Wealth Accumulation vs. Risk

We see great looking celebrities in magazines and on television, and many people want to be like them.  Not only do people want to look like a supermodel, but they also want the lifestyle of the rich and famous.  I can understand the rich part, but not so much the famous part.

We also see successful (at least as defined by money) investors and entrepreneurs.  Many people aspire to be like them.  Again, I can understand wanting to be rich, especially if it is for the right reasons.  Having wealth means that you have a certain element of freedom that most others don't enjoy.  It allows you the opportunity to focus on what is most important to you, whether it be spending time with family, pursuing your calling in life, relaxing, or any combination of these and other things.

It is important to give yourself a reality check though.  There is certainly nothing wrong with aspiring to be rich, but the chances of becoming extremely wealthy are almost zero.  You are almost definitely not going to be one of the rare billionaires in this world.  You are probably not going to be a decamillionaire (assuming no mass inflation).  You can become a millionaire with some realistic expectations.

It is not a good idea to look at someone like Donald Trump or Bill Gates or Warren Buffett, at least not in people to copy.  Most really wealthy people had a combination of things going for them.  Many started with money in the family in the first place.  Many were in the right business at the right time.  Many took huge risks.  Almost everyone had a combination of good timing, good luck, and taking an opportunity when it presented itself.  And, of course, there are some people who just have a unique skill, like singers and athletes.

You can only control what you can control.  It is true that you have to make your own good luck, at least in a way.  But this doesn't mean you should take foolish risks.  For every really wealthy person out there, there are probably another thousand or more who failed miserably.  While there is nothing wrong with failing in starting a business, it isn't good when it takes most of your money away from you, unless you started with almost nothing.

There are a lot of people who take major risks with a lot of money.  You hear mostly about the ones who made it big.  And it doesn't really matter much whether they made it big through luck or wisdom.  The point is the statistics.  Most people who take major risks with a lot of money, end up losing that money.  There are probably ten thousand restaurant owners who go out of business every year and that is in just one sector.

I think it is better to emulate someone that you can actually realistically follow and expect to achieve some success.  You are not going to be the next Steve Jobs.  But you could be like the guy in your town who bought residential real estate when he was a young adult and now owns 20 houses free and clear and makes $200,000 a year in net profit.  You could be like the guy who was a plumber for 10 years before starting his successful business that brings in over $1,000,000 per year now.  You could even be like the office worker who saved 15% of his income every year and made smart investments and paid down his mortgage.

Most rich people do not have a glamorous story to tell.  They stuck to their knitting.  They made a plan (even if not a great plan, it can always be revised), they took smart risks, they put in a little extra time, they saved some of their income, and they took action.

If you really want to figure out how to be successful in terms of making money, then talk to ten people who are well off and ask them for some secrets.  You might be surprised how many will share their story.  Meanwhile, ignore the celebrities and the super rich.  And if you are going to make a big investment in a startup business, then do most of that investment with your time and very little with your saved money.  You are not going to accumulate wealth by destroying what you already have.