Wealth Creation: Part 4
If you spend an hour or so doing Internet research, you will learn that there are five widely agreed upon pathways to creating wealth.
I want to go on record stating that I am not necessarily in agreement with these because I have far more evidence that these don’t work for most people.
But, I will share them with you to get us all on the same page.
Path 1: The Saver-Investor
The Saver-Investor Path is the pathway I LEAST recommend, as Parts 1 thru 3 of this series loudly proclaimed.
However, if you are a stubborn type, or feel that I may be incorrect in my assertions that saving your way to wealth is a losing strategy for most of the human race, here is what you need to do to win at this strategy. There are two rules you must follow:
Save 20% or more of your income by living off of 80% or less of your income, and
consistently invest your savings.
If you choose this path, studies show that a person will accumulate on average, $3.3 million in wealth. This is more than the established minimum to be considered wealthy in America.
This path is not for everyone though. It requires enormous financial discipline and a long-term commitment. You will need to save 100% more per year than your fellow Americans clocking in at less than 10%.
You can also forget about being a Baller in your prime. However, the win is that you can be wealthy later in life with this strategy.
Path 2: Climb The Corporate Ladder
Another path to riches, is you can work for big companies and rise up the ladder into a senior executive management position. The source of your wealth will come from either stock compensation or profit distributions.
Please note that I did not mention income. As we covered in Part 1, saving 10% of your net income each year won’t make you wealthy, even with a big fancy Exec salary.
This path is also not for everyone. You must devote yourself to one or more big companies for a long time. And there are risks: The biggest risk is that you could lose your job. Watch out for those nasty recessions that lead to mass layoffs.
How often do recessions happen? Since 1857, a recession has occurred, on average, about every three-and-a-quarter years. Oh snap!
Path 3: Become An Expert At Your Craft
Experts are people who are the best at what they do, or possess knowledge that sets them apart from the competition. Think of someone who is world-class at their chosen craft.
Becoming an Expert at anything in life requires a big investment of time. It can also require sizable investments of money. Individuals seeking to become Experts often seek out the services of a coach or mentor. This support, in most cases, costs money. The market size, measured by revenue, of the Business Coaching industry is $15.2bn in 2023. That’s a B for billion!
I just spent five years as a coach to help people find the courage to become an expert at what makes them feel alive. I can tell you with 100% certainty that there is a lot more to becoming an expert than learning expertise from someone more expert than you. In my opinion, this is less than 10% of the Journey. The other 90% is mindset.
Path 4: The Dreamer Path
The Dreamer Path requires the pursuit of a dream. This is the path I chose for the first two decades of my career and what I tirelessly inspire people to embark upon.
This path might entail starting a business, or, many businesses. As an example, my wife and I currently own over twenty companies and counting.
Like the pursuits of more than a few members of this group, it could also involve becoming a successful actor (Franchesca R Davis) artist (Mike Richards), author (Robert Kain) or musician (Dave Muntner).
Or it might be the creation of a product or service that provides added value to a significant number of people.
One might assert that this path takes talent. Having traveled this path myself, I would counter this assertion. The #1 attribute that you will need is courage. And, be ready to sprinkle a whole lotta grit on top.
Path 5: Inheritance
Nothing to write about this one.
These five pathways to wealth are the most common.
But……..if you haven’t already self-identified with one of these strategies, I believe that there is a much better one that doesn’t preclude any of the above strategies playing a role in your lives.
What is it? Come back for Part 5! See you soon.
