Chapter one Meet the Neighbors The New Rich List Back in the early 1990s, I was--for a short while--a reporter/ researcher for Forbes magazine. During my tenure there, I got a few plum assignments, including spending one weekend fact-checking the first interview Michael Milken had granted from prison and fact-checking another on the businessman who would eventually become New York's mayor, Michael Bloomberg. I suppose I did well enough because I was soon tapped to do a little legwork on Forbes's lists of billionaires and richest celebrities. The preeminent Forbes rich list, of course, is the Forbes 400: the list of the country's four hundred wealthiest Americans. It has been around since 1982, when just three families made up 13 percent of the list. There were eleven members of the Hunt family, fourteen Rockefellers, and twenty-eight du Ponts. In 2007, on the list's twenty-fifth anniversary, these dynastic numbers had dwindled to almost nothing. There was one Rockefeller (David Rockefeller, Sr.), one Hunt (Ray Hunt), and no du Ponts. Fifty people fell off the list completely. Forty-five were newcomers--nearly half of whom had made their money in hedge funds and private equity (like Pete Peterson of Blackstone and David Rubenstein of the Carlyle Group); the others were a mixed bag, including Frank and Lorenzo Fertitta of the Ultimate Fighting Championship, a pay-per-view fight fest. The point, notes Columbia University researcher Wojciech Kopczuk, is not just that wealth is less concentrated (the share of wealth in the hands of the top 1 percent of Americans has fallen by half over the last eighty years). The real point is that it has moved into a whole new set of hands. Over the past twenty-five years, as these families have lost their historical positions, a whole new set of people has gotten rich. Some are entrepreneurs that have made a splash. Others are high earners on Wall Street, in corporate America, at law firms or consulting companies. Still others bought the right stocks (or were handed the right stock options) at particularly opportune times. This is an incredibly optimistic sign--and it's not just coming from the pages of Forbes. According to the Harrison Group, a research firm in Connecticut, three-quarters of the wealthy families in this country--and nearly all of those who qualify as upper middle class--didn't start out wealthy. Eighty-three percent came from the middle class. They've accumulated wealth over fifteen years on average, which means that some of them got there in significantly less time than that. And here's a bonus: When you look at the wealth of the pentamillionaires (the folks with $5 million or more), only one-tenth of their money came from passive investments. They made the rest of it themselves. Survey after survey I pored over while researching this book shows that a shrinking percentage of today's wealth came through a bequest. Research from the Spectrem Group, based in Chicago, found that only 2 to 4 percent of today's millionaires became rich that most old-fashioned way. This means you no longer have to be born into wealth. Despite the hurdles presentd by the markets in 2008, the American dream is alive and thriving--and you have the ability to achieve it. Where Are Women in This Mix? The tide for women is turning a bit more slowly--but it is turning, nonetheless. Remember, there are two ways for people to become wealthy: They can inherit money or they can earn it. (Some people might argue that marriage is a third proven way to get wealthy. I don't put it on the list because it can also take your financial life in the opposite direction. Nine percent of our survey respondents blamed divorce for a negative turn in their fortunes; 8 percent blamed marriage itself.) Interestingly, the fact that the ranks of the wealthy are mor Excerpted from The Difference: How Anyone Can Prosper in Even the Toughest Times by Jean Chatzky All rights reserved by the original copyright owners. Excerpts are provided for display purposes only and may not be reproduced, reprinted or distributed without the written permission of the publisher.
