The United States is home to more millionaires than any other country. According to one recent report, there are 5,220,000 millionaire households in the U.S. — almost five times the number in China and 10 times the number in the U.K.
So while it’s rare, it’s not impossible to break into the elusive 1%. But what do they know that the other 99% don’t?
There’s one key investing concept millionaires have mastered, according to Brent Fykes, a senior investment partner at GenSpring:
They know when to stop being greedy.
Most average investors “tend to want to dabble in the stock market and buy the latest hot stock like Facebook or Apple,” Fykes told Bankrate.com.
But wealthy investors “by nature are less risky because they’ve created a nest egg and don’t need it to grow at incredible rates,” he says. “They just want to stay rich. On the whole, the 99% is in the get rich mode.”
And that’s where we get tripped up — going after what’s inevitably too good to be true, not playing it safe, and overreacting to the market.
This passage from Investopedia drives the point home:
Perhaps the No. 1 killer of investment return is your emotions. The axiom that fear and greed rule the market is true. Do not let fear or greed overtake you. Focus on the bigger picture. Stock market returns may deviate wildly over a shorter time frame, but over the long term, historical returns for large cap stocks can average 10% to 11%. Realise that, over a long time horizon, your portfolio’s returns should not deviate much from those averages. In fact, you may benefit from the irrational decisions of other investors.
NOW WATCH: Money & Markets videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.