Each of us defines success differently, but in most cases building wealth (even if it’s just building a comfortable nest egg) is an important factor.
In Want to Be Rich? Salary Alone Won’t Get You There I shared information pulled from the 400 individual tax returns reporting the largest adjusted gross incomes, a government report that shows how those individuals earned their money.
That information was taken from income tax returns, and there’s no doubt that information found on tax returns might be just one version of reality. A report compiled by the Spectrem Group on the 132,00 people in the U.S. with a net worth of over $25 million takes a different approach, surveying wealthy people to find out how they say they made their money when the IRS isn’t involved.
So what do they say made them successful?
- Hard work: 87%
- Education: 78%
- Smart investing: 72%
- Taking risk: 63%
- Frugality: 59%
- Being in the right place at the right time: 56%
- Luck: 53%
- Running a business: 46%
- Guidance offered by an adviser: 35%
- Inheritance: 30%
What can we learn from those results?
If you want to be wealthy:Hard work is required. Nearly every wealthy person credits hard work for his or her success. (That sounds like bad news for the “live on an island while you generate passive income” crowd.)
Education is also extremely important. The study doesn’t differentiate between formal and informal education, but clearly people who succeed place a high priority on constantly improving their knowledge, skills, and experience.
Sometimes you have to take a risk. Over half of respondents say taking risk contributed to their success. Of course there’s a huge difference between blind risk and intelligent risk — which is where education and experience play a key role.
But you also have to hang onto what you earn. Over half also cite frugality as a key factor. (While the last two might seem contradictory, risking capital on a startup could generate a significant return; buying a new Porsche will not.)
Luck plays a role. Good fortune and being “in the right place at the right time” were both credited by over half of respondents. Even so, it’s possible to make your own luck — you can’t be in the right place at the right time unless you’re actively seeking opportunities. (The “right place” is never sitting on your couch and hoping lady luck will find you.)
It doesn’t matter where you start. Fewer than one-third of people with over $25 million in assets credit inheritance for their success. That means two-thirds went out and created their own success.
Let’s see: hard work, education, taking intelligent risks, spending money wisely, striving to be in the right place at the right time, and working to create your own success.
Does that sound like a plan you can follow?
Of course it does.