What is the secret to becoming wealthy? What does “becoming wealthy” even mean? It obviously means different things to different people but, to me, it’s just a polite way of saying “getting rich”. So what does “get rich” mean? Again, it’s up to the individual but to me, a general, back of the envelope measure would be to have assets, less debt, of between $1m to $5m. This includes property, shares, super and cash.
So what’s the secret to accumulating between $1m and $5m in net assets? There are a number of ways of getting there. This is my simple summary.
1. Gift or inheritance. Someone you know gives you lots of money. Hooray!
2. Win the lotto. Again, hooray!
3. Invent something valuable. Think Steve Jobs, Bill Gates, Mark Zuckerberg, etc
4. Have some special skill. Think Sports Star, Movie Star or Musician.
5. Start your own business. That could be anything but importantly it needs to be something that someone else finds monetarily valuable. The other critical thing about starting a business is you need capital (cash) to start. Without capital it is very, very difficult to start your own business.
6. The final way is, in my experience, by far the most common. It’s the way most “wealthy” people do it. It’s not glamorous, it’s not sexy and you won’t have much to post on social media. And, did I mention, it takes a long time, think 20 years. The good news is it’s available to almost everyone. You don’t need any special skills. You don’t need any capital to start. You don’t need much luck, although a little bit always helps. You will need to be prepared to work hard for a long period of time. And you will need to have ambition. Almost everyone you know who’s “wealthy” has done it this way. And, by the way, you already know how to do it, because this is what your parents have told you, endlessly.
1. Work hard at school. Get good marks.
2. Go to uni. Preferably choose a course which offers high paying career opportunities. Think banking, accounting, law, medicine, IT, etc. Work hard. Finish your degree.
3. Get an entry level job in said industry.
4. Work hard. Get promoted. Stick at it.
5. Buy a property to live in.
6. Contribute to super.
7. Buy an investment property.
8. Invest in shares and managed funds.
9. Keep contributing to super.
10. Save your money.
11. Do not lease your car. Buy it.
12. Catch public transport to work.
13. Eat at home.