Until the past year or so, wealth in America has largely been equated with Wall Street -- and with good reason. Rising stock prices created bulging IRAs, money market accounts ballooned in size during the past decade, and newly-minted billionaires decorated both the business and style pages of local newspapers.

But now comes word, despite all the hoopla and analysts' reports to the contrary, that the place to find wealth is where you live.

A study by the Consumer Federation of America and Providian Financial Corporation shows that "by far the greatest source of wealth for all affluent households is the value of their homes.

"According to the economic analysis (prepared by Professor Catherine Montalto of Ohio State University), 34 percent of the wealth of these families represents equity in their primary residence. By comparison, only 17 percent is in retirement accounts and only 11 percent is in stocks, bonds, and mutual funds (not part of retirement accounts)."

The study, which was done by the Opinion Research Corporation International (ORCI), found that "for households with net assets of $100,000 to $250,000, home equity is an especially important source of wealth. The value of their homes represents 43 percent of their wealth (compared to 17 percent in retirement accounts and 6 percent in stocks, bonds, and mutual funds)."

Interestingly, even those with modest incomes can accumulate significant assets. According to the study, 26 percent of families with incomes between $10,000 and $25,000, and 38 percent of those with incomes between $25,000 and $50,000, have at least $100,000 in net assets.

When asked to rank sources of wealth, only 40 percent identified home equity.

"Contrary to the belief of many, those with modest incomes can, over time, build wealth," noted Stephen Brobeck, CFA's Executive Director. "The easiest way to do so is to buy a home, faithfully make the mortgage payments, and be cautious about borrowing the accumulating home equity," he added.

Americans believe that 15 percent of all households have net assets of at least $1 million, according to the ORC study. But in reality, only 4 percent (4.6 million households) have this much wealth, based on an analysis of Fed data.

"Their perceptions may well be unduly influenced by the portrayal of American wealth in television ads and programming," said Brobeck.

Having rich parents doesn't hurt, according to the study. Among millionaires, forty-five percent had received an inheritance whose median level was $125,000.

So what do you do if you have not been named in the wills of the rich? Five strategies are suggested:

• Pay off high-cost debt.

• Buy a home and pay off the mortgage before you retire.

• Participate in a work-related retirement program.

• Outside of work, save monthly through an automatic transfer from checking to savings.

• Earn over 5 percent on many CDs or U.S. Savings Bonds.

For more articles by Peter G. Miller, please press here.

Published: July 18, 2001

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Peter G. Miller, also known as OurBroker®, is the author of six real estate books -- including The Common-Sense Mortgage -- and is the original creator and host of America Online's Real Estate Center. Peter's weekly columns appear in more than 100 newspapers nationwide, he is also published in a variety of other media outlets and he is a frequent speaker at national events and conventions. Peter welcomes your questions, comments, and news releases via e-mail at .