This is most definitely not the experience I have had when doing volunteer financial counseling. (I ran out of ways to say "If your take home pay is $4,000 and your "absolutely mandatory" expenses are $5,000 then you will lose.")
Actually this is exactly why people borrow money from banks. The trick, of course, is to know that your income will at some point rise to cover the cost of borrowings.
Get seriously ill regardless of what kind of medical coverage you have. My ex was career military. We had very few medical expenses -- the occasional pharmacy copay for items not carried at the military hospital (items on base were dispensed free). My health crisis still created financial problems.
There is a page by Phil Greenspun about how even Bill Gates only became rich by having rich parents (I'd post a link if this stupid cell phone supported copy and paste, so I must rely on your google fu instead).
You must consider too that many entrepreneurs start several businesses through out the course of their lives. For each attempt, an entrepreneur would increase his/her chances at attaining wealth by 5%, no?
Well, if you wanted to be a real geek about it, given n attempts, your chances of a single success are 1 - (.95 ^ n)... but I'd also like to think that an entrepreneurial endeavor is not pure chance.
> I'd also like to think that an entrepreneurial endeavor is not pure chance.
Agreed, I don't think you'll ever succeed in your business attempts if you're not providing something new, original or just not established in the area. You'll make a killing opening a coffee shop in a moderate sized town - as long as there's not 3 Starbucks already there.
There's a lot to business beyond the idea, hence it's important to be a businessman once you've succeeded your entrepreneurial dream of getting a company started. You don't want your company to fail just because you fucked up and didn't file your taxes.
No... not if you are implying this because of a 95% failure rate, your odds improve with each attempt. Statistics have no memory. You are statistically part of the same group every time. You don't increase your chances of flipping a "heads" on a fair die by flipping tails first. The odds stay at 50%.
That's not to say that multiple attempts at starting profitable businesses won't teach you things, and increase your chances of success, your chances of picking the right strategy out of the gate, etc - but there is no simple "Hey if you list yourself as "entrepreneur" and keep trying, you'll end up rich.". Many people just end up wildly in debt and failure.
It's also not useful to take some aggregate 5% of businesses succeed so I have a 5% chance. Some business lack the talent, idea or plan to make it and have a virtually zero chance while others are way on the other end.
Worldwide? Honestly, cronyism explains a lot. Carlos Slim, and virtually all the Russian oligarchs, are as rich as they are because they knew the right people when vast parts of the economy were "privatized" right into their hands.
"The global wealth pyramid has a very wide base and a sharp point. The richest 1% of adults control 43% of the world’s assets; the wealthiest 10% have 83%. The bottom 50% have only 2%."
Why do they never think to age adjust these damn numbers? is it not common sense that you can't compare a 22 yearold college grad entering the workforce with $50k in debt to a 65 yearold lawyer about to retire?
I guess because then the numbers stop looking so shocking.
How is that evidence in support of the thesis that age correlates with income or wealth once one adjusts for the increased mortality which correlates to poverty?
If you live in a mud hut without debt then you technically have a higher net worth than a recent college grad who may very well have a negative NW due to debt.
No, I just formed a poor sentence. My sibling said it better.
The reason they don't segment by age is that at the wealth scale we're discussing, the amount accumulated in an average person's life is irrelevant. It's called a 'class' for a reason; mobility is difficult. It's not like "I got a raise, and now I'm significantly ahead." The top 1% is an income of over $350k/year. A lawyer making $150k is just outside of the 5% range.
I looked over the numbers on Wikipedia before making my post. In that case we were slightly talking around each other, because you were talking about net worth, and I was talking about income, but the principle is the same. Here's the numbers on net worth: http://en.wikipedia.org/wiki/Wealth_in_the_United_States#cit...
In 2004, which seems to be the newest data that I could find (and the one this article uses), the median net worth for a household with the head's age under 35 is $14.2k. By 55-64, that rises to $248.7, which is your point.
My point is that the difference between $14k and $248k isn't enough to move you up into the upper echelon of wealth. From that article:
> This data shows that the top 25% of American society holds on average a net wealth of $1,556,801 which is 33 times more than those of the lower middle class, or the 25th-50th percentile
So your average 65 year old is _still_ far from being in the upper quartile.
My point was that if you age adjust the numbers you no longer have the top 20% owning 90% of everything, you have the top 20% owning around 50% of everything, which is a lot less shocking.
Age adjusting these numbers takes it from "oh my god we live in an oligarchy!" to "meh, that's not so bad."
edit: I quickly glanced at the wikipedia article, I couldn't easily find any age vs. net worth numbers. I got my numbers from the Federal Reserve Consumer Finances Survey (it was titled something like that...)
That's where the wikipedia numbers come from. If you look at the 'distribution of wealth' heading, skip to the graph, and go to the big giant table, you'll see them.
And we're apparently just going to have to disagree, unless you can find some numbers and scale them yourself. I'm still not sure how age is a significant differentiator, and on top of that, it doesn't matter if the people who own everything are old or not. They still own everything.
The biggest surprise is the blinding speed in which Asia has caught up with the rest of the world, both in total population of millionaires (equal with Europe) and in total assets accumulated (almost as much as the US).
I slum it in political forums often (I had to wean myself off of /r/politics just to get IRL stuff done!), and the prevailing wisdom of the crowds always think that the wealth in Asia is more concentrated into distinct industrial silos filled with nepotistic back-alley corruption and Politburo greed; which might well be the case, but it looks like some real entrepreneurial success is creeping in there!
Not much of a surprise there. If you ship all your manufacturing to an area and then proceed to get yourself hip-deep in debt to buy the stuff they make then the balance will shift rapidly.
Asia always had the long view, it's the West that is on a three monthly myopic 'quarterly earnings reports' schedule that makes it look as though we're making the right decisions but actually we're setting ourselves up for a bit fall. The cycle repeats.
That's a way in which the article is deliberately misleading. Inheritance is just one way in which wealth is transferred intergenerationally. By highlighting the small percentage, the article creates a false impression that a significant amount wealth is bootstrapped by individuals.
That got me thinking about the obvious question - how are they counting people who married into wealth? They have 23% getting wealth from employment, 16% from inheritance, and 43% from owning a business. That only leaves 14% for spouses (less lottery winners, malpractice award recipients, etc.) That just doesn't seem correct - considering the frequency of marriage among adults.
Your calculation assumes that entrepreneurs and people who inherited their wealth are disjoint sets. Not so: many rich entrepreneurs got their start in life and fortune by inheriting a successful company.
Not to mention that they can inherit 'assets' other than wealth: connections, experience, confidence, cushion, as well as less consequential financial support that just makes their lives a bit more fulfilling.
100% of the population are entrepreneurs, but most of them don't know it and have delegated the running of their business to someone else under very tax-inefficient and unprofitable deals.
It also says only 16% inherited their money. I don't find this very surprising, TBH. A million dollars isn't what it used to be - if you're some kind of professional making, say, $150k/yr you can retire with a million.
Their definition of "Rich" is flawed in my mind, or at least not very meaningful...but that aside.
Is it any surprise that about half of the people in the world who are "wealthy" by some definition spend their time... investing in and starting businesses? Creating jobs? Investing?
If they redefined their definition of "Wealthy people" to not look at net worth and instead look at income earned from investments -vs- living expenses, then look at the people who aren't in the red - then we'd probably find that near 100% of them were entrepeneurs of some kind.
Being an entrepreneur is one of the few fields where your ingenious mind and relentless motivation will always pay off. I haven't met one true entrepreneur that hasn't built something really friggen' cool and had a burning passion that fueled that fire.
Well said, ericmsimons! Pavel commented earlier that "hard work and working up the corporate ladder to some executive position at some big company [will get you rich]"... but most of us were frustrated by or left the corporate world --- or never joined it in the first place --- because hard work doesn't make you rich. Sucking up to the right person does. And, damn, there's gotta be a better way to get rich than fake-laughing three times a day with your boss. :) That 'better way' is working for yourself. If you can be happy along the way, all the better!
Whoah there - let's not be defining everyone's intentions for them, or be looking down on emloyment.
If it's not for YOU, and doesn't meet your definition of success - that's perfectly fine - but good luck telling me that that I'm just "getting by" and "not succeeding".
The problem with throwing the home in there, and in looking at "net worth" -vs- "net income" is that things like your house don't generate income. Having a million dollar house and $50/month leftover to spend on fun puts you in the same position on a day to day basis as the guy who, after rent and bills, has $50/month leftover to spend on fun.
I mean it puts you in the same place in terms of "I'm rich, I can do whatever I want" - neither of you have f-you money. Neither can just go do whatever they want. Guy who owns the house has more equity he can borrow against if he has to... he also has to take care of that house.
Renting guy renting -but he's mobile, and can pass a lot of expenses on to others. He can just cut his living expenses by a bunch and live in a cheaper place if he needs more income.
