Do you ever wonder how someone got wealthy? We know about corporate CEO’s, rich families, and Hedge Fund managers, but what about everyone else? What is their story?
I came across this answer from Quora. I think there is some great insight found in the story about getting rich or wealthy.
I think you will find with most who are rich in the US, a good portion of breaking income barriers involves four key ingredients:
1. Dedication and focus on something
2. Creating opportunities to takeÂ
3. Luck
4. Passion
In today’s world, each one of these can be very hard to achieve.
Take the first, with the number of distractions from email, texting, and social media it is increasingly more difficult to be focused. We are becoming busy at the cost of being focused. Busy does not get you rich.
For the second, it is increasingly more difficult to be able to take risks due to the enormous costs put on us. The basics get more expensive every day, states and cities tax us more each year, home prices a very high, the average low-end car now costs over $20K, etc. We get caught up in trying to just get by, lose our focus on saving money, and dimish our opportunities to take
The last two come hand in hand. The more passion you have for something the more opportunities you will create for luck to work. It could be a passion for a blog, stock picking, real estate, or any number of other things. I help advise Startups and what I have found is the groups that have passion will eventually create something that works. If a group does not have passion nothing ever comes out of the effort put in.
If you want to become wealthy, read stories like below, find your passion, and create opportunities. It is not a guarantee, but nothing ever is.
Share your advice in the comments below!
How Did You Become A Millionaire?
response by Sam Dogen, founder of Financial Samurai
Went from $4,000 to $1,000,000+ by 28 and from $1,000,000 to $10,000,000+ by 40 due to:
- Luck. Got through 55 interviews over 7 rounds to land a job in investment banking at Goldman Sachs. Someone like me from a state school (William & Mary), had no business getting this job, but I got on a 6am bus to go to a career fair one Saturday and one thing led to another. Base salary was $40,000, so that kinda sucked, but my experience taught me how to invest, network, sell, and build relationships.
- Luck. Invested in VCSY in 2000, a Chinese internet stock that climbed 50X in six months. Turned $3,000 into $170,000 and sold at $155,000 when it started collapsing. The stock went to nothing a year later. At the time, I only had about $4,000 to my name, so this investment was a significant leap of faith.
- Luck. A headhunter called my VP to see if she wanted to work for a competitor covering West Coast clients. She said no and handed me the phone because I covered West Coast clients out of NYC! One thing led to another, and I got a new job after 2 years with GS as an Associate with a raise. Over the next two years, 90% of my GS analyst class got let go.
- Rational decision making. After arriving in San Francisco for my new job, I decided to live like a pauper for a year and a half because I didn’t know anybody and didn’t know where to live. In 2003, at the age of 26, I put down $120,000 and bought a 2/2 condo in a nice part of town for $580,500. I figured, best to turn funny money (VCSY profits) into a real asset. Today, the condo is a paid off rental generating $4,300 a month and worth ~$1,300,000.
- Went all-in again. At age 28 in 2005, I bought a single family home I didn’t need on the north side of San Francisco for $1.52M. The $300,000 downpayment took ALL the cash I had. I needed a $50,000 bridge loan because it was December, and bonuses weren’t paid until February the next year. Things were good for a couple years until the financial crisis happened. I was sweating bullets with my $1,200,000 mortgage. So I rented out a room for several years.
- Super lucky. I tried to sell the house I bought in 2005, for $1.7M in 2012. NO TAKERS after 30 days. It was embarrassing, so I took it off the market. My agent said a couple people were willing to offer $1.5M, and I said heck no. I wanted to sell because I had just left my job and we had just recovered from the financial crisis. I needed to lock down costs. I ended up selling the house for $2.74M in 2017 after my PITA tenants gave their notice. I couldn’t believe how sentiment turned so positive just five years later. Now the market is softening in 2018 as inventory is up 45% YoY and mortgage rates are at least 1% higher.
- Unwavering consistency. Real estate has made me over $2.5million, but it is Financial Samurai, my personal finance site that has done the most for my net worth growth. I started the site in 2009 during the middle of the financial crisis and made a promise to publish 3X a week for 10 years in a row. I figured, if I could stay consistent all these years, the site would grow, allow me to leave my job, and earn me some online income and equity in the process. Almost 10 years later, it has done just that. A couple of my peers just sold their websites for $6M – $7M, but I plan to keep going because running Financial Samurai is fun!
So much of my wealth has been created through luck. The key was not taking my luck for granted and continuing to save and invest aggressively, as if my luck would run out.
I got crushed during the financial crisis and made a poor investment in a Lake Tahoe property in 2007, but I have kept on going no matter what. I expect misfortune to fall upon me again, but hopefully I’ll be better prepared.
It’s hard to keep the faith, but you must during the most difficult times. If you continuously put yourself out there, sooner or later good things will happen!
Below is a snapshot of my various passive income investments to hopefully hold us over during the next recession. I’m focused on building my Alternative Investments, since I have more control over their outcomes.
Real estate crowdfunding is the investment I’m most excited about after reinvesting $550,000 of my SF rental house proceeds in lower cost areas of the country with much higher cap rates (2.5% vs 10%). I’ve got a total of $810,000 invested in real estate crowdfunding and plan to slowly build a larger portfolio for passive income because I no longer have time managing rentals as a stay at home dad.
Remember, you only need to get rich once. Once you’ve achieved a level of wealth where you never have to work again, focus on capital preservation. The last thing you want to do is return to the salt mines!
Related:Â The First Rule Of Financial Independence: Never Lose Money
Fight on,
Sam, Financial Samurai
