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What Does it Take for Near Millionaires to Get There?

By Hal M. Bundrick

NEW YORK (MainStreet) You're this close to being a millionaire. Just can't seem to get over the hump into seven-figure heaven? Here's how to fix that and get that first Big One out of the way.

First, "near millionaires" will be defined for our purposes of discussion as having about $800,000 in total assets, with an average annual household income of $150,000. Fidelity did a study on this pool of prosperous investors and found that nearly half are women (49%) and Gen X/Yers (49%). That's As compared to most of today's millionaires, who are predominantly rich old guys, according to Fidelity. So the near millionaire club is inclusive. And growing. These investors are expected to amass $22 trillion and $41 trillion in assets by 2023, respectively.

What's holding them back from reaching the million dollar mark? Well, according to the study, 70% say that they are not very knowledgeable about investing. Think how well they would have done if they had just picked up an investing book or two.

And they are playing it too safe. The research says that while these seven-figure wannabes are on top of their financial basics, such as debt and household expenses, they are "not comfortable taking on risk to maximize returns."

More than three-quarters of those surveyed (77%) said they already have, or are currently managing, household expenses more closely, and 85% felt they've got personal debt under control. Saving for retirement is their primary goal, while increasing wealth was the runner up. More than one-quarter (27%) were looking to improve their returns on investments, though nearly half (45%) focus their investment strategies on reducing risk, minimizing loss and avoiding market volatility. The study found that cash, CDs and money markets make up the second largest asset category in their portfolios.

Financial advisors may be disappointed to learn of one overriding attitude these near millionaires share: 77% don't have a financial plan -- and 38% don't want one.

More bad news for money managers: with a large majority (70%) admitting a lack of investing knowledge, only about half (51%) are relying on financial advisors for help. Many believe advisors aren't interested in investors with assets of less than a $1 million, but most (53%) say it's simply a matter of avoiding fees.

However, they aren't without resources. Being tech-savvy, nearly as many of these investors use technology as much as they do an advisor for financial education.

--Written by Hal M. Bundrick for MainStreet

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