How to become rich: These are the only 8 ways
Money is a very important aspect of life. Not the only important aspect by far, but definitely an important one. That’s why you may be wondering how to become rich. There are actually only 8 ways to do so on your own outside of inheriting wealth.
None of these methods are easy. Achieving financial success requires a smart strategy, hard work, dedication, perseverance, and stamina, which are rare qualities.
You also need strong support from your environment. This includes family support (financial, psychological …), the right market paradigm, a good network, education, luck, and so on. At the end of the day, no one can succeed alone and on the wrong market. But it can be done.
There are numerous self-made billionaires and millionaires who have proven that it is possible to become rich, so, let’s take a look at the 8 ways you can too. While reading the article, try to assess which path would be the most appropriate for you and your character.
At the end of the article, we’ve also summarized everything and created a secret formula for how to achieve financial success. Now let’s explore the eight paths how to become rich.
1. Start your own venture with high-growth potential
The vast majority of rich people are entrepreneurs. There are a very limited number of jobs that can make you rich, but everyone can start a business.
Not many businesses succeed, but in capitalism owning equity in successful companies is what creates and drives wealth. Ownership and profits are the name of the game in the capitalist system.
There are three ways to own a share of a successful business:
- Start your own venture
- Join a fast-growing company with a share option plan
- Invest in public (stock exchange) or private (crowdfunding) markets
Let’s say a word or two about the first bullet point. When it comes to starting a business, there are three important factors that define the potential: The innovative idea, the executive team, and the markets.
Markets have an especially big impact, because only businesses that operate on large enough markets, preferably in fast-growing industries, can become big and profitable.
People who get rich by owning a business usually operate in industries that have an impact on great masses of people (IT, telecommunications, oil etc.), and big paradigm shifts (changes) are happening on the market.
The problem is that most businesses fail in the first five years. Only some businesses are successful enough to bring founders enough money for a decent life. Even fewer achieve fast growth and bring founders real wealth.
The businesses that get founders rich are usually the businesses that bring disruptive innovation or have a new business model that reinvents or refreshes established industries.
A special branch of businesses that must be mentioned are those that operate online. Today entrepreneurs have the chance to reach millions of customers from their home offices, something that has never been possible up to now. This incredible access is another reason many solo entrepreneurs and digital entrepreneurs get rich.
Yes, most of ventures fail, but the good news is: “You only have to be right once”; meaning that if you want to become rich by starting your own business, you’ll have to be prepared to fail a lot, invest heavily in your entrepreneurial skills and keep a long-term view until you find the winning idea. It usually takes a decade or so to build a successful business.
2. Join a fast-growing company with an option pool plan
Starting a new, successful company is not an easy job, and few people have the energy, determination, stamina, creativity, people skills, seed capital and other resources needed to do so.
As the saying goes, “If you can’t beat them (find your own way to start a business), join them.” So, the next option on the table to become rich is to join a fast-growing company.
In a young, fast-growing company, there is usually a stock option plan, and you can be promoted quickly if your skillset is in line with the company’s strategy and needs. When a startup company is sold, it can make many people rich, including employees outside of the founders.
When companies are growing quickly and they are having a lot of impact, careers take care of themselves. If you’re offered a seat on a rocket ship, don’t ask what seat. Just get on.Sheryl Sandberg
Joining a fast-growing company is probably one of the most attractive options if you are an ambitious person with a good skillset and the right attitude, but you don’t want to start your own business. The biggest challenge here is finding the right company.
If you believe this is the best way for you to get rich, get to know a few prominent industries. Study their rules, new trends, disruptors, and successful companies; read forecasts and reports, start collaborating with incubators and startup accelerators, develop the skillsets that startup companies value, and so on.
Only some are lucky enough to find themselves in the right place at the right time (getting hired by the right company), so don’t count on luck. Put in the effort to position yourself strategically in the right scaleup company. Don’t wait for them to find you, forge a plan for how you will find them.
3. Become a specialist with an ultra-high paying job
Capitalism is all about supply and demand. If you develop a skillset that is in great demand and short supply, you can get paid well.
Really well, in fact. If you become a specialist, possessing a rare, but highly valuable skill, you can become rich with time. Maybe not as quickly as by starting your own company, but your chances of accumulating wealth are definitely much higher because of a lower chance of failure.
Besides the supply and demand on the market, it’s important to consider the median salary of the occupation in order to calculate how quickly you can become rich. Logically, more intellectual demanding jobs with higher responsibility are paid better.
Money tends to flow from those who know how to do things to those who don’t. In most cases, to do a specialist job you need formal education, and usually a really good one (there are exceptions, such as programmers and creative directors).
