Are you wondering how do millionaires and billionaires make their money? Let me tell you after going to a dinner party with several of these rich folks.
1. One public company founder and CEO worth ~$5B. You've all heard of this guy.
2. One public company CEO worth ~350 million. You've all heard of his company.
3. One public company CEO worth ~$150 million. You may not have heard of this guy or his company, but he's only 32 years old.
4. One private company founder and CEO worth $100 illiquid, maybe $20M liquid. You probably haven't heard of this guy, but you may have heard of his company.
5. One young guy who sold his company to #2 for ~$10M.
6. A General Partner at a major VC worth perhaps $10M liquid, and maybe $30M illiquid. This guy could be the next big time VC as he just moved to his new shop.
7. A private real estate investor with his own company worth about $3-$5M
8. And me, an ex-banker who spent 13 years in the business, and now an owner of a lifestyle business, FinancialSamurai.com.
How Everyone Made Their Fortune
#5 was a trust fund kid, whose grandfather is worth $100M+ as an early VC in the valley. #7 has family money and very rich friends, but I think he built his business on his own.
The common thread is that everybody is an entrepreneur. We all took a lot of risk. We all went through a lot of bad times. And we all got some very lucky breaks because we gutted it out for a long enough period of time. It is really hard getting truly rich working for someone else.
These public company and private company CEOs with thousands of employees actually feel kinda bad for their employees who make $200,000 – $500,000 a year. Seriously, because they realize these employees are the ones who are helping them make huge fortunes!
Being a entrepreneur is a completely different mentality from being a worker bee. It's all about figuring out how to get very motivated and talented people to come work for you to make you a success. And the irony is, many of these highly educated people could become extremely wealthy as entrepreneurs as well, but they are too fearful to take too much risk and would rather just live a comfortable life.
Lifestyle Business Is The Way To Go
I’m the only one with a lifestyle business with zero employees and therefore, no personnel headaches. I can tell you straight up that I would NEVER want to be a public company CEO and have to deal with employees and investors.
As someone who left a well-paying banking job to be free, I value my freedom to do anything how I want, when I want above all the money in the world. As a private company CEO with no employees, you can do this. Once you have investors or go public, your freedom is screwed.
The only thing I can’t comfortably do is fly private for flights longer than 1–2 hours. Other than that, our lifestyles overlap very closely. And I would venture to guess I’m happier and less stressed because very few people bother me since I'm not famous.
I suggest everybody at least start their own website online to own their likeness. Don't let Facebook, Twitter, LinkedIn, Quora, Instagram own you. Own yourself! Once you have your own website, you can attract new business and create your own business. Here's my step-by-step tutorial guide on how to start your own website in 30 minutes.
Here's a sample blogging income statement. Notice how high the profit margins are.
The best thing everyone can do is start their website and business on the side while they are still working. Once you launch, tinker with ideas here and there. The more you try, the luckier you'll get.
Invest In Startups Instead
Check out the Fundrise Innovation Fund if you want to invest in promising startups. The fund invests in private growth companies in AI, property tech, data infrastructure, and fintech.
What's great about the fund is that the investment minimum is only $10 and you get to see the portfolio composition before making an investment!
You can also listen to my hour-long conversation with Ben Miller, CEO of Fundrise, about venture capital and why he's so bullish on artificial intelligence and more.
Keep Track Of Your Finances Like A Hawk
Finally, what everybody should be doing is diligently tracking their net worth through a free online financial tool like Empower. Their tools allow you to manage your cash flow, analyze your investments for excessive fees, calculate whether you are on track to retire comfortably, and plan for your future. I've used their free app since 2012 and have seen my net worth soar.
That which is measured can be improved. Don't be like the majority of Americans just winging it with their finances. They're going to wake up 10 years from now wondering where all their money went. But you're going to on the ball because you've been tracking your money since the beginning.
Related:
The Following Occupations That Pay $1 Million Or More
How The Top 1% Invest Their Money
About the Author:
Sam began investing his own money ever since he opened an online brokerage account in 1995. Sam loved investing so much that he decided to make a career out of investing by spending the next 13 years after college working at two of the leading financial service firms in the world. During this time, Sam received his MBA from UC Berkeley with a focus on finance and real estate.Â
FinancialSamurai.com was started in 2009 and is one of the most trusted personal finance sites today with over 1.5 million organic pageviews a month. Financial Samurai has been featured in top publications such as the LA Times, The Chicago Tribune, Bloomberg and The Wall Street Journal.