This article was last updated on May 20
We have all thought about being wealthy and rich, and what we would do if we had enough money to fund all our desires and take care of loved ones. However, how can you get rich? In reality there are only a few ways to do so and here I look at the main paths on how anyone ever gets rich. They are in order, from the quickest path to becoming rich/wealthy to the slowest and most likely path.
Luck: As the saying goes, “I’d rather be lucky than good.” Think winning the lottery; winning a slots jackpot in Vegas; big inheritance; being born into a family fortune; winning a big legal settlement. The flip side is being in the right place at the right time—by choice perhaps, but with lots of luck. Think an intelligent but lucky stock pick (Apple when it was $5); an intelligent but lucky job choice (company goes IPO).
Extraordinary Talent: Some have the god-given talent that they are able to profit from by ensuring it is not wasted. Think: Michael Jordan, Tiger Woods and other top professional athletes; film and song celebrities and authors than can write for the masses. Growing up, it is important to recognize all forms of talent because if you become among the best in your field of practice, there is a good chance that riches will follow (especially in America).
Visionary: Build on amazing vision, unique product/service or new idea that you commercialize. Think: Bill Gates and Microsoft or the founders of Google, Ikea and Wal-Mart. Many of the richest people in the world are those who built a company from ground up, yet had the business sense to profit from their invention. Unfortunately, very few people will come up a brilliant idea AND commercialize it successfully.
Small Business Empire (franchise): Start a profitable small business and eventually franchise it. This way you are able to make money as your franchise grows without having to take much of the business risk associated with putting up your own time and money.
The Full Time Investor: Put loads of money (perhaps borrowed) into risky and high-return (speculative) investments. Think: flipping real estate; buying on margin; hedge funds; investing in hot emerging market stocks. This path could make you rich beyond your wildest dreams, but more likely than not could result in you losing everything you own and then some.
Corporate Warrior: This is the realm of the CEO’s, MBA’s and investment bankers. The idea is to get an ivy league education, work 70 to 100 hours a week for a big corporate or hedge fund and then retire before you are completely burnt out. Those that follow this path, assuming they have the capability, will probably achieve financial freedom sooner than most, but the personal toll could be very heavy indeed.
Slow and Steady : Sound familiar? It should. Most of us are on this path which involves working for most of our adult lives, saving diligently, raising a family and then retiring after 65. This was a pretty well worn path for many, until the recent financial crisis where all the hard work from years of saving and investing were wiped away. This is also the approach espoused by many personal-finance publications and blogs, because it is probably the surest and more straight forward. Though if you do want to get rich, before you get old, consider the above paths first.
Which path are you on? If you are like most people you are on the corporate warrior or slow and steady path. The top ones are much faster ways to get rich, but available to only a select few. I’ll discuss the above paths in more detail during future posts, but early in life you should decide which path you want to pursue and follow it with all your heart.