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Not all high net worth individuals have the same approach to their money.
The "millionaires next door" - those with net worths between $1 million and $5 million - manage and spend their fortunes quite differently than the ultra-wealthy, whose net worths exceed $30 million.
Some of the differences are superficial, like a preference for subtle displays of wealth over flashy labels. Others, like their preferred investment vehicles, can have substantial impacts on their fortunes.
Keep reading to learn more about the differences between ultra-high net worth individuals and the millionaires next door. For the purposes of this article, Business Insider also examined the differences between millionaires' and billionaires' money habits. While the differences highlighted below speak to trends among the different levels of wealth, they are by no means exhaustive.
1. The ultra-wealthy work because they want to, not because they have to.
Millionaires and billionaires almost always answer the question "What do you enjoy more, making money or spending it?" differently, Business Insider's Hillary Hoffower previously reported.
The difference between "financially successful people (millionaires) and financially super successful people (billionaires) boils down to the fact that the latter get pleasure making money, but don't enjoy spending it," according to Rafael Badziag, an entrepreneur who spent five years conducting face-to-face interviews with 21 self-made entrepreneurs.
Billionaire businessmen Michal Solowow — the wealthiest person in Poland — and Lirio Parisotto — the wealthiest person in South America — both credited their savings habits to their financial success, Business Insider previously reported.
2. When the ultra-wealthy do display their wealth, they prefer to do it subtly.
Facebook CEO Mark Zuckerberg isn't known for his fashion sense, but his uniform of grey t-shirts, blue jeans, and Nikes is more expensive than one might think. Zuckerberg special-orders his shirts from Italian luxury brand Brunello Cucinelli for between $300 and $400 each, Business Insider previously reported.
The ultra-wealthy increasingly favor displays of wealth that are discreet, Business Insider's Hillary Hoffower previously reported. They are increasingly investing in luxury travel, wellness and fitness experiences.
Millionaires, on the other hand, are more likely to spend their wealth on flashy purchases like designer clothes and bags, Business Insider previously reported.
3. If the ultra-wealthy retire at all, they do it later.
While speaking at on a panel in July, Brazilian financier Jorge Paulo Lemann said, "It's a horror that everybody in Switzerland retires at 60 and thinks it's all right," Business Insider previously reported. Then there's Warren Buffett, who, at age 88, still goes to work every day and said in an interview with the Financial Times that he has no plans to retire.
However, the prospect of retiring young is gaining popularity with self-made millionaires, Business Insider's Hillary Hoffower reported. One community of early retirees known for the acronym FIRE — "financial independence, retire early" — have even developed a unique way of congratulating each other on their retirement. "Go f--- yourself," they tell each other, because that's how outsiders tend to respond when FIRE members discuss their financial goals.
4. Millionaires next door are younger than the ultra-wealthy, on average.
The average age of an ultra-high net worth individual across the globe is 63.3, according to market research firm Wealth-X told Business Insider. That's nearly five years older than the average age for all high net worth individuals.
The average of all people with net worths above $1 million was 58.8 in 2018, according to Wealth-X's 2019 High Net Worth Handbook.
5. The ultra-wealthy favor riskier investments than millionaires.
Millionaires next door tend to choose less risky investments that perform better in volatile markets, Chirag Thakral, the Deputy Head of the Global Financial Services Market Intelligence Strategic Analysis Group of French consulting firm Capgemini, previously told Business Insider.
Billionaires, on the other hand, often include riskier investments like commercial real estate, hedge funds, and private equities in their portfolios.
6. Millionaires' fortunes are more stable than those of the ultra-wealthy.
Their equity-heavy portfolios make the net worths of the ultra-wealthy extremely susceptible to market volatility.
Approximately $15 billion was wiped off the net worths of Hong Kong's 10 richest people between late July and mid-August as protests upheaved the city's stock market, according to the Financial Times. Li Ka-Shing, Hong Kong's richest citizen, lost $3 billion alone. Li took out advertisements in local Hong Kong newspapers calling for an end to the protests on August 15, The South China Morning Post reported.
7. The ultra-wealthy are more likely to spread their portfolios across the globe.
Having assets in multiple markets doesn't necessarily give the ultra-wealthy an advantage over other investors, Wealth-X Director of Research & Data Analytics Maeen Shaban told Business Insider.
"The thing about that is that the individuals at this level wealth are very exposed to stock markets," Shaban said, "but these individuals are also kind of exploded at a global level. You have wealthy individuals from even markets that experienced a positive performance [in 2018], but they are strongly invested in other markets as you would expect at this level of wealth. So a 20% or 15% drop in the stock market may have a smaller impact on an average investor, but had probably proportionally much bigger impact on an individual at this level of wealth."
