Bill Gates, Warren Buffett, George Soros – these are just a few of the names that everyone associates with vast amounts of wealth. So what does it take to get rich? Not only that, but how do you define being rich? Does it mean having a million dollars in the bank? Two million? Fifty million? First, let’s make a distinction between being asset rich and cash rich. Owning a million dollar home may be something worth aspiring to, but once you own it, how will you survive?
You still need income to pay the fees, keep the house, pay the electric bills, and buy groceries. Owning an asset that does not generate income does not make you rich. So what if the million dollars was in the bank and you made regular withdrawals to provide an income to support your lifestyle? How long would the money last? Five years? Money in the bank means you are rich only as long as money lasts. Let’s say you have a business that brings in $500,000 a year. Does that make you rich? Not if the business depends on you being there. Otherwise, your business is really just a high-paying job that gives you little freedom to enjoy its rewards. Being rich means having assets that produce a sustainable income, without requiring your time and effort, and that are enough to allow you to have the things you want in life.
There are three ways to get rich: the unlikely way, the hard way, and the easy way. We will deal with them in that order. The most unlikely way to get rich is through a windfall of money, such as an inheritance, lottery win, or legal settlement. The problem is that unless this money is used in some way to create a sustainable income, a windfall will only make you rich while the money lasts. Not many of us will get rich this way. Another way to get rich is to earn a lot of money by working hard and spending less than you earn. Over a period of years, by carefully saving and investing your money, you will eventually have enough wealth to retire comfortably. This is the hard way to get rich.
The problem with this approach is that when you have enough money to consider yourself rich, you are too old to enjoy your wealth and have spent most of your life working hard and doing without. That just leaves the easy way to get rich. Take another look at the list of people’s names in the rich list. Add to that list the names of any other rich people you know. Now think about how they got rich. Without exception, you will find that rich people have become rich by creating, buying, or selling growth assets, i.e. businesses and property. Starting your own business is not difficult to do if you focus on something that you are passionate about and that satisfies a need in the market. Do your research first and don’t quit your job until you’re sure you’re on to something that will be successful. If this sounds too risky, educate yourself about buying property; after all, it is something that most of us do several times in life, so why not do it as a means of creating wealth? You may not make it to the top 50 of the rich list, but if you invest in growth assets, you’ll create a sustainable income that allows you to have the things you want in life, and that’s what it means to be rich. .