Before reading this book further, please read this preface.
Wouldn't it be wonderful if everyone were rich and no one poor? If poverty didn't exist? If the only wealth disparities were whether she had $20 million, he had $7 million, and another one had $7 billion? Feel free to disagree, but I don't see much merit in poverty. Sadly, I can't see poverty being eliminated in your lifetime or mine. Still, I believe you can do your little part toward that goal by making yourself wealthy in a way that creates wealth for society as well. If you get yourself rich in one of a handful of appropriate ways, you make the world a better place. Others benefit as you get rich, as you will read later. I, for one, would like you to do that.
But how? Well, that's what this book is about. There are really only ten ways to get rich. This book details them and shows you the good and bad qualities of each so you can pick among them and decide which is right for you. Then, the book teaches and guides you on the basics of each.
It's true not everyone can become rich. But it's clear to me that most people can—they just don't know how. If more people knew how, we would have more rich people and the world would be a better place. I'm asking you to read this book and then do your part.
Now, if you know me from past books or my long-running Forbes "Portfolio Strategy" column, you may not know I'm a roads scholar. Not a Rhodes Scholar who got money to study at Oxford, but the more important kind—that studies the various roads leading to financial success and failure.
It started as a kid in the 1950s, dreaming of becoming a professional baseball catcher and simply adoring Yogi Berra who famously said, "When you come to a fork in the road, take it." For decades I've kept a large version of that quote on a note board within three feet of me at my desk, collaged with photos and notes of people that are and have been important to me. Takes decades of wisdom to get life down that simply. Pretty much sums up how to get super wealthy, once you understand the roads.
Berra later decried most all his most famous Yogisms. He claimed this particular quote was simply driving directions to his home, and when you got to the fork it didn't matter which way you went because they reconnected later and either fork got you there. If so, it's kind of a Zen-like statement about continuing—like the command, "Further"—and we can use that too. But growing up I assumed Berra's was a comment about making quick, fundamental, timely decisions without great road signs. Maybe I was wrong all this time. But I still prefer my interpretation of the great American Yogi. In life there are roads leading to riches and roads not. There's nothing wrong with ones that don't, but if you travel them you'll go where they take you. Don't be surprised.
To methodically get rich there are only ten basic roads. Find one making sense for you, get to that fork in the road, take it, and stick to it. But ten roads can be confusing. Ten! Hence the need for this book. Reading it may not make you a roads scholar, but you'll know enough to get the rest of the way down your chosen road (or roads) on your own.
One point: If you've read any of my prior books, this isn't like them. They were largely about capital markets, primarily stocks and bonds. That is my main background as founder and CEO of a global money management firm running over $45 billion in stock and bond money for institutions and wealthy individuals. But this isn't a capital markets book at all. It's a detailed micro and macro inspection of how very wealthy people get that way—and how you can too!
Why ten roads? Why not five? Or 100? It's just the observation of this roads scholar from studying wealthy people all my 36-year investment career. I've got over 25,000 wealthy clients I've studied carefully—some for decades. As a 24-year Forbes columnist I've studied and written about the annual Forbes 400 list of richest Americans for decades—and been on it and the Forbes global billionaire list myself since 2005—and know people on both lists in and out of America, and interacted with many more very wealthy people. From all my observation, I can tell you they all fit into ten basic categories.
But this book isn't about "what most rich folks have in common." There are plenty of those books and they're perfectly fine. They're usually about one road—"live frugal and save." Like The Millionaire Next Door, Rich Dad Poor Dad, The Automatic Millionaire, on and on. They tell stories from a traditional American Calvinist, Christian background—about down-to-earth, frugal folks with a great work ethic who own gas stations and trailer parks and sock away a few million. Or your typical, middle-class, modest homeowner in a modest neighborhood driving a modest, used car, working 70-hour weeks, saving and investing well. These books admonish you to be like them. That's a fine road, to be sure. It's the most common way people get wealthy, though it doesn't generate the biggest fortunes. I call it "The Road More Traveled," and it's this book's last chapter. It's a perfectly valid road—the preferred road for many and the only for some. While fine, it's just one road and generally not how the mega-rich did it. The richest can be frugal or not—it doesn't much matter because they create so much wealth mastering one of the other nine roads. Frugality is a virtue but isn't necessary to becoming super wealthy, as you'll see.
No one tells you how to get mega-rich—which is why you need this book. But you may not want to be mega-rich. Well, the good news is the same roadmap to these ten roads applies if you want to be worth $3 million, $10 million, or $300 million.
One convenient feature—this book is modular—one chapter for each road. You needn't read them in order if you don't want. If you want, after this preface, skip to the middle of the book—doesn't matter where. Start a chapter. If you decide that road isn't for you, skip to another one more suitable. Throughout the book I reference the other roads—as in, "No, that isn't this road, that's that road in Chapter 9"—sometimes earlier in the book and sometimes later. Think of it like a collection of ten little mini-books.
