Because I joined the equities business a year before the 2000 dotcom bust, I’ve always been a little wary of stocks as a source of long-term wealth. It was crazy to witness so many people go from having millions to zero in a matter of months. Where does all the wealth go?

The irony about my suspicion is that I firmly believe the only way for someone to reach “next level wealth” is if you build enough equity in your own business. Unless you make Managing Director at a major financial firm, Partner at a big law firm, get hired as a Senior VP at a large tech company, or work as a janitor for San Francisco’s public transportation system, it’s very hard to get really rich through a day job.

Therefore, the best way to reach next level wealth is to not only build a business, but to make your business LAST for as long as possible. 

One of the luckiest things I’ve ever done was not sell any major assets during the downturn between 2009 – 2012. It’s understandable to panic sell when things are crashing and burning. It’s also easy to sell in a down market when you have a major life event e.g. losing your job, having a baby, etc. But fortunately, many of my investments were either illiquid (real estate) or were locked up with long vesting periods (private funds). Even if I wanted to sell, I couldn’t!

For example, in 2012 I put my home on the market for 28 days to see if I could get any motivated buyers after Facebook went public. I just left my day job and was thinking it might be a good idea to get more liquid in case my early retirement plan didn’t pan out. Fortunately, no buyers were to be found as IPO money takes a year to work its way into the economy. Now the home has appreciated 60% since 2012 based on a written offer I received recently on a relatively large figure.

But seeing a 60% rise in an already expensive home was not my biggest lucky break. Hanging onto my business was. Every year since 2011 someone has inquired about buying FinancialSamurai.com. There was a period of time during the bear market when several personal finance sites sold for between $1 – $4 million. Although $1 – $4 million is a lot of money in absolute terms, based on the cash flow, the acquisition prices were all absolute STEALS.

For example, one guy with an operating profit of about $700,000 a year sold his site for only $2,500,000. You’re not even a real millionaire at $2,500,000 thanks to inflation. If you have a partner, then you’re definitely not a millionaire because you’ve got to divide the after-tax proceeds by two.

To generate $700,000 a year at a 8% rate of return requires $8,750,000 in capital. At a more conservative 4% rate of return, you’d need a whopping $17,500,000 in capital to generate $700,000 a year!

It’s hard to say someone making $2,500,000 got robbed, but robbed he was because if he had held on for just 3.6 more years, not only would he have made a total of $2,500,000 in operating profits, but he would still own a site making $700,000 a year or more for the foreseeable future.

It took me 16 years to build a portfolio that generates over $200,000 a year in income. It took only four years to build the same income blogging. Why?

1) Low barriers to entry. Depending on where and when you buy, you need $1 – $2M in capital to generate $50,000 in net operating income with property here in San Francisco. It takes at least $1M in capital to generate $23,000 a year in dividend income from the S&P 500 index. With both asset classes, you can also lose principal. With blogging, it costs as little as $2.95/month to run a website and you get a domain name for free. If things don’t work out, all you’ve lost is your time and a minimal amount of money.

2) Enormous demand curve. Financial Samurai can theoretically reach three billion people online through search engines, word of mouth, organic promotion, and advertising. If that happens, I’ll be worth billions and I’ll take each of you out to a steak dinner! However, in real estate, you can only lock in one set of tenants and raise the rent once a year. In the stock market, you are a passive investor with no control over dividend payouts or other strategic management decisions. With a retail store, you can only capture your neighborhood traffic. The internet is growing in usage and size every day.

3) Operating leverage. Because costs are generally fixed (hosting and domain registration), operating profits soar the more traffic and revenue you get. It’s not uncommon to earn 70%+ operating profit margins as a professional blogger, depending on how much you pay yourself. Very few businesses can compare.

Now that I’ve convinced you pro blogging is the best profession on Earth, perhaps you’re interested in knowing how much you can actually make? Before we get to the money, let me first highlight the types of people most suitable for succeeding as a professional blogger.

Now that I’ve published my view that blogging is the best business in the world, I’d like to pump the brakes for the most enthusiastic of you who now think freedom from a tyrant boss is just around the corner once you start a website.

Anybody can start a business, but not everybody can generate enough money from their business to live a comfortable lifestyle. Capitalism, ironically, ensures that everyone will not be successful. Capitalism is what causes an uprising, even though our standard of living has never been higher!

I made the case years ago that real entrepreneurs are successful when I defined success as being able to generate at least the median per capita income for your city after three years of full-time effort. Those entrepreneurs who’ve been trying for far longer, while earning far less were clearly agitated by my stance. But everyone knows the more you spin your wheels in the mud, the more trapped you will be until one day the cannibals hear your cries and start hacking off your limbs until you die.

I don’t want you guys to ruin your lives because of an entrepreneurial pipe dream, so let me share with you a warning story of what may become of you if you don’t recognize reality.