money grow over time, rather than worrying mostly about what is happening to their money right now. Short-term moves mostly are made because they feel good in the moment, but long-term focus is essential to achieve savings growth over a lifetime.
Investing style: The emerging affluent invest aggressively, which means taking on riskier investments with the promise of bigger long-term payoffs, and they tend to be hands-on investors, making their own decisions. If it “takes money to make money,” for most people that means putting at least some of their money into strategies focused on payoffs sufficient enough to reach their long-term goals.
If one or two of those factors aren’t in place, however, what’s someone to do?
For starters, stop thinking of a million dollars as the be-all, end-all goal. While studies show that plenty of people associate that seven-figure mark as where they feel “set for life,” the truth is that individuals have unique needs.
The median household doesn’t have the resources to reach a million dollars, but that doesn’t doom them to a lifetime of unhappiness.
“What you get paid is somewhat out of your control — you can make some choices about how to negotiate better for a salary — but the other five factors are very much in your control,” says John Sweeney, executive vice president, Fidelity Investments. “The folks who are on track to be millionaires do have that drive — that self-starter attitude — they are focused on the long-term and they recognize that if they make a trade-off today it’s going to have a significant impact in their future. And they are willing to invest and engage in their investments, which usually portends someone who is…not going to panic when the market gets volatile.”
Meanwhile, no matter your ability to reach affluent status, look at your ability to save and invest more aggressively, to expand your time horizon and stay focused on long-term results, without worrying about hitting seven figures.
“A million dollars is less important than the lifestyle it is going to sustain for you. If you are in a career that you love — you’re living a lifestyle where you can comfortably cover your expenses and put something away for retirement — that’s Nirvana,” Sweeney says. So the benchmark of a million dollars “is something we have centered on because it’s a nice round number and has seven digits in it but, by and large, if you’re covering your expenses and feel confident in the amount of income you can generate, that’s happiness.”
A million dollars or not, that’s priceless.
This article originally appeared on MarketWatch.com and is reprinted by permission from Marketwatch.com, ©2015 Dow Jones & Co. Inc. All rights reserved.