How do most rich people get rich?

[AchillesWrathfulLove]

Are there any statistics for this question? I want to be filthy rich and am wondering how I should go about doing it?

I'm kind of leaning towards invention/innovation to make money but I don't know how well that area is good in making money because unless you discover something new and profound then you can't really make anything. More hope lies in innovation of existing products I think. Also I hear that development of applications for mobile phones is really good especially games which you can put advertisements in and if enough people play the game and watch the advertisements you can make some decent money there. So apps are another thing I was thinking about I could work on to get filthy rich by.

So basically how do I get filthy rich, what can science do for me?

 

[S.G. Janssens]

So basically how do I get filthy rich, what can science do for me?

Perhaps don't ask what science can do for you, ask what you can do for science.

The rational answer to your question would probably be: "Spend less than you earn".
Personally, I would recommend striving for something else than getting rich.
Maybe that "else" will make you rich indeed, maybe not, but I hope that it will make you happy and healthy.

 

[Vanadium 50]

How rich is "filthy rich"? A million dollars? A billion dollars?

 

[Borg]

Long-term saving is the way that most do it. Getting rich quickly from an app or the lottery is extremely rare.

"Spend less than you earn"

Exactly! I have known people that, no matter how much they earn, they spend it all and more. Measured by net worth, they usually aren't rich.

 

[Borg]

How rich is "filthy rich"? A million dollars? A billion dollars?

For my wife, it's always the next unit more that we currently have.

 

[AchillesWrathfulLove]

So about saving money - Do some people save money through many family generations and get rich that way?

And for me filthy rich would be 1million + in my bank account

 

[Borg]

So about saving money - Do some people save money through many family generations and get rich that way?

And for me filthy rich would be 1million + in my bank account

You'll have to do the math for your own situation. It really depends on your salary and expenses. When I was in my twenties, I calculated how much I would have to contribute to a 401K each year and attempted to include salary increases in order to figure it out. Depending on your situation, it could take anywhere from 20 to 50 years depending on how much willpower and determination you have.

 

[sandy stone]

And for me filthy rich would be 1million + in my bank account

Many people would consider that barely enough to retire.

 

[pasmith]

Inheritance.

 

[DarMM]

Prove the existence of Yang Mills in four dimensions and demonstrate the existence of a gap in the spectrum. You just need pen and paper and a copy of Glimm and Jaffe.

 

[russ_watters]

Are there any statistics for this question? I want to be filthy rich and am wondering how I should go about doing it?

The general answer is that most rich people are self-made (to the extent you can be), but it does vary based on what your cutoff for "filthy rich" is.

You should peruse lists of billionaires (if that's your cutoff) to see how they got their money.

And for me filthy rich would be 1million + in my bank account.

Really? How old are you? It never would have occurred to me to set a bar so low. Have you considered what you want to do with your money? $1m is not enough money to buy a typical Rich Person Starter Pack, much less live that way. As others have said, it's barely enough to maintain a middle class lifestyle in retirement.

 

[russ_watters]

The rational answer to your question would probably be: "Spend less than you earn".
Personally, I would recommend striving for something else than getting rich.

I would say that's necessary and sufficient for becoming "rich", but not "filthy rich". But again; depends on the criteria.

 

[George Jones]

Prove the existence of Yang Mills in four dimensions and demonstrate the existence of a gap in the spectrum. You just need pen and paper and a copy of Glimm and Jaffe.

"Rich" and "famous"!

(scare quotes used because these are relative terms)

 

[Wrichik Basu]

So basically how do I get filthy rich, what can science do for me?

We do something for science (not the other way round) to gain knowledge and not to earn money. If you want to earn money ONLY, then science is NOT your path.

 

[BWV]

Well, 87.3% of today's billionaires did get their start by asking an Internet discussion board how to get rich, so you are headed in the right direction.

 

[StatGuy2000]

The general answer is that most rich people are self-made (to the extent you can be), but it does vary based on what your cutoff for "filthy rich" is.

You should peruse lists of billionaires (if that's your cutoff) to see how they got their money.

My understanding is different from yours, as I would suspect that a significant percentage of (if not most) rich people inherited their wealth, although this would depend in what country and what criteria you or the OP (or others) uses to determine who is "rich", let alone "filthy rich".

Really? How old are you? It never would have occurred to me to set a bar so low. Have you considered what you want to do with your money? $1m is not enough money to buy a typical Rich Person Starter Pack, much less live that way. As others have said, it's barely enough to maintain a middle class lifestyle in retirement.

