Money
Visualizing U.S. Millionaires by State of Residence
Visualizing U.S. Millionaires by State of Residence
There are literally millions of millionaires in the United States.
In fact, there are 7.1 million households in the country that have investable assets of $1 million or more.
Impressively, this gives the U.S. a higher total population of millionaires than any other country in the world, even though China’s rapidly rising wealth is also quite notable.
Millionaires by State
Today’s visualization comes to us from HowMuch.net, and it breaks down U.S. millionaires by state.
Here are the states with the highest millionaire populations, in absolute terms:
Rank | State | Millionaire households | % of all households |
---|---|---|---|
#1 | California | 885,225 | 6.61% |
#2 | Texas | 566,578 | 5.66% |
#3 | New York | 465,479 | 6.15% |
#4 | Florida | 427,824 | 5.23% |
#5 | Illinois | 300,142 | 6.14% |
#6 | Pennsylvania | 294,002 | 5.77% |
#7 | New Jersey | 258,988 | 7.86% |
#8 | Ohio | 243,118 | 5.19% |
#9 | Virginia | 226,167 | 6.98% |
#10 | Michigan | 210,957 | 5.35% |
Not surprisingly, states like California, Texas, New York, and Florida dominate this list. They all have high millionaire populations, but they are also the four most populous states in general.
Millionaire Concentration
When looking at millionaires per capita, aforementioned states like New York, Texas, and Florida all fall off the Top 10 list altogether.
The state of California, however, remains clinging on to the #10 spot:
Rank | State | Millionaire households | % of all households |
---|---|---|---|
#1 | Maryland | 178,003 | 7.87% |
#2 | New Jersey | 258,988 | 7.86% |
#3 | Connecticut | 106,892 | 7.75% |
#4 | Hawaii | 36,903 | 7.57% |
#5 | Alaska | 20,444 | 7.50% |
#6 | Massachusetts | 198,750 | 7.41% |
#7 | New Hampshire | 39,209 | 7.36% |
#8 | Virginia | 226,167 | 6.98% |
#9 | Delaware | 24,212 | 6.62% |
#10 | California | 885,225 | 6.61% |
As you can see, the states surrounding hubs like New York City and D.C. shoot up the rankings when looking at the data this way.
New Jersey and Connecticut are in two of the top three spots – and of course New York City is home to well over 300,000 millionaires itself.
Meanwhile, Maryland walks away with the title of most millionaires per capita. It may be surprising, but this is the seventh year in a row that Maryland has ranked number one in the country for this metric.
Money
How Small Investments Make a Big Impact Over Time
Compound interest is a powerful force in building wealth. Here’s how it impacts even the most modest portfolio over the long-term.
How Small Investments Make a Big Impact Over Time
This was originally posted on our Voronoi app. Download the app for free on iOS or Android and discover incredible data-driven charts from a variety of trusted sources.
Time is an investor’s biggest ally, even if they start with just a modest portfolio.
The reason behind this is compounding interest, of course, thanks to its ability to magnify returns as interest earns interest on itself. With a fortune of $159 billion, Warren Buffett largely credits compound interest as a vital ingredient to his success—describing it like a snowball collecting snow as it rolls down a very long hill.
This graphic shows how compound interest can dramatically impact the value of an investor’s portfolio over longer periods of time, based on data from Investor.gov.
Why Compound Interest is a Powerful Force
Below, we show how investing $100 each month, with a 10% annual return starting at the age of 25 can generate outsized returns by simply staying the course:
Age | Total Contributions | Interest | Portfolio Value |
---|---|---|---|
25 | $1,300 | $10 | $1,310 |
30 | $7,300 | $2,136 | $9,436 |
35 | $13,300 | $9,223 | $22,523 |
40 | $19,300 | $24,299 | $43,599 |
45 | $25,300 | $52,243 | $77,543 |
50 | $31,300 | $100,910 | $132,210 |
55 | $37,300 | $182,952 | $220,252 |
60 | $43,300 | $318,743 | $362,043 |
65 | $49,300 | $541,101 | $590,401 |
70 | $55,300 | $902,872 | $958,172 |
75 | $61,300 | $1,489,172 | $1,550,472 |
Portfolio value is at end of each time period. All time periods are five years except for the first year (Age 25) which includes a $100 initial contribution. Interest is computed annually.
As we can see, the portfolio grows at a relatively slow pace over the first five years.
But as the portfolio continues to grow, the interest earned begins to exceed the contributions in under 15 years. That’s because interest is earned not only on the total contributions but on the accumulated interest itself. So by the age of 40, the total contributions are valued at $19,300 while the interest earned soars to $24,299.
Not only that, the interest earned soars to double the value of the investor’s contributions over the next five years—reaching $52,243 compared to the $25,300 in principal.
By the time the investor is 75, the power of compound interest becomes even more eye-opening. While the investor’s lifetime contributions totaled $61,300, the interest earned ballooned to 25 times that value, reaching $1,489,172.
In this way, it shows that investing consistently over time can benefit investors who stick it through stock market ups and downs.
The Two Key Ingredients to Growing Money
Generally speaking, building wealth involves two key pillars: time and rate of return.
Below, we show how these key factors can impact portfolios based on varying time horizons using a hypothetical example. Importantly, just a small difference in returns can make a huge impact on a portfolio’s end value:
Annual Return | Portfolio Value 25 Year Investment Horizon | Portfolio Value 75 Year Investment Horizon |
---|---|---|
5% | $57,611 | $911,868 |
8% | $88,412 | $4,835,188 |
12% | $161,701 | $49,611,684 |
With this in mind, it’s important to take into account investment fees which can erode the value of your investments.
Even the difference of 1% in investment fees adds up over time, especially over the long run. Say an investor paid 1% in fees, and had an after-fee return of 9%. If they had a $100 starting investment, contributed monthly over a 25-year time span, their portfolio would be worth over $102,000 at the end of the period.
By comparison, a 10% return would have made over $119,000. In other words, they lost roughly $17,000 on their investment because of fees.
Another important factor to keep in mind is inflation. In order to preserve the value of your portfolio, its important to choose investments that beat inflation, which has historically averaged around 3.3%.
For perspective, since 1974 the S&P 500 has returned 12.5% on average annually (including reinvested dividends), 10-Year U.S. Treasury bonds have returned 6.6%, while real estate has averaged 5.6%. As we can see, each of these have outperformed inflation over longer horizons, with varying degrees of risk and return.
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