Review: What every youth should know
Most of the richest people in the world came from working and middle-class backgrounds.
Only in some places where inherited wealth dominated, like some parts of Europe, is it 50%-50%.
If you mean is it possible to get rich, or wealthy, on a middle-class income, then the simple answer is yes.
This man was a UPS driver for years. He made a maximum of $14,000-$15,000 a year:
Theodore Johnson died with $70million, after a friend told him about investing, which is why he got into it.
Yes, you read that right. $70million. Now sure, when he started investing, 14k-15k a year was worth 50k-75k in today’s standards.
Yet it still wasn’t a huge salary. So, how did he manage it? Well, he invested very smart, long-term.
He wanted to make a difference when he died, so he gave it to charity.
He isn’t alone. This man was a janitor called Ronald Read who accumulated $8million:
This lady was a secretary and accumulated $6m-$8m:
You might think these are one-offs. However, stats show that 14% of the world’s millionaires are teachers, and about 50% are middle-income professionals.
The reason is simple. Income doesn’t always rise exponentially with time. Wealth can.
Buffett was once asked why he was so rich. He said three reasons:
- Being born in America at the time he was, which gave him business opportunities.
- Good genes. So, he has lived a long, healthy life.
- Compounded returns, which have been aided by those compounded returns.
He didn’t make his first billion until he was about 55. Now he has $100 billion.
He would have had more if he hadn’t given so much to charities since the mid-2000s, when he started to donate to the Gates Foundation.
Same with many of these people above. Plenty of them probably only had $1m at say 60, but the extra time allowed them to accumulate more.
So, leveraging time is one way to get wealthy, although not the only way. Another way is to leverage tax advantages you might have, for example if you become an expat.
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