How to be a millionaire – NBR Rich List

If rampant Auckland house prices are any guide, tens of thousands of New Zealanders can now call themselves millionaires, a term once used to describe only the wealthy.

Many will have achieved this millionaire status by doing nothing except pay off their mortgage.

Sadly, it also means some may have to borrow a million dollars to buy a home – a mortgage that could take a lifetime to repay.

Years ago, I read an American book, The Millionaire Next Door, which describes how ordinary folk – normally long-married couples – can accumulate considerable wealth over a lifetime of simple living and frugal habits.

Most of these millionaires are first generation – inherited wealth tends to be dispersed rather than accumulated.

High incomes are not necessarily the main factor, either, as often this is accompanied by lavish spending habits.

Indeed, a key feature of these ordinary millionaires is their rejection of flashy cars.

Another is that most are economically self-sufficient: from the start of their adult lives they have had to support themselves.

But most critical is the way they earn their living.

Self-employment gives you a four-times greater chance of becoming rich.

The type of business does not matter, so long as it is successful. Many of them are mundane, providing everyday goods and services.

You will find all of these characteristics in the profiles of the Rich List 2013. Businesses that are built up over a lifetime, or those continued successfully through several generations, are the foundations for fortunes.

A focus on business success, careful investment decisions and identifying entrepreneurial opportunities complete the picture.

The value of property, shares and bonds may rise and fall – but first you have to acquire it.

The past year has been a good one financially and this has benefited the majority as well as the select few.  

Twelve newcomers
This year’s Rich List is bigger and richer than ever before, with the total minimum net worth of members now at $47.8 billion, an increase of $3.5 billion on last year’s list.

Add the small group of New Zealand-based international billionaires and the figure climbs to $60.4 billion, an all-time record.

The surge in wealth is mainly due to the substantial gains of most investment classes. The New Zealand equity market returned 25.9% last year and has added another 10% in the first half of this year.

At the same time, the property market – residential and commercial – has been white hot. But new wealth has also been created through entrepreneurism, hard work and determination.

Those willing to back themselves and deploy capital into growth-orientated businesses are being richly rewarded.

There are 12 newcomers on the Rich List 2013.

The richest new entries are Victoria Ransom ($300 million), Mark Dunphy ($240 million), Hamish Edwards ($105 million), the Watson family ($100 million) and Gary Rooney ($90 million).

The Chow brothers close out the list at $50 million, with ventures in property and the sex industry.

Unsurprisingly, four of the newcomers on this year’s list – Hamish Edwards, Victoria Ransom, Malcolm McDonald and Derek Jones – made their fortune in the technology sector by developing software for an increasingly tech-savvy population. 

Other profitable sectors include dairy farming, oil and gas exploration, insurance and food retailing, while construction is making a comeback, particularly in Christchurch.

The local share market contributed to some big jumps in the wealth of existing Rich Listers – this year’s biggest success story was Xero, the online accounting software company co-founded by Edwards and Rod Drury.

Mr Drury, who still owns more than 18% of the company, saw his personal wealth skyrocket from $120 million to $400 million.

Former Rich Listers Craig Heatley, Earl and Lani Hagaman, Alan Pye and Humphry Rolleston return this year.

Graeme Hart again tops the list, testimony to his fearless global deal making in the packaging industry.

2013 Rich List Top 10

Graeme Hart                   $6.4 billion
Richard Chandler            $3.7 billion
Todd family                     $2.9 billion
Erceg family                    $1.6 billion
Christopher Chandler      $1.3 billion
Goodman family              $1 billion
Michael Friedlander        $950 million
Sir Owen Glenn               $900 million
Stephen Jennings           $900 million
Sir Douglas Myers           $880 million

The National Business Review Rich List is on sale from Friday, July 26, for $9.90 at all good retailers.

ngibson@nbr.co.nz