The majority of the world’s wealthy people became rich through entrepreneurship. This article tries to answer the question: Why are entrepreneurs wealthy?
You may think that investing in stocks is a terrific way to amass wealth. But, that’s not the only way people become wealthy. Most multi-millionaires amass their wealth through the buying and selling of stocks, real estate, inheritance, or entrepreneurship.
If you read the financial press, you could get the sense that investing in stocks is the best way to get rich.However, if you look at the list of the world’s richest persons, you will note that almost none of the world’s richest billionaires become wealthy through the stock market. Most wealthy people, including Microsoft’s Bill Gates, Amazon’s Jeff Bezos, and Facebook’s Mark Zuckerberg, amassed their fortunes as entrepreneurs.
Warren Buffett is the only one of the world’s 10 wealthiest people who got rich by investing in stocks. Even him, though, is not a normal stock market investor. Stocks are nothing more than a vehicle for him to make large investments in companies.
But, why are entrepreneurs wealthy?
The world’s wealthiest billionaires are all self-made business owners, not inherited. The same is true further down the list. The bulk of the people on the yearly Forbes 400 list of the wealthiest Americans are also self-made business owners. Many people believe that in the past, it was simpler to build fortune as a self-made entrepreneur, and that most wealthy people today inherited their wealth. In fact, the inverse is true.
According to a scientific research published in Germany in 2012, only 2.4 percent of millionaires obtained their money through stock investing. One-tenth of the billionaires polled said they became wealthy through real estate investments. However, the majority became wealthy as entrepreneurs.
Some may argue that this is due, at least in part, to Germany’s underdeveloped stock market culture. However, even in the United States, where stock market investing is significantly more widespread, the scenario is similar.
Thomas Stanley polled 733 millionaires in the United States, and only 12% of those polled stated stocks were an important element in their financial success. Despite the fact that Stanley’s poll was done in the late 1990s, when financial markets in the United States and around the world were flourishing like never before! At the end of it, Stanley found that, while many billionaires do invest in stocks, the vast majority made their fortunes as entrepreneurs, self-employed professionals, or top executives, not through stock investments.
In-depth interviews were performed with 45 German multimillionaires with net worths ranging from $10 million to several billion dollars for the research The Wealth Elite. Almost all were self-made entrepreneurs; not a single one had amassed fortune from stock trading. Stocks are a terrific way to stay wealthy as an asset class, and they, along with real estate, should form the foundation of every investment portfolio.
Hope you now have the answer to the question: Why are entrepreneurs wealthy? Finally, you also need to understand that if you want to grow rich, becoming an entrepreneur is the only option.