In the last post titled Millionaire Quiz we listed 15 questions about millionaires to assess your knowledge of how to become a millionaire.  If you have not yet taken the quiz, go back and try to answer the questions before looking at the answers below.  Once you’ve noted your answers, come back and compare to the answers provided.  You may be surprised by what you will learn.

Without further ado, here are the answers to the millionaire quiz:

1. True. Four of five millionaires are college graduates. Eighteen percent have Master’s degrees, eight percent law degrees, six percent medical degrees, and six percent Ph.D.s.

2. False. About 2/3 of millionaires work 45-55 hours a week.

3. True. Only 19 percent of millionaires received any income or wealth of any kind from a trust fund or an estate. Fewer than 10 percent of millionaires inherited 10 percent or more of their wealth.

4. False. Only 28.6 percent of millionaires have American Express Gold Cards while 43 percent have Sears credit cards. Only 6.2 percent of millionaires have American Express Platinum Cards.

5. True. Ford is preferred by 9.4 percent and Cadillac by 8.8 percent. Lincoln comes in third at 7.8 percent. Only 23 percent of millionaires drive a current-year (new) car.

6. False. A majority of millionaires are in ordinary industries and jobs. They are proficient in targeting marketing opportunities.

7. False. About three out of four millionaires are self-employed and consider themselves to be entrepreneurs. Most of the others are professionals, such as doctors, accountants, and lawyers.

8. False. Few people get rich the easy way. If you play the lottery, the chances of winning are about one in 12 million. The average person who plays the lottery every day would have to live about 33,000 years to win once. In contrast, you have a one in 1.9 million chance of being struck by lightning. A pregnant woman has one chance in 705,000 births to have quadruplets. How many sets of quadruplets do you know?

9. True. In recent years, the average college graduate earned 66 percent more than the average high school graduate did. People with professional degrees earned 150 percent more than high school graduates did.

10. True. Of course, a normal person would spend some of the difference, but it is a dramatic illustration of how valuable a high school diploma is. The difference in earnings between a high school graduate and a high school dropout is $8,000 at age 18. The illustration assumes the difference increases by 1.5 percent each year and that the difference is invested at 8 percent interest each year.

11. False. Recent studies show that 80 percent of day traders lose money.

12. False. Long term (starting in 1926 and including the Great Depression), the Standard & Poor’s 500 Stock Index has increased at about 11 percent compound annual rate of return, exceeding the return on any other investment. Of course, there is risk. The stock market has down years, and there is no guarantee of an 11 percent return in the future, especially in the short run. In contrast, the long-term return on risk-free U.S. government securities during the same period ranged from 5 to 6 percent. The actual return depended on the term of the bond. Another way of looking at this is that $1.00 invested in the S&P 500 on January 1, 1926, was worth $1,828 on December 31, 1997. One dollar invested in long-term government bonds during the same period was worth $39 on December 31, 1997. It probably paid to take the additional risk of buying stocks.

13. True. Because of the power of compound interest, small savings can make a difference. It pays to resist temptation and live below your means.

14. True. Because of the power on compound interest, the earlier you begin saving, the better. Regular saving will make you a millionaire, even if your salary is modest.

15. False. Most millionaires are married and stay married. By contrast, divorce is a gateway to poverty. Financially speaking, divorce is something you want to avoid, particularly after you have children. It is important to choose a marriage partner carefully.

To learn more about the source of these answers, please refer to the National Council for the Social Studies article callled  Improving Economic and Financial Education – A Program for Urban Schools, by Mark C. Schug, Robert L. Wynn II, and Tracy J. Posnanski.