Now, all these roads aren't for everyone. Can't be! But at least one is right for everyone who wants to be wealthy. What are these roads? To acquire big wealth, you can:
Start a successful business—the richest road!
Become CEO of an existing firm and juice it—a very mechanical function.
Hitch to a successful visionary's wagon and ride along—it's high value-added.
Turn celebrity into wealth—or wealth into celebrity and then more wealth!
Marry well—really, really well.
Steal it, legally—no guns necessary!
Capitalize on other people's money (OPM)—where most of the mega-rich are.
Invent an endless future revenue stream—even if you're not an inventor!
Trump the land barons by monetizing unrealized real estate wealth!
Go down the Road More Traveled—save hard, invest well—forever!
Follow one of these ten roads. Or a combination. We'll see some people who went down one road successfully and switched to another. For example, become CEO of a firm you didn't start (Chapter 2), build it up, sell it off, and use the proceeds to start your own firm, which ends up even more successful (Chapter 1). Or be a media mogul (Chapter 4) and a successful CEO. Some people do two roads at once. I'm a founder and CEO of a firm (Chapter 1), but it's a firm capitalizing on other people's money (Chapter 7). If you can do two at once it's faster. Harder, but faster. But most wealthy folks travel one road their whole lives. That works. It's more than enough.
Warning: Some Parts May Be Offensive to Some People!
You may see some roads as ill-advised, squawking, "That's ridiculous. Starting your own business is too risky." Or, "Who'd want to own real estate today? It's a bubble." Others may say, "That's both terrible and tacky! You shouldn't suggest everyone marry for money like Anna Nicole Smith or John Kerry." I'm not suggesting any of that. Or, if you disagree with me and don't think you should be rich, that's fine with me, too—totally up to you—not my business that you get rich or how. Life has many rewarding roads not about wealth. You should find that right path for you, whether it's about money or not.
Note: I guarantee some roads, or parts of some roads, may offend you—and will definitely offend some people. There will be offended Amazon.com reviewers decrying what they see as the terribly offensive things I suggest people do. Why? I don't know—but since forever, people getting rich in certain ways have always been offensive to some other people. But that's ok—again, ten roads. Every one of these roads is valid for someone—although offensive to someone else and that someone else may be you. Sorry! Don't shoot the messenger.
If a particular chapter seems frivolous or offensive, that's not your road. Read through or skip it—up to you. My intent in writing this book is not to offend. For example, I talk about myself in several of the chapters as an example, because I have a lot of first-hand information about me. Some of you may think me talking about me is offensive. I'm just trying to show you the roads and not trying to offend. If you get steamed up while reading, have a glass of wine, take a walk, kick the dog, do whatever you do—and then come back and start in on another chapter.
And of course, there are some who simply find the whole concept of "getting rich" offensive. If that's you, I have no further advice for you and you won't like the book for obvious reasons.
Actually, becoming rich usually means doing good (as you will see) and often living an exciting life. Where would humans be today had Bob Noyce not co-invented the integrated circuit? He chose a path to riches and benefited the world immensely—rich, poor, in between, everyone. We'll see that beneficent effect repeatedly in people who changed the world for the better, doing good, getting rich, and enjoying their lives. That's a beyond-great thing for everyone. And feels great to those who do it.
The good news is—and few will tell you this—making $30 million or so in your lifetime isn't that hard. Example: Build a not-so huge business (Chapter 1) that in 10 years grows to $15 million in revenue. If it has a 10 percent profit margin, you have $1.5 million in profits. If it's worth 20 times earnings—not extraordinary—there's your $30 million. After a few years, you'll know if your firm is further scalable or not—if it can grow much larger. If so, you could be very wealthy. If not, sell, collect $30 million, and go be happy. Or maybe start something else. Or retire! Up to you.
Is it impossible? No! Is it trivial? No—but if you fail, you can start over. Start young enough and you have maybe three to five stabs at it. If you fail, you can try being an entrepreneur again or try another road. Nine more!
Well, what does "rich" mean to you? A million? Five million? Fifty? Ten billion? What's plenty to some falls far short for others. An example: A married couple, two schoolteachers, makes $60,000 a year. One spouse works part time and stays home with their two kids. A modest lifestyle, but they fully fund their IRAs each year and invest wisely. At 65, they conceivably could have $4 million saved. Or more, if they take advantage of their school's 403(b). That $4 million, if managed well, could kick off $160,000 in annual income after taxes and inflation (distributions of 4 percent). That couple may feel rich—their income increased over two and a half times in retirement. If your income increased over two and a half times, you might feel rich, too.
