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Many people work hard. If hard work were the key to more income miners and garbage men and oil field workers would be in the top 5%.
IMO, one needs to be a sociopath to end up in the upper echelons. Captains of industry have to be willing to
screw their fellow citizens to get to the top.
the first half of your post is true
it's not just about hard work- you need to do something productive and efficient. you can carry the same boulder up and down a hill all day and you would have worked hard but don't nothing from a finacial standpoint.
this is a mistake lot of people make- they work hard and wonder why they're broke but they don't produce much of value.
the second part of your post is an utter load of crap. not every self made rich person is a bernie madoff type. most are not at all but if it makes you feel better about yourself to pretend that they are go right ahead.
these people you think screw over society are the ones who pay the vast majority of tax, provide the vast majority of jobs and don't have to screw people over to be successful.
Actually, that's the formula for becoming middle class, not rich. That's the American Dream. Raise a family of healthy kids, drive a car that's not a pile of junk, own your home free and clear by the time you retire, with enough savings to meet emergencies and maybe travel a little.
The next generation will need to find some different ways of getting ahead. I think about a friend of mine, who bought a small town garbage hauler franchise over 40 years ago. He had to scrape up the down payment on a couple of used garbage trucks and the franchise fees, which was a stretch but do-able for a recently graduated Rose Bowl linebacker. He laughs that he and his wife furnished their first home with things other people threw out.
Over the years the town grew, and so did his business. Instead of a gravel lot to park the trucks, he now owns a couple acres in a commercial/industrial zone with a shop and a nice office. The trucks are a lot fancier and more expensive now (about $1 million each) and he owns 3x as many of them. I don't know what the business is worth, and neither does he, but no recent college graduate would be able to buy it unless he had somebody else's deep pockets to get the money out of.
The first step on the ladder has gotten taller and taller. You can look around at people who have "made it," but they made it during an easier time. Yes, there are more distractions and more shiny trinkets to distract the natives, but that is not the only problem.
this is just one example. in his line of work you are right.however there are many people who have made damb good money starting out with a lot less than your friend because of the internet/technology.
and i don't just mean guys like the creator of facebook.
We're not disputing the reasonable chances of becoming a "middle class millionaire". The point of the linked article, however, is that there's an enormous gulf between having a net-worth of $5M and $500M. The person with $5M is technically already in a rare minority of the successful, but he's nowhere near enjoying the power and prestige of the true elite.
Simply put, the small-business-owner isn't going to become a billionaire. And in the grand scheme, the guy sitting on $5M is just another peon.
except barring health issues the guy sitting on 5 mil is better off than 99.9 pct of the people who have ever walked the face of the earth. if he wants to waste his life crying he isn't worth 5 bil instead then he is a fool.
This is simply not true. Are you going to be Bill Gates by investing in the stock market? No. But who cares? You can still do quite well investing in pretty plain vanilla investment vehicles. I show examples of how people can do well in balanced mutual funds all the the time. Balanced funds aren't even 100% stocks...more like 65% stocks & 35% bonds.
$10,000 ($833.33 per month) per year invested in the following balanced funds starting 20 yearsago and what they'd be worth today (All have gotten 7.93% annualized returns or better over the last 20 years except for Dodge & Cox Income which only got 6.22%):
Vanguard Wellington: $595,651
Dodge & Cox Balanced: $611,266
Mairs & Power Balanced: $608,894
T. Rowe Price Capital Appreciation: $707,013
Fidelity Balanced: $507,942
Fidelity Puritan: $502,234
Vanguard Balanced Index: $489,816
Vanguard STAR: $535,613
Vanguard Wellesley Income: $500,347 (This one is quite conservative 60% bonds & only 40% stocks).
Dodge & Cox Income $397,277 (This is a bond fund, the ultimate in conservative/boring investing).
Actually, the returns would probably have been a bit better as I didn't factor in dollar cost averaging in the bad years....which probably would have added to returns. These are all plain vanilla mutual funds that have been around since the 1980s or longer. So for someone to have 500K by their mid 40s or early 50s is quite achievable. From that point forward, if you keep investing your 10K a year, you'll be up to $1 million in 10 years if your returns are 6% and in 8 years if your returns are 8%. So hitting $1M by ages 55-65 is achievable for the majority of folks, yet few achieve this. Most folks in their 60s only have net worths around 200K-300K, and that includes their houses.
Nothing wrong with these paths, but they are not for everyone. And you can be a small business owner with a great income and still be broke if you spend it all. It's just that small business owners tend to save a lot more of their incomes compared to people with the same incomes who are employees.
I notice engineers are particularly good savers and they often invest in pretty plain vanilla stock/bond funds. The main thing is they focus on only true needs and invest large percentages of their salaries. The personal finance blogosphere is loaded with engineers who retired in their 30s.
The biggest problem people have in getting wealthy isn't the method (real estate, your own business, stocks, etc.). It's that they prioritize stuff they want to buy over saving. They expect to have money left over at the end of the month after they've bought what they think they should have....but that method usually just leads to being broke regardless of income level.
This former Goldman Sachs exec turned financial adviser pretty much nailed it here:
What’s the biggest financial mistake people make?