As an aside, that's quite concerning for me, since (for reasons I don't want to get into here -- will require a whole other thread) I have very little savings, and I honestly don't foresee being able to save a million dollars (US or Canadian) before age 65 (I am 43 now, going on 44).

 

[russ_watters]

My understanding is different from yours, as I would suspect that a significant percentage (if not most) rich people inherited their wealth, although this would depend in what country and what criteria you or the OP uses to determine who is "rich", let alone "filthy rich".

Your wording overlaps mine...

A quick google tells me for the US it is about 62%, though it will vary by year and criteria. As my parenthetical indicates, everyone gets something from their parents, so one has to judge the significance of that contribution.

Also, this is indeed different from the pre-PC age, as a great many of the more recent self-made billionaires are in the tech industry. That might be the simplest answer to the OP's question.

Most of the "basic" rich work, though; doctors, lawyers, business exec's, athletes/entertainment people, etc. There's millions of them.

As an aside, that's quite concerning for me, since (for reasons I don't want to get into here -- will require a whole other thread) I have very little savings, and I honestly don't foresee being able to save a million dollars (US or Canadian) before age 65 (I am 43 now, going on 44).

I don't know anything about Canada's Social Security system, but I operate on the assumption the US system will be of little help to me, for a couple of reasons;
1. It will go bankrupt in 15 years; before I retire.
2. It is structured to provide a portion of up to a middle-middle class income and nothing above that.

I do think that's relevant to the question.

 

[StatGuy2000]

Your wording overlaps mine...

A quick google tells me for the US it is about 62%, though it will vary by year and criteria. As my parenthetical indicates, everyone gets something from their parents, so one has to judge the significance of that contribution.

Agreed. And the significance of the contribution from parents (or other relatives) will of course vary.

Also, this is indeed different from the pre-PC age, as a great many of the more recent self-made billionaires are in the tech industry. That might be the simplest answer to the OP's question.

You raise a good point, since the varied path toward wealth generation has certainly changed with the advent of the tech industry over the past 20-30 years.

Most of the "basic" rich work, though; doctors, lawyers, business exec's, athletes/entertainment people, etc. There's millions of them.

I guess I never thought of doctors and lawyers as a group to be necessarily counted among the "basic rich", although they are certainly well-paid and compensated, and there are individual doctors and lawyers who are wealthy by any criteria one cares to choose.

 

[russ_watters]

I guess I never thought of doctors and lawyers as a group to be necessarily counted among the "basic rich", although they are certainly well-paid and compensated, and there are individual doctors and lawyers who are wealthy by any criteria one cares to choose.

See here:
https://archive.nytimes.com/www.nyt...12/0115-one-percent-occupations/?ref=business
Note:
That graphic is occupations of those living in a 1% household. So the teacher wife of a doctor is listed there.

The income cutoff of the 1% is $421,000 per year and it is 1.3 million households, which is fewer than I guessed.

This graphic is for the working 1% only. Non-working rich are a separate group. But for example if the proportion is the same as the non-self made billionaires, there would be another 500,000 of them.

 

[AchillesWrathfulLove]

We do something for science (not the other way round) to gain knowledge and not to earn money. If you want to earn money ONLY, then science is NOT your path.

Well don't you need some science to be an inventor like with electronics and stuff? Anyway this was mostly a joke thread that's why I wrote "I want to be filthy rich" and included random ideas I had... but good info guys thanks

 

[gleem]

Study the masters. Steven Hawking was worth $20M. How did he do it? See

https://www.newsweek.com/what-was-stephen-hawkings-new-worth-843892

 

[AchillesWrathfulLove]

Study the masters. Steven Hawking was worth $20M. How did he do it? See

https://www.newsweek.com/what-was-stephen-hawkings-new-worth-843892

Does what you are worth mean how much money you have in your bank account? So he had 20M in his bank account or no?

 

[gleem]

It should include any properties, investments as well as cash.

 

[symbolipoint]

Well don't you need some science to be an inventor like with electronics and stuff? Anyway this was mostly a joke thread that's why I wrote "I want to be filthy rich" and included random ideas I had... but good info guys thanks

Engineering is far more important than "Science" for becoming "rich" or "filthy-rich", because rich people at whatever levels gained wealth through (if technical oriented was meant) would need to be able to contributING to services or products which many people will want to use or consume, or possibly NEED to use or consume.