Some examples of specialists are: doctors, IT scientists, lawyers, pharmacists, data scientists, creative directors, dentists, psychiatrists, salespeople, and so on. Air traffic controllers and pilots can also be paid very well, but the demand has negative projections for the future.
You can explore the highest paying jobs for more ideas.
4. Secure a management position in a blue-chip company
Managing (and leading) people and organizations is hard. It’s one of the hardest occupations, in fact. That’s why managers/executives are usually paid very well, especially in blue-chip and highly profitable companies.
Besides entrepreneurship and highly-specialized intellectual work, management is one of the most frequent paths to wealth.
There are few challenges to securing a good management position. Usually, it takes years to be promoted to senior management. Joining a fast-growing startup can accelerate this process, which makes it a more attractive option. But as you’ve probably figured out by now, there’s no fast way to become rich; each path takes a lot of time.
The second problem is that the competition is tough for good management positions, and the higher you are in the ranks, the more politics come into play.
That means it’s hard to be promoted to the top if you don’t develop your diplomatic skills and forge a strategy that enables you to navigate inside a specific organization. That said, becoming a manager is undoubtedly one of the ways to get rich.
5. Save as much as possible and invest smartly
There is a saying in the financial industry that there is only one greater miracle than love, and that’s compound interest.
Compound interest is interest on interest. The result of compound interest can be the exponential growth of your wealth.
Here is the formula for how to get rich this way:
- Start investing as soon as possible. Time is a big factor in exponential growth.
- Each month you need to save as much of your salary as possible.
- Everything you save, including interest, must be reinvested based on dollar cost averaging (DCA).
- You need to meet a decent annual yield, which means there will be risk present. The higher the risk, the higher the potential reward (but also losses).
- You must not get scared in a downside economic cycle and liquidate your investments with losses.
Realistically, you can start saving your money in your late 20s, when you start earning more. That gives you 30 – 40 years until retirement. The average yearly return rate you can realistically expect is around 6 – 7 %. With these projections, you need to save $1,000 every month to have a million dollars at your retirement.
Some very valuable financial skills in this case, but also in general when it comes to money, are:
Increase your earning potential
First, you want to maximize your earning potential by developing new, highly sought-after skills, properly negotiating your salary, getting employed at a company where you can get promoted, etc. The more you earn, the more you can save, if you keep your spending under control.
Save 20 % – 50 % of your income
Some people say that if you can’t save money, the seeds of greatness are not in you. Probably one of the best life skills is the ability to save money, because it’s so easy to spend $100 and so hard to earn it.
As calculations show, if you want to become a millionaire, you’ll have to save much more than $100 every month (probably 30 % or more of your income.)
If you can’t save money, the seeds of greatness are not in you.
Become financially literate
Before you start investing, you must financially educate yourself. The financial industry wants to sell you thousands of different products, on which they’re the ones making money in the end.
If you don’t completely and fully understand kind of a product you’re investing your money in, you’re probably going to lose it. So, if you want to become rich, you must understand financial products, taxes, your legal responsibilities and other investment issues really well.
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Invest your savings smartly
You have full control over your spending, at least if you can control your emotions and avoid stupid purchases. This situation is a lot different when it comes to investments. There are many factors beyond your control, from market trends to other people being involved.
That’s why the most frequent route of going from rich to poor is not lavish spending (except for lottery winners), but bad investments. Putting your money in a mutual fund is very far from smart investing.
You don’t have to be a full‑time investor, but you have to be extremely smart about who you trust to manage your money or types of investments you make. As we said, you must become financially literate.
Protect yourself financially
In the end, you also need to protect your wealth from yourself (doing something stupid with your savings), unfortunate circumstances and others.
Insurance, legal corporations, rainy day savings funds, tax shields and so on – there are many ways you can protect yourself and your wealth from accidents, the government, market meltdowns, sneaky salesmen, and even yourself.
6. Join the financial industry or become a professional investor
It is also possible to take a step further and not only invest money that you save from your daily job, but also become a professional investor.
One of the fastest ways to get rich is to get yourself into the financial industry, and convince other people to trust you to manage their money. Fund managers, investment bankers, brokerage firms, wealth management firms, they’re all dealing with large sums of money, and consequently people working there can earn very well.
To stay in the money management game in the long-term, the key is to make money for investors. It’s extremely hard and stressful to be a successful investor, in the same was as it is hard to be an entrepreneur or manager.
Investing is an extremely competitive field, and it takes a very strong character (especially incredible emotional control) to succeed in the financial industry. But you can definitely make a lot of money if you’re good and have an outstanding investment strategy.
Similarly to working for the financial industry, you can become rich by becoming a trader. Again, it’s not a simple thing to do, but many people have proved that it can be achieved.
You need enough seed capital, you must be incredibly educated about markets and specific investments, and even more so, you need an outstanding risk-management strategy.
