I read the book The Millionaire Next Door in year 2001. It is a marvelous book! Here is one of the gem:
One’s expected net worth (ENW) = [Age X (Realized Pretax Annual Household Income – inheritance)/10] – Inherited wealth
Example, Mr. Lee’s annual income is RM100,000, age 35. He inherited nothing from his ancestor.
Lee’s expected net worth = [35 X (RM100,000-0)/10] – 0 = RM350,000.
According to Dr. Thomas J. Stanley ( the author ), there are 3 categories of wealth accumulator:
1. PAW – Prodigious Accumulator of Wealth
2. AAW – Average Accumulator of Wealth
3. UAW – Under Accumulator of Wealth
If Mr. Lee’s net worth is RM800,000, which is more than 2 times of ENW, he is a PAW.
If Mr. Lee’s net worth is RM50,000 only, which is less than half of ENW, he is a UAW.
Let’s calculate ours, which category do you belong to?
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