The biggest mistake isn’t bad investment choices, it’s overspending. Most people are very surprised when they analyze their spending to discover that a lot of it doesn’t reflect their priorities.
$10,000 ($833.33 per month) starting 20 yearsago and what they'd be worth today So for someone to have 500K by their mid 40s or early 50s is quite achievable. if you keep investing your 10K a year is achievable for the majority of folks, yet few achieve this. Gee, I wonder why?
Just 10 grand 20 years ago and every year since is ALL it takes huh? LMAO!!!
I think that professor just gets it wrong in that so mnay really aim to strike what he calls rich. One only has to look at often what they do in education decision. Many do not want the life that goes with the hard work that it takes to be rich and keep it. Most of those dreams are hit the lottery or toher such luck based methods. I certainly have never made being in the top ten per cent even a priority.I am quite satisfied with meeting the goals I set which I guess if you think that way is winning.to me its just being successful at meeting goals I set I my life and its just one of mnany that do not involve wealth of any kind.I would bet that professor never set his goals at being the top per centage since he picked such a safe type job and environment .
except barring health issues the guy sitting on 5 mil is better off than 99.9 pct of the people who have ever walked the face of the earth. if he wants to waste his life crying he isn't worth 5 bil instead then he is a fool.
Plus, the $5 mil thing you get from investment salesmen is just hype. If you pull 4% of $1 mil a year that's $40,000, plus maybe another $15k from SS, gives you an income equal to the median income in most places. With a paid off house and no commuting/work expenses, you are in fat city. Anybody who thinks they need $200k/year to retire is a brainwashed consumer.
It's not impossible, though. My grandfather was dirt poor at points in his life, and went to bed hungry plenty when he was young. He worked his way up to somewhere between 95-99% before retirement. He built a small business that he handed to his two sons, my father and uncle. They grew up one step better than their parents. They have grown the business to the point that puts them at the low end of the top .5%, according to this article. It happened with skill, tons of hardwork, and a fair amount of luck.
Im a pretty smart fella. I like to think Ive done well. Even with all my confidence, and experience, I dont think Ill hit the same benchmark as my Dad. Maybe Ill achieve something similar to my grandfather. Id be thrilled with that. But I wont go crying about how I was locked out of the process. One of my college roommates comes from a house that would certainly rank lower on this scale than mine. He is flat out screaming up the ladder and I truly believe he will be one of "those" men. Im proud to consider him a friend.
I do agree that if its a Dream, you wont get it. Make it a goal, and get to work.
except barring health issues the guy sitting on 5 mil is better off than 99.9 pct of the people who have ever walked the face of the earth. if he wants to waste his life crying he isn't worth 5 bil instead then he is a fool.
I agree! It's hard to feel bad for someone that is worth 5million, anywhere in the world. Whether it's Beverly Hills, Hong Kong, New York or Bangladesh.
$10,000 ($833.33 per month) starting 20 yearsago and what they'd be worth today So for someone to have 500K by their mid 40s or early 50s is quite achievable. if you keep investing your 10K a year is achievable for the majority of folks, yet few achieve this. Gee, I wonder why?
Just 10 grand 20 years ago and every year since is ALL it takes huh? LMAO!!!
Out of touch much?
I knew someone would call me out on that. I practice what I preach. I make 47K per year, live in the high cost San Francisco Bay Area, and will put away 13K for retirement this year. Sorry, I don't want to hear that people can't do it. What people do is they look around at what everyone else is doing and copy what they think is average or normal. The problem is, it's a classic case of the blind leading the blind.
Talk to the hand. I don't want to hear how it can't be done. I'm living the example above and saving more than 10K per year on a modest income in a high cost area.
I LOVE this piece by Megan McArdle:
If you're like, well, almost everybody, you're not saving enough. 15% of each paycheck into the 401(k) is the bare minimum you can get away with, not some aspirational level you can maybe hope to hit someday when you don't have all these problems. 7 [CENTER]Sha[/CENTER]
I mean, obviously if one out of two workers in your household just lost their job, or has been stricken with some horrid cancer requiring all sorts of ancillary expenses, then it's okay to cut back on the retirement savings for a bit. But let's be honest: that doesn't describe most of us in those years when we don't save enough. What describes most of those years when we aren't saving is normal life. We moved. We got married or had kids. The kids required entirely expected things like food, clothes, and schooling. Work was hard and we felt we wanted a really nice vacation. Friends and family went through the same normal life stages that we were, requesting that we travel and bring gifts to the happy events.
These things are not an excuse to stop saving....
.....Most of the research on consumer finance shows the same thing: people can usually save a lot more if they make saving a priority. Most people don't. Savings is an afterthought--it's the residual of whatever hasn't been spent on clothes, groceries, cars, dinners out, school trips, travel soccer team, college tuition, vacation, etc. Unsurprisingly, there's frequently no residual. However, if people decide how much to save, and then budget their consumption out of what is left, they suddenly realize that they could drive an uglier car, take the kids out of dance class, live with the kitchen the way it is, stay home for a week in August instead of going to Disneyworld, and so forth. And those people are not, as you might think prospectively, made desperately unhappy by these sacrifices. Savers are actually happier than the general population--in part, one assumes, because they're less worried.
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Gee, I wonder why?
