Wednesday, June 20, 2012

Do You Want To Get Rich?

Here's how...and it is NOT what you think.

As of 2009, the IRS did a study on how the 400 highest income earners made their money (if you want to go to the source, you can review it here: 400 Individual Tax Returns Reporting the Largest Adjusted Gross Incomes, an annual report issued by the IRS). 

To give you the Reader's Digest version, in 2009 $77.4 million got you in the club; but the average earnings were $202.4 million, a lot of money but well down from the $334.8 million average in 2007.  In interesting thing is WHERE they made their money:
  • Wages and salaries:  8.6%
  • Interest: 6.6%
  • Dividends: 13%
  • Partnerships and corporations:  19.9%
  • Capital gains: 45.8%
Yep, almost 50% was made in capital gains...investing in theirs or others companies. Diving deeper there can be seen obvious conclusions:
  • Working for a salary won't make you rich.
  • Neither will making only safe "income" investments.
  • Neither will investing only in large companies.
  • Owning a business or businesses, whether in part or partnership, could not only build a solid wealth foundation but could someday...
  • Generate a huge financial windfall.
The data clearly supports the last two points. Clearly, getting rich--in monetary terms--is the result of investing in yourself and others, taking risks, doing a lot of small things right, and hopefully doing one big thing really, really right, and of course...being lucky never hurts!  Hopefully you can achieve some other lofty goals along the way--because then, even if you do not end up rich, you will still be wealthy.

No comments: