The conventional wisdom says to a kid: study well and get a good job.
It is rare to hear: take risk and start a business.
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Before you get the wrong idea, I am not here to bash conventional wisdom. It is sound advice but not enough.
The fact is that the majority are not born with a silver spoon and getting an income via a job is the usual and most dependable route. A respectable one even. And if one can get excellent grades and earn a high level of income, why not? Academic excellence indeed is able to transform a family’s fortune in a meritocracy society.
But the world isn’t fair, each person is born with different capabilities, personalities and into varied circumstances. Not all are academically inclined for example. All these factors account for the different remunerations one receive from a job – some can rent out their hour at $1,000 while others at $20.
The natural tendency is to seek the highest remuneration one can get but a hierarchy exists and obviously the majority cannot be at the top of the pyramid.
One does not need to stay stagnant and can make progress up the ladder by working hard and smart, not always via academic results. But again, the harsh truth is that not all can progress because seats are limited.
For the lower part of the pyramid, renting out time in a job becomes less economical. Everyone has 24 hours a day and about 40 years of a working lifespan. That is the time ceiling. The difference in wealth between the low and high income earners widens over time.
Hence, ‘study hard and get a job’ isn’t complete advice. One must own equity – starting and owning a business is one way but a riskier one. Not everyone is suitable to become business owners. But one can always piggyback on others by investing in their business.
Investing has its risks and can be difficult to understand. But it can be kept simple by making monthly investments into a well-diversified ETF consistently over a long period of time. One could achieve wealth that way instead of renting out time for a limited period and amount.
We have not seen a Forbes richest making his or her wealth by renting out time. They all own equity. This is an extreme example and the goal here is not to be the richest, but to make life less stressful and more enjoyable by having more financial means – money cannot buy everything but a lack of it would make one worried.
The people with great inheritance don’t really need to invest but they are.
The higher income earners don’t really need to invest but they do.
That’s why the saying, ‘the rich gets richer’.
It is true the lower income earners would find it harder to invest because the disposable income can be negligible after spending for necessities. But complaining isn’t a solution. It just means spending has to be more prudent in order to squeeze out some capital for investment, no matter how small. It can be done. It must be done.
The lower the rental rate for an hour of work, the more one must invest.
