How to Get Rich
Getting Rich Slowly
Everybody wants to get rich quick(ly)! We can avoid hard work, discipline and sacrifice and spend the rest of our lives in the lap of luxury and having fun. One problem – it is very, very difficult to get rich quickly. It is almost always the case that when people try to get rich quickly, the wind up getting poor even more quickly. Let’s see why.
How to acquire wealth:
1) Steal it.
2) Provide a service
3) Add value
4) Exploit Market inefficiencies
5) Gamble
6) Inherit it or wait for someone to give it to you.
Stealing wealth: This is a broad ranging topic that spans the acts of mugging someone in a dark alleyway to exaggerating the market value of fixed assets on a balance sheet in order to increase the market price of common stock. Martha Stewart, Bernie Madoff and Michael Milken went to jail for stealing, although they didn’t pull a gun on anyone. Although some have been successful, I would suggest you consider the other options. Successful stealers usually don’t stop until they get caught.
Provide a service: This is obvious. I need my car fixed occasionally. But in the time it would take me to fix it, I could earn a day’s pay as an economist. A car mechanic, however, might only require a few minutes to fix my car and would therefore only charge me a half day’s pay. It would then be worth both our whiles to have the mechanic fix my car for me. In a world of perfect information, such an exchange is mutually beneficial. As a professor, I earn my income by providing a service. I serve up financial knowledge in a way that is easier to understand than by getting it straight from a textbook.
Add value: A worker in a furniture factory adds value when he uses wood, saws, nails, glue and other resources to produce a table. The table is worth more than the sum of the resources used to produce it. By doing so, the worker has added value to the pile of resources. Generally, a worker is paid an amount roughly
Everybody wants to get rich quick(ly)! We can avoid hard work, discipline and sacrifice and spend the rest of our lives in the lap of luxury and having fun. One problem – it is very, very difficult to get rich quickly. It is almost always the case that when people try to get rich quickly, the wind up getting poor even more quickly. Let’s see why.
How to acquire wealth:
1) Steal it.
2) Provide a service
3) Add value
4) Exploit Market inefficiencies
5) Gamble
6) Inherit it or wait for someone to give it to you.
Stealing wealth: This is a broad ranging topic that spans the acts of mugging someone in a dark alleyway to exaggerating the market value of fixed assets on a balance sheet in order to increase the market price of common stock. Martha Stewart, Bernie Madoff and Michael Milken went to jail for stealing, although they didn’t pull a gun on anyone. Although some have been successful, I would suggest you consider the other options. Successful stealers usually don’t stop until they get caught.
Provide a service: This is obvious. I need my car fixed occasionally. But in the time it would take me to fix it, I could earn a day’s pay as an economist. A car mechanic, however, might only require a few minutes to fix my car and would therefore only charge me a half day’s pay. It would then be worth both our whiles to have the mechanic fix my car for me. In a world of perfect information, such an exchange is mutually beneficial. As a professor, I earn my income by providing a service. I serve up financial knowledge in a way that is easier to understand than by getting it straight from a textbook.
Add value: A worker in a furniture factory adds value when he uses wood, saws, nails, glue and other resources to produce a table. The table is worth more than the sum of the resources used to produce it. By doing so, the worker has added value to the pile of resources. Generally, a worker is paid an amount roughly