Many day traders lose their seed capital and fail big because they want to get rich quickly. It takes a lot of daily effort and a strong, patient character to be a day trader, but it’s definitely one of the paths to wealth.
“Getting rich quicky” is only the other side of the “getting poor quickly” coin.
7. Get wealthy with real-estate
Real estate is at least as attractive an industry as financial services when it comes to getting rich. Everybody needs a place to live, and usually a home is the biggest expense in people’s lives. The average real estate transaction goes into the thousands of dollars.
The beauty of real estate is that that also means an opportunity to earn thousands of dollars in commission on every sale.
And there are many ways to get involved in real-estate. If you have some seed money, you can buy, renovate, and sell homes as a developer, or become a landlord. If you don’t have any seed money, you can become an agent, join a real-estate fund as a manager, and so on.
However, as mentioned for every path to become rich until now, you must know exactly what you’re doing. You need understand the industry, and you need superior insights as well as extraordinary business and sales skills to become a real-estate guru in your area.
8. Get famous and capitalize on your fame
One more very valuable thing in today’s society is attention. Luckily, with social media, attention is not in the captivity of a few big production houses anymore.
If you manage to attract the attention of millions, you can also earn millions. Movie stars, athletes, reality show winners, musicians, writers, YouTube stars, Instagram influencers, educators and other famous people have the power to impact scores of people and consequently earn very decent money.
Fame, if you have enough fans and followers, can definitely make you rich.
Much like money, entrepreneurial success, or becoming an outlier at something, fame is also a very concentrated commodity. Ridiculously concentrated, in fact.
We have only a few people who take the majority of the market share; and consequently, the income. Out of the millions of people who want to become stars, there are only a few who are really successful and famous. But hey, that shouldn’t stop you; if you feel this is your way to become rich, go for it, give it a try.
You miss 100 % of the shots you don’t take.
There are two more paths to wealth worth mentioning, but definitely not worth following:
Don’t go the “broken moral compass” route
Unfortunately, many people get rich in a shady way – through internet scams, Ponzi schemes, government corruption, and so on. Besides illegal operations (which place many people in jail), there are also many legal, but morally questionable ways of making money.
No matter how much you wish to become rich, it is never advisable to go this way.
Life is much more than just money. Legacy is always greater than currency, and the world needs more good, not evil. Why go to the dark side if you can make money by providing a useful skillset, or creating real and valuable products from which you and the whole society benefit?
Sometimes, it might be attractive to take shortcuts – but is it really worth it? Nobody respects evildoers, and everyone respects people who innovate, work hard, develop a valuable set of skills, and work in favor of the whole society.
Develop valuable competencies to the point that they can get you rich, and don’t look for shortcuts that can destroy your name, or even worse, have you end up in jail with nothing.
Legacy is greater than currency.Gary Vaynerchuk
Don’t count on your luck alone
Last but not least, you can count on your luck to get rich. It’s not the self-made way, but still worth mentioning nonetheless. You can play the lottery, go to a casino, make sports bets, or otherwise try your luck in many different ways.
However, once you know the statistics and realize that there’s a greater chance that lightning will strike you on a sunny day than you winning the lottery, you quickly realize that other options are much more attractive.
At the end of the day, there’s no easy way to riches.
A summary: The secret formula to become rich
We have now explored the eight ways to get rich. A wise concluding thought would be that these methods are based on achieving the following:
Be a producer: Provide valuable solutions or skills to the market
Create a product or service that people buy like crazy, or provide valuable skills which are in high demand and short supply. Become an entrepreneur, an online entrepreneur, a leader in a company, a fund manager. Also, fame can come handy in this regard.
Follow the money: Go where money concentrates
Get engaged with a company where money is already in abundance (or will be soon); big, blue-chip companies, fast-growing companies, the financial or real-estate sector, companies in the fastest growing industries, etc.
Become really good with money
Maximize your earning potential, save like crazy, invest smart or become a full-time investor on your own.
“Money is like a jealous lover. Ignore it and it will ignore you, or worse, it will leave you for someone who makes it a priority.”Grant Cardone
Becoming wealthy is usually a lifelong project that requires a lot of knowledge, many smart and strategic decisions, a set of carefully developed competences, ironclad self-management, and some luck; but it can be done, and many people have proven so.
Choose one of the mentioned methods (the one where you have the biggest edge), start reading biographies of people who created wealth in your chosen way, get educated, work smart and hard, and never quit.
As we said, you only have to be right once. And most importantly, build the right environment for yourself, because nobody can succeed alone.
Last but not least, don’t get obsessed with money. Money is definitely important, but it’s only one of the areas of life you have to take care of (never neglect your health, relationships, or quality of life because of money), and you don’t want to forfeit your soul by feeding greed.
You want to become rich, while also becoming the best version of yourself.