We in best of likelihood did not take your thread-or-topic as any kind of joke. Without some other kind of indication, any stated topic or topic/posted description would be taken exactly as it is stated. "Filthy-rich" might have caught a few members as humorous or joking, but I did not make such an interpretation.

(EDITED for usage and grammatical coherence)

 

[symbolipoint]

Okay the humor MAY be understood by at least a few smart members.

Filthy-Rich wealthy people should have the sense to not waste their money on foolish or grossly unnecessary things.

See here for examples (I am serious, even if this does not seem like it.):

 

[Vanadium 50]

Boy am I glad I asked!

By that definition, 5-6% of American households are "filthy rich". Their age distribution peaks in the late 50's and early 60's, so it is very consistent with the idea that they made their million by saving. At a conservative 5% growth, it takes $8300/year over 40 years to reach a million.

 

[gleem]

By that definition, 5-6% of American households are "filthy rich".

Is that cash or wealth( cash, equity, investments, etc.)

 

[phinds]

Boy am I glad I asked!

By that definition, 5-6% of American households are "filthy rich". Their age distribution peaks in the late 50's and early 60's, so it is very consistent with the idea that they made their million by saving. At a conservative 5% growth, it takes $8300/year over 40 years to reach a million.

Yeah, but that's the nominal amount. People don't think about the fact that when they say "1 million" they are, without stating it, saying "the equivalent of 1 million in today's purchasing power", and that is a LOT different that what 1 million is likely to be worth in 40 years.

With inflation at an average of 2%, your 5% growth on $8300/yr for 40 years will result in about $270,000 in equivalence to today's purchasing power.

 

[Vanadium 50]

Is that cash or wealth( cash, equity, investments, etc.)

I believe it is net worth.

With inflation at an average of 2%, your 5% growth on $8300/yr for 40 years will result in about $270,000 in equivalence to today's purchasing power.

See message #6 in this thread.

 

[russ_watters]

With inflation at an average of 2%, your 5% growth on $8300/yr for 40 years will result in about $270,000 in equivalence to today's purchasing power.

The 5% includes inflation: it's 8% growth - 3% inflation.

The main thing this oversimplifies is the savings rate is not constant for most people. Not a lot of 25 year olds can save $8300 per year. At an entry level post college salary of $50k, that's 17%. Conversely if the same person makes $200k as a 60 year old, that's only a 4% savings rate. In reality, savings rate goes up with age/salary. That 60 year old could have a savings rate of 50% or more.
[again, all adjusted for inflation.]

But it's a good indicator of how relatively easy it should be to save a million dollars.

 

[Vanadium 50]

The main thing this oversimplifies is the savings rate is not constant for most people.

Certainly true. But.

Your 25-year old is probably paying back student loans. The average rate is 4.8% and the average payment is $400/month. In terms of increasing net worth (which is, in this case, likely to mean "making it less negative"), this is equivalent to depositing it in a risk-free investment that returns 4.8%. I would not consider financial advice like "Pay back the student loans as quickly as you can, and once paid for, invest what used to be your monthly payment" terrible. It's not for everybody, I understand, but I don't think it's intrinsically terrible.

I wouldn't call saving a million dollars "easy" (although I have done it, more than once) because many people don't manage to do it. (About 20% of the 65-69 bracket have $1M) But I would say that it is the way most people who have a million dollars get it/ (It's almost a tautology)

 

[Choppy]

While I don't necessarily endorse everything Dave Ramsay says, if you're interested in how to get out of debt, learning how to manage your money, and the long game of accumulating wealth you might want to give him a listen.

 

[George Jones]

About 20% of the 65-69 bracket have $1M

Do you mean a net worth of 1 million, or, e.g., paid-off house and 1 million in other funds?

 

[Vanadium 50]

Do you mean a net worth of 1 million, or, e.g., paid-off house and 1 million in other funds?

I believe it is net worth.

 

[Vanadium 50]

Dave Ramsey has a bit of a bad rep with me, in party because of a particular forum member who would ascribe all sorts of idiotic statements to him. By now if he told me my mother loved me, I'd look for confirmation.

I don't like the idea of financial gurus in general, but if you must have one, I'd go with Thomas J. Stanley. He doesn't say "do this" and "don't do that". He researches decisions that affluent people have made and decisions people who have not become affluent have made. In short, he describes what has worked in the past.

Mostly he covers spending rather than investing. People who spend more than they make have a hard time investing anyway.