Have you ever wondered what it is that rich people do that got them rich? Is there a secret to finding ways to get rich that most of us are not in on?
That’s the question acclaimed financial author Thomas C Corley set out to answer in his Rich Habits research. He interviewed 233 wealthy people in a five year period. The interviewees had at least $160,000 in annual gross income and 3.2 million in net assets.
A snapshot of that date showed this:
-A whopping 86% of them worked more than 50hrs a week. So much for the 4 hour work week, right?
-25% had a postgraduate degree
-13% were sales people
-63% took a personal financial risk in search of wealth
-68% had a college degree
-41% of them were “B” Students while 29% were “C” students. Who said you have to be an overachiever in school to be rich?
That’s some interesting data, but how exactly did they create their wealth? According to the author, there are 4 different paths that led to wealth for most of the responders.
The Saver/Investor Path
49% of the wealth people interviewed got there by saving their money and investing it. All of them had modest incomes but they consistently saved 20% or more of their income and invested it over a period of 32 years.
Yes, they saved and invested consistently for over 30 years to accumulate their wealth. This might not be appealing to you if you’re looking to get rich quickly, but the truth is, building wealth takes time for most people. Saver-Investor is a path that anybody can take as long as you have about an average income. Save 20% of your income and live off of the 80%. And don’t just stash away your savings at the bank. Invest it!
There are various investments you can make, from investing in stocks, mutual funds, real estate and more.
The Big Company Senior Executive Path
If you work in corporate America, rising into senior management is another path to building wealth. When in senior management positions, not only will your income rise up from modest income, but you can also get compensated through stocks, sharing of profits, and healthy bonuses.
This was a more common path to wealth back when people stayed employed at big companies for 20, 30 years. Staying with a company for that long is becoming a rarity as employees hop from job to job more frequently and more and more people choose the entrepreneurial path.
Out of those interviewed, 18% were in the Big company Senior executive category.
The Virtuoso path
These are people who are best at what they do or possess unique knowledge. Skill-based Virtuosos devote a lot of time through many, many years honing their skills. Knowledge-based virtuosos also spend many years in continuous study and often require formal education like medical degrees, law degree, and Ph.D.
With specialized knowledge usually comes a big payout, be it in salary payments or having your own business using the special skills you have. Note that a lot of time and money is invested in acquiring these knowledge or skills. Formal education at that level is especially expensive and might require you going into massive debt to acquire the knowledge. But the payout at the end of the day leads many to wealth. Only 7% of the wealthy people interviewed were in this category.
The Dreamer/Entrepreneur Path
This path is the path that might lead the very, very few to overnight wealth, be it through a successful business idea or through the arts like music, acting, and writing. In 2020 alone, 4.4 million new businesses were started in the US. That’s a mind blowing number that has set a record.
According to the Small Business Administration, about 20 percent of businesses fail in the first year. The rate of failure within 5 years is about 50%. In 10 years, only 33% of businesses survive.
From the group of wealthy people, 51% were in the Dreamer-Entrepreneur category with 27% failing at least once in business.
So to sum up, according to the survey, the number one most common way to accumulate wealth is to pursue your dreams or own a business. That is followed very closely by being a prudent saver and investor for many years. The third most common way is through being a senior executive at a big company and the least common way is through having a unique skill or being a top expert in their field.