The obvious answer, which is that Warren Buffet is a superstar, probably isn’t the whole story. A fuller answer probably has something to do with sociology. For whatever reason, society tends to believe that wealthy people are smarter, more attractive, and healthier than everyone else. In short, we sometimes put the rich up on a pedestal.
This is shame, because this distracts from a discussion of what it really takes to become wealthy. While I’m certainly not an expert, wealth building seems to be built on a number of factors. These are 1) small business ownership, 2) ownership of stocks and 3) a combination of personal and family factors.
So, the overall point of this posting is it doesn’t make sense to buy into public perceptions of who is wealthy, rather you should focus on doing what works. There is enough information out there to be making the right decisions.
For More On This
For more on the mechanics of wealth building, check out this IMF study on investing returns and the wealthy. Nick Maggiulli also has a really good article on Where Millionaires Keep Their Money. Both are solid pieces that should help you think strategically about your own investment returns.
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James Hendrickson
James Hendrickson is an internet entrepreneur, blogging junky, hunter and personal finance geek. When he’s not lurking in coffee shops in Portland, Oregon, you’ll find him in the Pacific Northwest’s great outdoors. James has a masters degree in Sociology from the University of Maryland at College Park and a Bachelors degree on Sociology from Earlham College. He loves individual stocks, bonds and precious metals.
Question for you here.
In your evaluation of what factor make people wealthy, you listed 3 things. I’m sort of surprised you didn’t list real estate, as it’s been a traditional wealth builder for many many years.
Where do you stand on real estate as a wealth builder?
Kurt,
Real estate can be thought of as a business. Generally speaking, if you have a rental property you’re basically providing housing in return for rent payments.
And yes, it’s an extremely effective driver of wealth.
The best data on personal wealth comes from the IRS statistics of income, Their findings are that high net worth individuals typically own their homes, have other real estate and have a lot of common stock.
Here:
https://www.irs.gov/statistics/soi-tax-stats-all-top-wealthholders-by-size-of-net-worth