Conversely, a surgeon makes $600,000 a year with a big house, new cars, annual face lifts for his wife, expensive vacations, and a high-society lifestyle. He believes he can afford it. Why not? It's his money. When he retires, he's socked away $4 million too. But will he feel rich on $160,000 a year? No—it's a mere 27 percent of what he used to make. Four million makes some feel rich, others poverty-stricken. "Rich" is relative—truly in the eyes of the portfolio holder.
What can we know about being rich? Well, generally wealth must last longer than it used to because people live longer. Our surgeon may be 60 with a 45-year-old trophy wife. He may live 20 more years and she may live another 55—until she's 100. Their $4 million must cover her life. A few excess inflation hiccups along her 55 years and that $4 million may make her feel a lot more pinched and very unrich.
It used to be a millionaire was considered rich. That's pretty much never true now. Financial planners will tell you to withdraw no more than about 4 percent per year from your assets, depending on circumstances. For some, much less. But a millionaire taking 4 percent with 30 years to live would be getting below median income where I live, near pricey San Francisco. Not poverty—but not rich. So it still comes back to you deciding what's rich for you. Feeling rich is being rich.
Yet if you think of these roads correctly, it's possible to simply forget all that because you can create so much more wealth that issues of what is or isn't enough can simply fade away. As you read, you'll see examples of people creating mega-wealth that makes frugality become unimportant by any standard. It's just a matter of making one of the roads that leads to big wealth work for you.
This book isn't about celebrities—though I use many famous people as examples of success (and sometimes failure). The book is about the roads, not the people. Basically there are two types of celebrities. One got famous and subsequently rich from the celebrity. For example, boxer George Foreman retired penniless but famous, so he leveraged that into an enterprise based on his fame (Chapter 4). Merv Griffin got fabulously rich, even appearing briefly on the Forbes 400, building a media empire from his relatively modest fame as an entertainer (also Chapter 4). The second celebrity type made money first, and then got famous. Warren Buffett comes to mind. Or Ron Perelman. Famed for their wealth.
The topic of getting rich through celebrity leads me to harsh advice. Acting, singing, sports, or other entertainment done with the explicit goal of becoming rich is the wrong motivation and terribly tough—as shown in Chapter 4. It's a legitimate road, but be warned: Other roads have much higher success rates. This is not a comment on the nature of celebrity, which is neither good nor bad by itself. The right motivation to be a singer or actor is wanting to sing and act. Overwhelmingly, most starve. I'll take you through the stats, but they're scary. Almost none get rich. Celebrity is not a goal. In this book I won't be able to avoid some discussion of celebrities. But the focus is on the roads.
For example, of the money-first-then-fame crowd, it's hard to avoid mentioning Bill Gates. He's the pinnacle of success of a particular road to riches. I can't really cover that road or any other without at least citing those who've traveled it most successfully. But I focus more on the less famous or nonfamous wealthy who used that road—right on down to those using the same road for nonfamous amounts of wealth. For your purposes they may be more useful examples. If you want salacious stories about Bill Gates or other celebrities, there are plenty on the Internet. This book simply identifies which road or roads these celebrities took, and how you can navigate those roads to success—to whatever degree you choose.
Are there really just ten roads? Yes and no. There are more ways to get wealthy, but none you can plan for. For example, I can't write a book on how to inherit $50 million. Either you're closely related to the rich or you're not. There could be a book on how not to squander a fat inheritance or not to tick off your grandpa so he leaves it to charity instead of you—as Paris Hilton's grandfather did. Or Leona Helmsley: When dying in 2007 she left $12 million to her Maltese dog, "Trouble," and more to Trouble's custodian—Leona's brother. Half her grandchildren got nothing—not even Trouble-visitation rights.[2] The rest of her estate (anywhere from $5 billion to $8 billion) is intended to go to "dog welfare"—the Humane Society should make out huge.[3] There's no strategizing for how to be an heir or heiress. Or for how to be a pampered pet pooch.
Nor is there a strategy for how to be a super-rich lottery winner. But this is a fate you shouldn't hope for because of the well-known and documented lottery curse. Tragedy doesn't promptly damn every huge lottery winner, but it does more often than not. And it will damn you, too.
