How to be rich (part 2)

Exactly 5 months ago, I suggested that a mentor is the way to riches and that luck may play a part.

Now we have hard data that luck really plays a part (at least according to a report by trusted names like Capgemini and Merrill Lynch).

A high net worth individual is defined as having more than US$1 million of investable assets on top of his/her residence property. So if you have US$1 million in your savings account, you're a HNWI. Or if you have a 2nd property worth US$1 million, you're one of the 67,000 HNWIs in Singapore.

22% of the high net worth individuals in Singapore became rich because they inherited the wealth.

That is about 15,000 of them. They are lucky to have wealthy parents. Their lucky kids are probably future HNWIs.

To be fair, the rest are self-made millionaires. In fact, 36% or about 24,000 got rich from their businesses, but a week ago, we just touched on the issue of fewer entrepreneurs.

22% + 36% = 58%

So what about the remaining 42%? I infer from the report that "earned income" and "stock options" are 2 other major sources of wealth. (Now, doesn't "stock options" relate to owning a business, or at least part of it?)

The question now is: Is it possible to become wealthy working for others?

Consider the case of a financial futures dealer/broker. The 75th-percentile dealer earns a monthly gross income of $23,517 (see top 100 jobs). In 10 years he'll earn $2.8 million. This is more than enough to own a property to stay in and have more than US$1 million in investable assets. He'll be a HNWI before hitting 40 years old.

So, to answer the question, yes it's possible to be wealthy through earned income. But it depends on what job you do.

Otherwise, you can always be lucky.

http://www.salary.sg/2007/how-to-be-rich-part-2/

I did not read the report.

But does the business include inherited businesses or new self made businesses?

jiante, it's not clear from the report.
But I believe there's a possibility of a person being "inducted" into a business and thereby making him wealthy "because of business." Then he's not as self-made a millionaire as it seems to be.

[Salary.sg]

In an interview with BT published last weekend, Dennis Gillings who is billionaire owner of private pharmaceutical research company Quintiles Transnational claims that some luck was on his side:

"Well, I am pretty happy generally," he says slowly. "I started the business in the US at the right time and that was lucky. You have to have some luck on your side - the timing was lucky but the starting wasn't, that was my decision.

"Then, I was lucky to be in the US. At that time it was easier to start a business in the US than the United Kingdom. But I expanded to the UK later and then to Asia. All those were good decisions.

"I suppose I stumbled a bit on appointments in the 1990s but I learnt from it and after we went private, I think I have put an outstanding management team together. I tend to feel we should be free to make mistakes, you just don't make the same mistake twice.

"Taking the company private was sensible," he adds. "It allowed me to make acquisitions so we had both organic growth and acquisition growth. But the privatisation was also lucky as I got it at the very bottom of the market. You can only see that on hindsight, not foresight although I felt it in my bones then."

[sportscar]

That guy's lucky. Could we trade places, even just for a day?

[Hermit]

It is not easy to get rich working for others.

Even if you think your salary + bonus + allowances + etc is very high compared to other "employed" peers, you are still way way below people who own or part-own a business.