8 Ways to Make Money. Spoiler alert: only 3 work
Are you looking at ways to make money, become wealthy and achieve financial freedom? Inspired by a thought provocative list published by Financial Planner David Bach (author of the Automatic millionaire), I share my updated version: 8 ways to become wealthy! Spoiler ALERT: only THREE of them TRULY work!
1) Inherit it
This is how a small group of families amassed their wealth for decades or even centuries. Out of business, power or any other mean, the original wealth is passed down to succeeding generations. No doubt, the easiest and fastest way to acquire wealth is to inherit it. Clearly, inheriting wealth is mainly a matter of blood; Warren Buffett calls it “the ovarian lottery”. You have to be born into the “right” family. If you want my take on that, this approach is NOT even worth considering for several reasons:
A) There is something sad or even sick about thinking about the money you can get from your parents when they die.
B) There is a school of thought ready to report undeniable evidence that generational wealth is lost in a few generations. A groundbreaking 20-year study conducted by wealth consultancy, The Williams Group, involved over 3,200 families and found that seven in 10 families tend to lose their fortune by the second generation, while nine in 10 lose it by the third generation.
C) There is another school of thought that reports very low social mobility and that wealth is simply “protected” and transferred among rich people. Therefore, the rich stay rich, and the poor remain poor unless we don’t strongly intervene with Redistribution Politics. We can enter into political or sociologic analysis, and discuss and implement a 10-year plan to change society. It is your choice. In the meantime, if you want to take control of your financial future, what can you do?
My bottom line is that inheritance is out of your control. If you have one, take it. Otherwise, move on and forget about it!
2) Marry it
If you can’t inherit it, the second easiest and fastest way to acquire wealth seems to marry someone who is already wealthy. And sometimes that person may even be kind, generous, compatible and loveable. And, if not, divorce can pay off handsomely. However, do you need a moralistic speech? Let’s rely on the popular saying: people who marry for money generally end up paying for it in one way or another. So, unless you truly fall in love with a wealthy person, forget about it!
3) Win it
If you can’t inherit wealth, can’t marry it, then maybe you can win it. Lotteries abound, paying out multi-million dollar jackpots, and eventually, someone always wins them. And remember the slogan: you can’t win unless you play, right? Unfortunately, you have a greater chance of being struck by lightning than winning the lottery. Now let me ask you something else. Have you ever won the lottery? Do you know anyone who has won? Exactly. If you need extra motivation to move on, keep in mind that most lottery wins are extremely taxed, and paid over several years. While the ultimate amount you get in your pocket is strongly sliced, the final blow comes from the classic behaviour of the lucky winners: they mismanage the money, spend it in crazy ways, ending up worse off in a few years. You might still dream of the “crazy expenditures”, but forget about ending up wealthy and financially free! So, forget about it!
4) Steal it
If you can’t inherit wealth, you can’t marry it, or win it then maybe you could steal it. You could “cook the books”, steal millions of dollars, buy a $20 million dollar home, lie to the feds, and hope you don’t get caught or convicted. I don’t recommend anyone try to get rich this way. Not a legal (or moral) way to get rich. Technically, the risk-reward is not positive in the long run. Forget about it!
5) Sue for it
This one is really big these days. More than three-quarters of the world’s lawyers practice in the United States, and upwards of 94 per cent of the world’s lawsuits are filed here. It seems some people feel that rather than earn, save, and invest, a better strategy is to find ’em, sue ’em, and sock it to ’em. In any case, it’s not a real system that can be counted on to build wealth. So, forget about it!
6) Save it
You can track every dollar you spend, be a minimalist, apply geo-arbitrage and live in cheap countries, become a digital nomad or just be frugal or more intentional with your expenditures. You keep your overheads down and save as much as possible. If not taken to extreme measures (becoming a cheap, greedy or stingy person), and not used as the only strategy, saving (storing away) is a necessary process for building wealth and financial freedom.
7) Work for it
People rarely get rich from the income of a job. Still, the income from your job, career or side hustles is a building block of wealth creation. This is where the monthly “seeds” capital to be invested comes from. As such, it is a pillar of wealth creation, as long as you manage to divert a reasonable percentage of income (i.e. savings) to productive tasks. Which one? Check it out in section 8!
There are several ways to invest in productive assets and build income streams. You can invest through traditional methods like Real Estate or the Financial Markets (stocks, bonds), or try more modern options like Peer to Peer lending, Equity crowdfunding or Crypto. There are four keywords I use when investing:
1) Quality assets
2) Diversify, based on geographic location, currency, and asset class (Real Estate, Stock, Bond or alternative assets)
3) Rely on passive and investment models
4) Let it compound (long term, with automatic re-investments)
For a quick view of my current investment platforms, check out this page.
It should not come as a surprise that my key pillars for wealth creation are built on saving, working and investing. The rest is just nonsense.
Still, I don’t think these pillars for Sweating Your Assets only entail formulas or processes on how to save or invest. Wealth is not only created through technical skills on how to manage money properly. There is the other side of the coin: the soft skills required to have the right mindset to build wealth.
You can check out these articles:
Keep it Real. Sweat Your Assets.