I don’t use the word “hate” often but do you know something I truly hate? The majority of investing advice that you see publicly. Let’s make something very very clear. Yes, you can stop buying coffee, put away that money into an S&P 500 index fund and over the next 30-40 years you might have $1 million. It’s true. That strategy can actually work. But that’s not making you a millionaire. That’s not making you the kind of money that you’re really seeking i.e. the difference making money that will put your financial worries aside. What most investment “experts” push is saving little by little and that over time that little turns into a lot by the power of compounding interest. Again, it “works” but it’s a process that takes considerable time. It’s also a process that I believe in, but in my eyes you need to make more money as a priority over saving pennies at a time. That’s the key to wealth. Then and only then can that money work for you in the ways you want it to. So how do you do that? How do you actually make more money?
The richest of the rich do it in their businesses. Granted there are few exceptions, but for the most part, if you want to get really rich you do it in one of two ways. The first is with your own business. The second is by clawing your way to the top of a business i.e. being an employee who’s gotten all the way to the top as a high level executive where the pay is extremely high. The last way is inheritance which happens to be a substantial portion of wealth in the U.S. Like I said, yes, you can set aside a few extra bucks a day and that money will eventually grow if invested properly. But what differentiates the super rich from just the “well off” or “comfortable” folks is that they had a TON of principal to begin with. It’s a hell of a lot easier to make money off of $10 million than it is starting with nothing and saving a few hundred here and a few hundred there.
So the next time you read some article touting things like saving on car insurance or paying less for your energy bill to be able to put away more money, stop. What you need to listen to is this: “how do I make more money?” What can I do? What skillsets can I achieve? What businesses can I start? You might want to wait 30-35 years to live “the life” but I’d rather do it in my 30s while enjoying myself and building income at the same time. Am I suggesting any get rich quick bullshit? Hell no. But what I am suggesting is going after the life and income you want right from the get go. Might as well have fun for the 5-10 years it might take to get where you really want to get financially, right? And just to bring home this point, I want to share a couple of different examples of people who all made money with businesses over investing. And this list even includes who is considered to be the most prolific investor of all time:
1. Warren Buffett
When you think of Warren Buffett what do you think of? Most people think of “the best investor ever.” They read articles about him and learn that he is one of the best value investors of all-time. They learn that Buffett was an astute stock picker and he made his riches by investing in “cigar butts.” In other words he found undervalued companies and plowed money into them before they hit their true worth. Back in the 50s and 60s this was much easier to do. Back then nothing was electronic and almost no one read annual reports. Buffett took full advantage of the information that was out there that barely anyone used. Today it’s much harder since information is not only everywhere but is produced in nano seconds. But what many people don’t realize was that in order to truly capitalize on his stock picking prowess, Buffett wouldn’t just invest for himself. He would start investing for others and take a piece of the profits. In today’s world? That’s what hedge funds do. Buffett established limited partnerships with investors under a pretty simple rule: hands off. His investors were to never know what he was investing in, just trust that he would get them the returns they were seeking. And for that, Buffett got a piece of those earnings too. Buffett’s fees weren’t as egregious as hedge fund fees are today, but he was able to parlay that money into a LOT more. In addition, as Buffett began to buy businesses, he used those profits to invest as well. Buffett’s main source of revenue for decades was insurance (it’s still a huge part of his revenue). He used the premiums he was collecting to invest in more stocks or buy more businesses. And on and on we go. But let’s get back to the root of the story here. Buffett’s massive riches came from massive riches. He never put away 100 bucks here and 100 bucks there. He kept accumulating and he kept growing. Buffett’s business gave him the capital to invest. Even the best investor ever became that way because of his primary business. His primary business just happened to be investing.
2. Elon Musk
Richest man in the world right now, right? The guy’s worth nearly $300 billion. Did that come from investing in stocks? Hell no. That money comes from his stock in Tesla. Musk’s an insane risk taker who’s almost been bankrupt twice. The guy was literally hours away from having no more money to run Tesla and yet here he is today, the richest man in the entire universe. And how? Well, being one of the smartest people in the world helps, but so does growing what is now considered to be the top car company in the world. Musk never counted pennies nor tried to build up a rainy day fund (P.S. I’m not saying you shouldn’t do these things). Musk’s obsession lies with the ideas he generates. Whether it’s electric cars, energy resources, neural links, or traveling to space, Musk’s constant drive for innovation is what has made him rich. Musk never listened to the outside world. He sure as all didn’t listen to “The top way to start your retirement fund.” Musk is a builder, a creator. His creations have made him a fortune. Which is to say that if you want to get rich Musk’s way? Change the world. Easier said than done.
Plenty of others
So these two guys are pretty obvious examples. But you’ve also got guys like Jeff Bezos, Steve Jobs, Mark Zuckerberg, and countless others. I’d even add Mark Cuban to this list. Cuban’s always considered to be this smart financial guy but he too made the bulk of his money by selling a business that netted him the money he would then use to invest. Without that sale, Cuban’s nowhere near as wealthy as he is today. He sure as hell doesn’t own the Mavericks and he’s definitely not one of the sharks on Shark Tank. Jeff Bezos and his fortune? Amazon stock. Mark Zuckerberg? Facebook stock. Steve Jobs? Apple stock. The list goes on and on and on. Hell even “investment gurus” don’t make the bulk of their money investing. Do you really think Suze Orman made her fortune by penny pinching and putting it all into dividend paying stocks? No. She made her money from giving advice on how to do it. Books, podcasts, courses, etc etc. She built a brand and then used THAT money to invest. What’s the common theme? You guessed it, businesses. You want serious dough? Create something or sell something or both.
As I stated before, if you don’t necessarily have an interest in creating your own thing, that certainly doesn’t mean you’re down and out with regards to riches. It’s just a much tougher and different route. But if you can manage to work your way up through the ranks of most any successful company, money will follow. These days, it’s especially fruitful if said company gives you stock. But look at all the CEOs of fortune 500 companies. And it’s not just the CEOs. Pretty much anyone in the top 10 or 20 positions of a large company is going to be making some nice coin.
The luck of the inheritance
Like I said, you can certainly inherit quite a bit of money and that’ll set you up quite nicely. I mean look at the Waltons. Must be nice to be part of the company that owns Walmart right? How about if you’re a Hilton? Pretty sweet deal. Unfortunately you have zero control over that one so it’s really not a viable option. I guess you could marry into money. Good luck with that one.
What you actually do with the money
Well come on now. I can’t give everything away in one article. Like I said, focus on the business or rising in the ranks first. The goal is to be growing revenue and income the entire time. Of course put the money away. Of course try to have that money working for you. But let’s get something straight. The clearest path to wealth is having enough money to begin with where you can make all of those things happen. Don’t worry, we’re going to be getting into how my own portfolio is made up in the articles to come. But the sooner you get it into your head that accumulating more money is way more important than saving money in a coffee can, the better off you’ll be.