How Do Rich People Get Rich?

There are a lot of wealthy people in the world but what defines someone as rich. Before we work out how to get there we need to know what being rich means.

How Rich Is Rich?

Simple answer is there is no hard and fast rule of what determines somebody is rich. For me if I’m walking through a supermarket and somebody has a trolley full of branded food products I wrongly conclude they are either rich or stupid. The fact is though they may simply prefer these brands to cheaper goods.

There is no specific financial figure that defines someone as rich.

If you live in a major metropolis, London for instance and “own” your house through a mortgage you are probably a paper millionaire. To somebody from the north of the UK whose house cost £60000 the Londoner is rich.

To the person in London struggling to get by, the person who owns their house mortgage free in the north is the rich person.

What we have learned here is being rich is just a point of view from which we see other people.

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“If your only goal is to become rich, you will never achieve it.”

– John D. Rockefeller

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Rich: A workable definition

For the purposes of this post we will define somebody living in the western worlds as being rich if they;

  • Have liquid assets of at least 1 million dollars (or £s)
  • Their primary residence is owned outright.
  • Their income is at least twice their outgoings.

What being rich probably isn’t;

  • Outward signs of possessing money; flashy is not rich.
  • Having a specific salary. $250000 a year is not rich if you spend $300000.

You could probably argue that having a million dollars in this day and age is not a sign of being rich. It would however put you in the top 1% of people in the world. In fact if you are reading this you are probably already in the top 5% of the worlds richest people.

Lets take a second to appreciate our situations, I suspect in reality we aren’t doing too bad.

Now lets take a look at some people who are doing slightly better than us, the super rich.

10 Richest people in the world.

This is the current list of the ten richest people in the world. For a more up to date list you can click here.

  1. Bill Gates
  2. Warren Buffet
  3. Jeff Bezos
  4. Amancia Ortega
  5. Mark Zuckerberg
  6. Carlos Slim Helu
  7. Larry Ellison
  8. Charles Koch
  9. David Koch
  10. Michael Bloomberg

So they are the richest people in the world but how on earth did they get there.

5 Ways Wealthy People Get Money And How That Can Help You.

1) Start a business

Amazon, Facebook, Snap. All these businesses have been started in the past two decades and have made their creators exceptionally wealthy. The owners of “Snap” Evan Spiegel and Bobby Murphy are now worth over $4 Billion each. Not bad for a loss making business that specialises in disappearing photos.

Starting a business may be the most direct way to increase your wealth and push you towards being rich.

Tip: Start you own business by coming up with an idea and following it through. Thousands of people have great ideas but never push it on. Don’t let your idea rot on the pile of abandoned ideas.

2) Inheritance

Money passing down through generations is one big way people become rich. The money may be diluted through more and more generations but all that time it is compounding and growing. The Walton’s are an example of a family passing wealth and assets through the generations. Sons, daughters and extended family have all benefited from the genius of Walmart founder Sam Walton.

Tip: You are probably going to have to marry in to a family with money if you like this. Alternatively consider how you are going to pass your wealth on to your family when you die.

3) Property

For generations property has been one of the most consistent ways to get wealthy. Buying, selling, leasing or renting are all great tactics to utilise to become rich. Wang Jianlin is the owner of China’s largest real estate development company. The company, Dalian Wanda also own the U.S cinema chain AMC.

It is often stated that MacDonald’s is not strictly a burger company, but actually a property company owning sites in some of the most desirable locations around the world.

Tip: Buying rental properties are the obvious way to go for this although house flipping is also an option.

4) Skill/Talent

Being world class at something is one way that people have got rich over the past 100 years. In the age of the internet and social media taking those talents to the masses is a great way to leverage your talents further.
Jerry Seinfeld took his talent as an actor and writer and utilised it across multiple mediums including advertising for Microsoft and signing to Netflix for $100 million.

Sports stars also bring in large amounts of wealth, for most of them however as age catches up the money begins to dry up. One example of the opposite happening is Michael Jordan who during his career was only the highest paid NBA star twice. However his off court activities during and since have pushed his wealth over the $1 billion dollar figure.

Tip: Train yourself up in a very desirable skill, in the fast moving world of technology high skilled people are always in demand.

5) Invest other people’s money

Lots of rich people know better than to risk their own money to bring in more wealth. Utilising a bank’s or investors money to help you gain more dollars is a great idea.

One of the famous examples of this is the owner of Berkshire Hathaway Warren Buffet who early in his career utilised friends and families money whilst risking very little of his own cash. He has taken that to the next level now and his company is now a behemoth of the investing world.

Tip: Borrow money from the bank to invest in rental properties. Ask parents to loan you money to pay for training courses. Get a friend to invest in a business with you.

How do rich people get rich wealthy

There you have five big ways rich people have gotten rich and some tips for you to follow their lead and get wealthy yourself.

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5 Comments

5 Comments

  1. Lesley says:

    Have recently discovered that there is repayment mortgage with a term of 35 years and a starting age max of 80! This has leveraged our rental properties nicely and increased our monthly net
    Wish I’d discovered property when I was much younger than when I did

    1. Frugalfox says:

      Hopefully something for me to get into over the next six months. It’s surprising how fast wealth accumulates when you give it a chance!

    1. Frugalfox says:

      Oh really?! Do you know what channel it was on? I don’t watch TV very often but i could try and find it on demand.

  2. Neil says:

    For me, 1 and 5 are quite similar. I think that most people are looking for:

    1) Relationships (friends, love)
    2) Financial security, freedom, wealth

    If you can come up with a new business that helps to give people more of these then it’s the fastest way to create a valuable business. Look at Tinder, Facebook, all the Fintech startups and all those courses that teach you how to make money.

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