For example, Jeffrey Dampier Jr. was by all accounts a nice guy. Had a tough upbringing on Chicago's West Side. As luck had it, he won an Illinois lottery—$20 million. He left cold, snowy Chicago for Florida, but didn't forget his family—showering his parents and nine siblings with gifts, trips, cars, and homes. He even treated his wife's family. But it wasn't enough for his wife's sister, Victoria. She and her boyfriend kidnapped Jeffrey and shot him dead. No more Caribbean cruises after that.[4]
Jack Whittaker won a 2002 $315 million Powerball jackpot. Soon his wife left him (money can't buy love either), his much-loved granddaughter died from a drug overdose, and his daughter was diagnosed with cancer. One may sympathize with his need to self-medicate, but there's no excuse for his DUIs. His habitual frequenting of strip clubs also proved painful. On one visit, his car was burgled. Thieves almost got $600,000. (The money was reclaimed later. His reputation was not—stripped of it at the strip club.) His money was hard to keep track of too. Whittaker repeatedly wrote bad checks—was even sued by an Atlantic City casino for check-kiting. In all, he estimates he's been involved in over 460 court actions.[5] Admittedly, he's still got money and is alive and kicking—so he made out better than Mr. Dampier. But 460 court actions? That's misery, not rich. It reminds me of the famous Mexican curse, "May your life be full of lawyers." Besides, you can't plan to be rich that way—and you don't want to be miserable that way.
I believe from studying it, people who create their wealth on these ten roads end up more happy than the few who get lucky getting wealth in ways that can't be planned for. The people who made their own wealth earned it and are confident about themselves relative to their money. Reading about these ten roads, you're going to see lots of happy people. Yes, you'll see a few who aren't and I use them as examples of what not to do. For example, in Chapter 6 I show you how to steal money legally. It's a kind of touchy issue that may be offensive to some—maybe to you! But I show you that the folks who go down this road feel great about themselves. Then I give you some examples of people who forgot the legal part. They did almost the exact same thing but broke the law and are in jail. They don't feel so great about themselves.
Every chapter has its successes and failures—and lessons from both. But going down these ten roads successfully is also about being happy in your life. Chapter 5 isn't called "Marry Rich," which might imply marriage for money without love—leading to a future that might have money but also misery. It's called "Marry Well," which includes the whole package of all good things. But that chapter also covers mistakes to avoid that can otherwise lead to failure and misery. Every road has blind side-alleys to avoid.
A Sidetrack Off the Road
There are plenty of ways not to get rich that may work one time out of a million. Someone goes boating. Boat sinks. He dives to find said boat—finds sunken treasure instead. Doesn't mean you should take up boating. That isn't a road to riches; it's pure luck. That someone did something and succeeded doesn't make it something you should try. For example, writing is perfectly honorable but doesn't make many rich, as I detail in Chapter 8. I'll also show you what to do instead if you're a writer and want to be rich. But for the most part, writing is a labor of love, not money. Yes, some few do succeed at it like JK Rowling and Stephen King. And we cover them and show you how they went down one of the roads—and how you as a writer can emulate their success. But Chapter 8 is about the twist they apply. Otherwise, getting wealthy as a writer is extremely rare. Normal writing is more a wealth rut than a road.
And book writing is a lot of work. So if it isn't a good road to riches, why do I bother, and particularly for this book? Two reasons! First, writing is a labor of love and I enjoy it and have for a long time. I have a great time writing. Second, being already rich, this book is a way to give back and show others how to get rich, so someone like you can if you want. I'm 58 and late in my career. I like what I do but I don't have that many more career years ahead of me relative to behind. My wife and I have three grown sons. I get to live where I want, do what I want. I have hobbies I like. My version of giving back is not giving money to opera. Nothing wrong with opera; it's just not me. My charitable output has been completely defined through the grave for a long time. The overwhelming bulk of my wealth goes to Johns Hopkins Medicine—which in my view helps people after my life through medical research. In effect, for a long time now, in a financial sense, I simply work for the benefit of that fine institution. But giving back for me isn't about being a Boy Scout leader—again, nothing wrong with it—just not me. For me this book is a logical way to give back so someone, maybe many, maybe you, can see for the first time how you can become rich to your satisfaction in a logical, methodical manner.
Now you have your roadmap in hand and we're ready to embark. Consider each chapter a trial run. Maybe the road appeals to you, maybe not. But there's a right road here for everyone who desires riches, if you can navigate the common pitfalls. The beauty of these roads is they work in good times and bad. Doesn't matter what's happening to others on other roads—it only matters that you find and pursue your road.
Some of the folks profiled here you'll want to emulate. Others are (sometimes comical) examples of what not to do. But even the more comical folks profiled here have made big wealth. Who's to say who is right and who is satire? If you want to be rich, who's to say someone's road wasn't the right one as long as they got down it happily without breaking the law and with their mortal soul intact? If they did it by dancing in a chicken suit as I detail in Chapter 4, who are you or I to judge?
May your own journey start now! At the end of this book if you've decided none of these ten roads is right for you, and you have no interest in being a roads scholar, at least by reading about the ten roads you'll have saved yourself the trouble of going through life and finding yourself at the end of a dead-end road. And that's not so bad, either.
Enjoy the tour and learn what you can from these folks who've already found their roads.