Who wants to be a millionaire?

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HOW MUCH money are you worth? And how much is that compared with what you ought to be worth at your age?

I have found the answer in a wonderful American formula that's explained in a book called The Millionaire Next Door. It's all about the rich (and how they got rich).

The formula is simple: take one-tenth of your age and multiply it by your household income. That's how much wealth you ought to have. Wealth is your assets minus your liabilities. Before you get depressed, your assets include the equity you own in your home, your pension fund, any savings and investments you have, and valuables.

This test is useful because it tells you where you stand in relation to your own circumstances - not against the general population. It's easy to look prudent in general terms as Treasury figures suggest only one in four adults in this country has more than pounds 200 in savings.

The formula is not aimed at people who want to be millionaires. It's about making enough provision for yourself in retirement. (If you do want to be a big player, you should be looking to have double the wealth figure generated by this formula).

Virtually everyone in the UK will fail the wealth test, even if they are saving and investing some spare cash. If your assets are less than half the projected wealth figure, the book labels you as an under-accumulator of wealth who will have difficulty making ends meet during your retirement.

It's useful to look at where you stand, but don't get hung up on it. Americans are much more accustomed than we are to making individual plans for savings and retirement. (And they pay less tax than we do.)

The answer to the question of how much you need to save and invest in order to build up a decent pot all depends on what sort of lifestyle you are looking for in retirement (as well as on how much you want to spend enjoying yourself before then).

Maybe now isn't the best moment to mention the stock market, but if you have an optimistic nature and some spare cash, then shares are cheap and probably haven't hit the bargain basement yet. If you can spare pounds 20 upwards a month then you should consider a punt on shares.

If you are feeling especially adventurous, have a look at Asian funds (see the feature on this page for some expert recommendations). Investment trusts are also worth considering as many of them are trading at double- figure discounts to the assets held in the fund. What's more, there are no rip-off initial charges on investment trusts (because they don't pay commission to financial advisers).

If you are interested in finding out more, the trade body the AITC (0171- 431 5222) has a good factsheet on international general investment trusts. Who knows, this could be the star investment that one day takes you all the way up to meet your projected wealth figure.

If you haven't got any spare cash, take a frugal tip from the millionaires in the book. Author Thomas Stanley estimates that 85 per cent of millionaires still cut out and use money-off shopping coupons.

'The Millionaire Next Door', by Thomas Stanley & William Danko, is published by Pocket Books, $11.20 plus shipping. Available from US-based internet bookstores.