There's no real practical reason to ask "who wants to be a millionaire?"
because the only people who won't put their hand up are religious types who've
taken vows of poverty and those who are already multi-millionaires.
Unfortunately, there's a big gulf between those who want it and those who do the
things to make it happen.
Based on recent statistics on U.S. household
income, millionaire-dom is not something that's going to happen for most people,
even with the dubious benefits of inflation.
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A household earning the median level of income
(approximately 50K) and saving an impressive 20% of that would need almost 100
years to save $1 million (excluding taxes and investment gains). It's pretty
clear, then, that a would-be millionaire has to think outside the boundaries of
"median" experience.
Start a BusinessThere are certainly people who can
become millionaires by working for other people, but this is not an especially
good route to choose. The trouble with trying to become a millionaire by working
for other people is that there are always other people siphoning off the value
of whatever you produce. Say you're a hotshot salesman – although you're going
to get your cut, a lot of the value you create is going to get split among a
broader pool of workers, managers and the owner(s) of the business.
Start your own business, though, and you get to decide how to divide that
pie. Better still, your ownership stake can become more and more valuable over
time as that business becomes larger and larger. While a good employee may get
raises and promotions as his or her employer grows, they'll never see the same
benefits (including the tax-free appreciation in the value of the ownership
interest) as the owners.
Use Other People's MoneyOne of the remarkably consistent
features of stories about people who go from relatively no wealth to major
wealth is the role of other people's money in making it happen. Sometimes it's
start-up capital from a generous relative, or maybe it's a small business loan
or venture capital.
Borrowed money can be a major force multiplier. Behind virtually every real
estate empire is borrowed money and the use of leverage in investing (whether
through buying stocks on margin, buying options or buying futures) can rapidly
magnify a skillful investor's success. Of course, this cuts both ways – just as
borrowed money can create a large business (or portfolio) quickly, just one
mistake in an over-leveraged enterprise can bring the whole thing crashing down.
It comes down, then, to risk tolerance. Those who really want to build large
wealth (and do so quickly) through business or investment will have to do so in
part with other people's money.
Cultivate a Valued SkillWages respond to supply and
demand just like everything else, so it is very important to cultivate a skill
that is not only in demand, but scarce enough to be valuable. Architecture and
law, for instance, are both specialized skills, but not necessarily rare enough
to make their practitioners wealthy unless they are at the high end of their
profession.
Sports is an obvious example, but most people know in their teens whether
they have the rare physical gifts (and perhaps the even rarer mental discipline
and dedication) to open the doors to a professional sports career, and it's not
really a door that can be opened in college or later. Medicine and engineering,
though, are both open to college-aged people who have the requisite abilities
and the willingness to put in the effort. The services of these professionals is
not only almost always in demand, but the supply is small enough that
professionals here can fairly expect to become millionaires on the basis of
their labors.
This is also true for unconventional skills as well. Pursuing a career as a
writer, actor or professional gambler is a virtual guarantee of poverty for most
people. For those who actually have the skills necessary to succeed, though, it
can be their best chance of building real wealth.
Out-Think or Out-HustleLazy and self-made millionaire
just don't go together. Hearkening back to that supply-demand equation, anything
that's relatively easy, convenient and accessible is going to have ample supply
and relatively low payouts. Since most people don't actually want to work that
hard, though, there are real wealth-creation opportunities out there for those
willing to think and/or work just a little harder than average.
One option for building exceptional wealth is to out-think the majority of
people out there. While endeavors like writing, investing and inventing all
involve a tremendous amount of effort and dedication, there is at least some
aspect of out-thinking to them all. Steve Jobs of
Apple , Herb
Kelleher of
Southwest a nd Alfred Mann of
MannKind all clearly worked hard to achieve success, but a lot
of that success was predicated on seeing things that others didn't see and
figuring out how to do them even better.
Out-hustling is an undervalued aspect of wealth creation. Success in business
is often about the hustle – the willingness to make one more call or work an
extra hour later. The field of "hustle" is wide, rich and fertile. You can make
good money visiting estate sales and reselling undervalued items, just as you
can make good money from a variety of multi-level marketing programs. The
question is whether you want to spend the hours it takes to drive the process
forward.
Rental real estate is a good example. It is actually not all that difficult
to find rental properties, buy them and rent them out. Do this well and it's
fairly easy to earn an annual return of 8-15%. The problem is that there are a
myriad of small annoyances that go with it – hassles in haggling over the
purchase price, hassles in getting mortgages, hassles in getting tenants,
hassles in dealing with tenants and so on. Some people just don't want to be
bothered with this, but those who don't mind the annoyances can reap the
rewards.
The Bottom LineHaving $1 million or more in net worth is
still uncommon enough to be special and significant, and it doesn't often come
as a byproduct of luck or chance. Hard work is a virtual requisite, but so too
is a willingness to take on some risk (such as starting a business or using
leverage) or cultivate a rare gift (like writing or inventing). Although simple
living and sound investing will help anyone build more wealth, a special level
of success requires a special person who is willing to do more and risk more
than most people.
