To Get Rich, Just Follow the Instructions

http://finance.yahoo.com/expert/article/yourlife/24513
My little brain simply can't stop putting things into categories and seeking to find the patterns in life.

One of the many patterns I've noticed is that some people in the United States are much richer than others. We have a nation filled with opportunity: free education, easy investing, and cheap interest rates. And yet there's stunning financial inequality.

Disparity by the Numbers

According to my wonderful pal, Phil DeMuth, the top 1 percent of all wealth-holders in the U.S. own about 44 percent of the financial assets of the country, mostly in stocks and bonds. The top 10 percent own about 80 percent of the financial assets of the nation.

The top one-tenth of 1 percent of earners in the nation earn about as much as the bottom 40 percent. That is, about 130,000 high-income Americans earn as much as the bottom 120 million Americans combined.

To me, this is stunning -- almost frightening. But the real question it poses is, how did the ones at the top get there? Obviously, some do it through inheritance, and some have spectacular athletic or musical abilities. But what about the others? How did they get to the pinnacle of wealth?

Think First, Get Rich Later

I'll to offer some homely speculation. First, as the genius financial planner Ray Lucia would say, the first step is to have a plan to save. Without equilibrating assets and liabilities by accumulating lots of stocks, REITs, and cash, you won't get there

But I'm looking for something more basic here. How do you get the income to start saving meaningful sums?

Here's a clue: think. In 1996, when I started shooting "Win Ben Stein's Money," I was assigned a bodyguard named Yaniv. He was a former Israeli soldier, and as tough as old boots. We worked together happily for about 900 shows, and then we worked on "Star Search" together, after which we went our separate ways.

Occasionally, Yaniv would help me set up electronics equipment. He always did a great job because he read the instructions and then followed them.

Up the Ladder

Not long ago, I bought some new stereo equipment for my house and I called Yaniv to come over to install it. He showed up in an immense truck and told me what he'd been doing for the past few years.

He'd become a construction foreman on a jobsite building condos. He was so good at reading instructions that he became a contractor. He was so good at that, investors hired him to build still bigger buildings and paid him a good chunk of the profits.

Now he's building large developments and gets an even bigger share of the startlingly large profits. If a unit costs $300,000 to build, it's not unusual for it to sell for $600,000 to $800,000. Of course, you have to factor in the cost of the land, permits and legal issues, advertising, and the time value of money. But all in all, the profits are consistently immense.

Yaniv, a 32-year-old who still gets a thrill out of his Ford truck, is well on his way to being in the top 1 percent and, after that, the top one-tenth of 1 percent.

Outstanding in Your Field

How did he do it? He reads instructions. Yaniv reads building plans very carefully, then he reads permit applications carefully, and soon a building is done.

Beyond that, he reads life's instructions carefully, too. People make a lot of money building condos in Los Angeles even in an economic slowdown, so Yaniv entered a field that leads to making money.

If he'd continued on as a bodyguard he would've had fun, but he never would've gotten rich. And here his experience proves the great advice of Warren E. Buffett: It's better to be medium-good in a great field than great in a medium field. There are some fields where a lot of money can be made, and real estate development is one of them.

Law is another one, at private firms. Medicine -- if you're a surgeon -- is another, and finance is the highest-paid one. Starting a restaurant isn't a moneymaking field. Teaching and writing, except in the rarest of cases, aren't either. Acting is almost never highly paid, and police work never is highly paid.

Making the Choice for Wealth

Please notice a pattern: the most interesting and psychologically rewarding work is rarely the best-paid. So choices must be made.

If your goal is to be in that top 1 percent of wealth-holders, you have to do what Yaniv did. Follow the instructions to where the money is, and to where it isn't.

There's nothing -- absolutely nothing -- about people who have money that's better than people who don't. But if you want it anyway, simply follow the instructions as to where to find it. It's not that complicated.


SpaceVegetable - Tuesday, February 20, 2007, 12:32PM ET
Overall: 5/5

You reap what you sow. If you're willing to invest your time and efforts, you'll be rewarded. How much reward depends on the choices you make. In high school, I realized the only way I could afford college was to take out lots of student loans and depend on grants and work-study. In order to pay those back, I needed a vreer that paid well enough to afford the payments. So, I chose engineering. I worked hard and started out making only $26K, which was more than my dad ever made in his factory job. Over the years, I've continued to study and keep up to date so I can be useful and in demand, and now I make 6 figures as a consultant. The key is that you have to sacrifice and be willing to make the effort. If you are content in your work, and don't desire greater wealth, that's great. But you can't sit on your butt and expect wealth to be handed to you. As Mr. Stein continues to point out, you control your own fate. Once you start to reap the rewards of your investment, you can continue to build on it, and take advantage of the exponential effect of building wealth through investments. I worked hard to get where I am and I resent that some people think it makes me automatically uncaring simply because I make a lot of money. Ialso don't think I should be taxed more simply because my investments in myself are finally paying off, but that's another issue. I actually like what I do and am good at it, so I'm rewarded in many aspects. Basically, it's all about choices. We're all free to make them and shouldn't blame others when our choices don't bring us the wealth or happiness we desire.


Yahoo! Finance User - Tuesday, February 20, 2007, 11:17AM ET
Overall: 4/5

Many of you are being too literal in asking "here are the exact directions that I need to follow to achieve wealth" That was the 'teaser' headline. If you want directions, here are my directions, with some of Ben's ideas. 1. Find a career path that leads to a well paying job. Web searches show general salary ranges of many careers. Ask people you meet what they do and the pros and cons of their jobs. Most people are flattered to talk about themselves and their career. I'm currently looking for a 'second' career (after 18 years doing the same thing), and people are amazingly helpful if you explain that you're researching different careers. Call a local recruiter and find out about the local job market for that career. 2. "Read the directions" on how to succeed in that job (this may require education, starting at the bottom to learn the techniques - but with an eye on moving up to your final goal.) Don't be shy about asking someone successful in that field to be your mentor. Most successful people want to help others - just be respectful of their advice and time. 3. Work hard to achieve that goal. 4. Live under your means, no matter how low they are. For me this meant used cars (i.e. old Toyota Tercel), roommates instead of my own place, learning to cook instead of eating out. 5. Have pride in your character, not your car. This is a small world. Every person you meet forms an opinion of you. Be known as a friendly, hard working, intelligent person. Luck is less a part of 'being in the right place at the right time', than being the right person for the job. My husband recently found out he would be out of a job due to his company being sold. An ex co-worker of my husband recommended him so highly that a position was created for him at a new company. I put myself thru college (earned a degree in Computer Science), used that degree to earn lower six figures, lived under my means (even when I started working for $19,000 a year). I'm now 43 and very secure financially. Money doesn't buy happiness, but financial security allows me to sleep at night and plan for my future. My husband and I never feel the stress of financial pressures.