In research on the differences between the rich and everyone else, Tom Corley found several main factors.
Tom Corley researched paths to wealth. He interviewed many rich and poor people, learned their habits, and has published several successful books on the topic.
He found that there are four paths to wealth, and determined which one is easiest.
The four paths to wealth are: Saver-Investor Path, Big Company Climber Path, Virtuoso Path and the Entrepreneur Path.
The “Big Company Climber Path” is where one gets hired by a large corporation, and then attempts to be promoted as high as possible. This takes time and is prone to company politics, and all the attendant issues in a corporation.
The “Virtuoso Path” is where one attempts to be a world-class performer, such as in music, sports, medicine, or other field of endeavor. This requires extreme dedication and a single-minded focus for many years to perfect the skills necessary.
The “Entrepreneur Path” is where a person founds a company and attemptsĀ to grow it in a large successful corporation. Examples are Elon Musk, Richard Branson, Bill Gates.
The “Saver-Investor Path” is where a person with a middle-class income saves a portion of their income and invests it. This is seen as the easiest path.
Tom Corley details why the “Saver-Investor Path” is the only path available to everyone:
– No special skills needed
– No special knowledge or degree necessary
– Low risk
– Does not require extreme dedication
– Does not require personal isolation
There are four requirements for the Saver-Investor to be successful:
– Middle-class income. A poor person does not usually have enough disposable income to save and invest.
– Disciple is needed. Saving at least 20% of one’s income, investing part of the savings. Therefore one must live below one’s means.
– Consistency. Once started, one must continue to save and invest reguarly.
– Time. This is a slow process. Tom Corley states it takes on average three decades to achieve this result. (I can testify that it can be done in much less time, even as low as two decades.) Which means a person starting in their twenties or thirties has the best shot. Starting later means saving a larger percentage of one’s income.
It is the ability to live below one’s means that allows one to accumulate wealth. Spend less than you earn, save and invest that difference. It can be done. You can do it.
What are you doing? Let me know here.
The illustration Buddha Illuminates The Universe is from Kytoto, Japan, approx. 1225-1275. Courtesy New York Public Library.
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