The Short Answer is… Yes!
The REAL answer is…it’s more complicated than that!
Truthfully, investing alone is not likely to make you rich. A good investor who puts money into Roth IRA, real estate, some quality stocks, and a few good index or mutual funds will see their nest egg grow in the later half of their life. They will be able to retire and live comfortably.
That’s not what most of us mean when we say “rich” though. We want to know what’s behind the curtain. We want to know what the top 10% are doing. If 88% of millionaires are self-made then there has got to be a way.
Well, there is a way. Investing is a part of the formula it, but not the entire formula.
If you want to be rich there’s two methods:
Leveraging Skills & Business.
Business First:
Let’s Start with Business. There’s one major lesson I learned while getting my economics degree that was initially supposed to be an accounting degree, but I hated accounting so I turned it into my minor. That’s a run-on sentence, but I don’t care.
Business owners have way more tax advantages. The tax code punishes earned income , and rewards income generated through businesses and assets. There are also many different tax breaks for deductible expenses for business owners.
The more ambiguous reason entrepreneurship creates wealth is the mindset that it puts you in. Entrepreneurs learn early and often about problem solving. Every business is in the problem solving business. You seek problems to solve in order form a business idea. You run into problems getting your business off the ground. Everyday you operate your business problems will rise.
The benefit to this endless supply of problems? You become good at problem solving; and in a capitalist economy, problem solvers get paid the most!
Leveraging Skills towards Wealth:
Who are the best problem solvers? People with elite skills within in-demand areas.
This can look like many different things. People with:
- High-level math, analytical skills with specialized knowledge. Think engineers, financial analysts & advisors, medical professionals, etc.
- Gifted Entertainers with 10,000 hours plus of training. Think professional athletes, musicians, etc.
It doesn’t have to be limited to these groups though.
NYU Professor Scott Galloway shared a great piece of advice, “Aspire to be in the top 10% (ideally 1%) of a field with a 90% employment rate.”
When you look at it from the perspective of Professor Galloway, we get a more open-minded idea of what career fields can demand a high level of income.
Now that we have our ingredients, we can put together our “Get Rich” formula:
Top 10% skills in a field that demands a high level income
+
A business to scale our income up, while taking advantage of the Tax Code
+
Value Investing (Not Trading) in assets that will appreciate and earn income passively
=
Wealth!
