There is only one way to become really, really rich
Do you want to become really rich? (Although there are many ways to feel "rich", this is about economic wealth).
The counterpart? You can lose everything at any time, due to elements beyond your control and that you won't see coming.
Would you be willing to make this investment? Of course not.
And yet millions of people do - they go to work every day for someone else. The analogy (and the numbers that go with it) is obviously not perfect. You get a salary until you're laid off. But when you work for someone else, your return on investment is limited - an increase is possible, but in most cases it won't exceed 3-4%.
The payoff is always unlimited because you can be fired at any time and see your income (as I did) disappear overnight... and your investment of time, effort, dedication and sacrifice.
An extremely limited potential return on investment. Unlimited quid pro quo.
It's a very bad investment.
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If you want to become very rich, you will never achieve this by working for someone else. The government agrees with me.
The statistical study branch of the U.S. Internal Revenue Service (IRS), where joy and good humor go to die, has published "400 Individual Tax Returns of the Highest Adjusted Gross Disposable Income per Year, 1992-2009" or, in non-government language, "400 People Making a Lot of Money".
In 2009, it took $77.4 million in adjusted gross disposable income to make the top 400. (And that was barely enough. The average income of the people on that list was $202.4 million).
It's the details of the sources of income of these 400 people that make this report interesting:
* Salary: 8.6%.
* Interest: 6.6%.
* Dividends: 13%.
* Partnerships and companies: 19.9%.
* Capital gains: 45.8%.
Some obvious remarks:
* You won't get really rich by working for a salary.
* You won't get really rich by investing only in the shares of big companies.
* Owning a company could not only allow you to build a solid base of wealth but also one day...
* Generate huge financial returns - and make you very rich.
Don't trust the IRS? That's fine. Take a look at the ten names at the top of Forbes' list of billionaires: Gates, Buffet, Ellison, Koch, Walton, Adelson. All entrepreneurs. (I looked over 200 to find an employee, got bored and gave up).
It is clear that financial wealth is the result of investing in yourself and in others, taking risks and a hundred small actions very well executed... and then one or two incredible big moves carried out.
What if you don't make those two big moves? There's another way to be extremely rich.
Rich in life
I know people who work for someone and are perfectly satisfied and fulfilled - but this is more the exception than the rule (at least, from what I have seen).
On the other hand, I've talked to hundreds of entrepreneurs and they all share this trait: when we talk about the economic dimension of entrepreneurship - exit strategies, revenues, IPO, withdrawing one's investment - they are interested but not really passionate.
But when we talk about the entrepreneurial life and the feeling they have, none of them fail to look cheerful. They talk about the challenges, the responsibilities, the sense of duty, the sense of purpose, the fulfillment and excitement of working in a team and the incredible sense of control they feel they have over their destiny... Every time, it's invariable.
People with a limitless reservoir of dreams and motivation and negligible income look cheerful.
Successful entrepreneurs like Joel Gascoigne, who helped take Buffer from a personal project to a real business with a good team and a large turnover, look cheerful.
Incredibly successful entrepreneurs like Scott Dorse, who helped take ExactTarget from a garage to an IPO and on to a buyout by Salesforce.com, look cheerful.
All entrepreneurs look cheerful when we talk about the life of an entrepreneur because that's what makes them feel alive: free to make their own schedules, to make their own decisions, to make their own mistakes... and to have no limits, financially but also (even more importantly) personally.
From this point of view, regardless of the financial counterpart, they feel rich. And they are - beyond their income or wealth.
Very, very rich
The only way to be truly economically rich and personally rich - in other words, truly wealthy - is to start your own business. Even if it's only a sideline. Even if it's just a hobby that's improved.
There is no reason not to do it. You don't have to quit your job immediately and you probably shouldn't. (One of the best ways to minimize your share of risk is to keep your full-time job while you build the foundation for success). The basics of starting a business are simple; it only takes a few hours.
Think about it: for less freedom, less control and less fulfillment, you'll be working for someone every day and your success will always be limited and the rewards will always be huge. The rewards are also unlimited for entrepreneurs - but on the other hand, they can look forward to the possibility of unlimited financial and personal success.
Bet on yourself. Try to become very, very rich.
Yes, you may only become very rich.
Either one would be great - and you'll have achieved a success that you've defined. So go for the entrepreneurial adventure, even if it's in a very small and safe way. Every step will bring you closer to the point where you will be very rich - and maybe even very, very rich - and will allow you to become part of a group of people who live their own way, with their own rules.
Who are these people? Entrepreneurs. Become one.
It's the best investment you can make - because it means you're investing in yourself.