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Chris Hogan knows what it takes to become a millionaire.
The personal finance expert and host of “The Chris Hogan Show” recently sat down with CNBC Make it to talk about what he learned about building wealth while researching and writing his book, “Everyday Millionaires: How Ordinary People Built Extraordinary Wealth―and How You Can Too.”
For the book, published earlier this year, Hogan and the Dave Ramsey research team (Hogan works for Ramsey Solutions) interviewed over 10,000 millionaires, defined as those with a net worth of at least $1 million, in the U.S. about their spending and savings habits over the course of seven months.
They found the “number-one contributing factor to millionaires’ high net worth” is investing in a retirement plan, like a 401(k), but that myths surrounding wealth accumulation can keep people from attaining it.
Here are four myths he says aspiring millionaires can learn from.
One of the most common professions of the millionaires Hogan interviewed was school teacher. While this might seem surprising, given the relatively low earnings of teachers nationwide compared to similarly educated professions, they are able to invest in 403(b) accounts, which are similar to 401(k)s, to save for retirement.
Teachers, just like with anyone else with access to a employer-sponsored retirement plan, who invest consistently over time benefit from compounding interest.
“Getting out of debt, retaining more of your income and investing consistently,” will put you on the path to becoming a millionaire,” Hogan says.
You can ignore cryptocurrencies and exciting “new fads,” Hogan says. The secret to becoming a millionaire is actually quite boring: consistently invest in low-cost index funds in retirement accounts for many years.
That last part is key. While many people are looking to get rich quick, building real wealth takes time — decades, in fact. Hogan found that the average millionaire reached the $1 million mark for the first time at 49.
Having a college degree is important, there’s no denying that: 88% of the millionaires Hogan interviewed graduated with at least a bachelor’s degree. But an Ivy League education isn’t as important. Over 60% of the millionaires interviewed by Hogan graduated from a public college or university, and 8% attended community college.
“Remove the barrier,” he says. It’s not about where you go to finish your degree, it’s the fact that you got started, you had goals and you finished.”
Hogan says that building wealth has more to do with your actions than your DNA. Of the 10,000 millionaires he interviewed, 21% received some form of inheritance, while around 80% came from families at or below the middle-class income level.
“I found out that 79% of the millionaires we talked to didn’t inherit one dime,” he says.
Of course, having family wealth helps, especially as the middle class continues to lose ground financially to the upper class in the U.S. In fact, the Federal Reserve estimates that 26% of total wealth in the U.S. can be accounted for by inter-generational transfers.
But having the knowledge and ability to use the financial tools at your disposal, like tax-advantaged retirement accounts, can allow anyone to build wealth, assuming you have the funds to save.
The number-one tool these people used to build wealth, by far, is employer-sponsored retirement accounts, like a 401(k) or 403(b). If you don’t have access to one of those, you can use a traditional IRA or Roth IRA, which also offer tax advantages. In 2019, workers can put away $6,000 per year into an IRA if they are under 50, plus an extra $1,000 if they are 50 or older.
Disclosure: NBCUniversal and Comcast Ventures are investors in Acorns.