The many faces of wealth-building.
In Silicon Valley, a lot of people have been fortunate enough to do quite well financially. And having worked as an engineer around here for almost two decades, I witnessed both some highs and lows in the technical and financial front.
As I’ve mentioned in my profile, there have been people whose lives where literally rearranged because of the dot com era of the 1990s. Some of them were people I had at one point worked with or known, who belonged to the 5% or so who stumbled into a lucky startup that made it somewhere. In reality, out of the myriad number of startups that littered this place then (and even today), only around 5% – 10% may find some kind of success and only around 5% or less will strike it quite big. That’s based on my own perspective and personal experience as someone on the bottom floor, so I can’t tell you if those numbers are accurate as per some econo-scan.
But returning to the subject of financial success, the good news is that a lot of people I’ve been fortunate to have encountered (mostly through past jobs) have done well by employing various schemes and exploiting their skills in one area or another. If there’s anything I learned from meeting them, it’s that opportunities abound everywhere and it’s up to ourselves to make the most of what’s handed us.
Profiles and Strategies Of Some Typical Wealth Builders
These are the stories and financial plans of ambitious, hard-working people I’ve met.
#1 The Real Estate Investor
There’s this guy who took “Kiyosaki’s Rich Dad, Poor Dad” series to heart and actually embarked on a real estate investing rampage starting in 2003. It was prompted by a family crisis involving his disabled child, during which he realized the worries of a parent who wondered how his child would be taken care of once he and his wife could no longer do so. Being in California, it was easy for him to build up equity, take it out and apply it to real estate ventures all over the nation. He now owns around 15 houses in various states and is somehow managing this “empire” on his off days from his engineering job. Kudos to him. By the way, there’s also a way to fail at this too. Main Asset: Hard Work
#2 Stock Market Investor
Everyone’s doing this as far as I know, simply by investing in their retirement plans. With the huge number of plans available these days: 401Ks, 403Bs, IRAs, pension plans and such, there’s no way you’ve escaped building wealth in the last 20 years. What I do find a little frustrating is that while people invest well in their retirement plans, they don’t do so well with their disposable income. Some of my acquaintances view their retirement accounts as their “serious money” while their disposable income is treated as “play money”. From a casual poll I conducted among colleagues, I found that most weren’t sure what to do with their non-retirement funds which could be either stuck in cash and CDs or used to do wild, aggressive trades. A read of these books could help: The Random Walk Down Wall Street or Asset Allocation: Balancing Financial Risk. Main Asset: Persistence
#3 Stock Market Trader
This other guy does stock trading part-time and seems to be quite successful at it. Sure there was a time (circa late 1990′s) when lots of people tried their luck at day trading and eventually fizzled miserably. But this guy is good. But that’s because he’s some kind of software genius and mathematical whiz. If I were a betting woman, I’d back this guy on any trade he makes. He says that 99% of wannabe traders are going to lose out because people like him are there to scalp the noobs. Is it arrogance? Perhaps. But he’s hard-working (sleeps 3 hours a night so he can trade after work), is skilled and talented at technical analysis, and has done his homework on that Forex stuff. He’s also very low key but I can sense that “Millionaire Next Door” aura. Main Asset: Genius
#4 Serial Startup Hopper (or Juggler)
Now here’s the typical way people try to get rich around Silicon Valley and it was the norm in the 1990′s. It actually worked for a few former colleagues. I admit, I joined a startup myself but that didn’t pan out. Instead, I lost out on $13,000, the amount of money I spent to own my stock options on the penny in order to maximize potential return in case the startup I joined actually succeeded. It didn’t work for me, but it did others, who amazingly went from one successful startup to another, raking in stock options that made them millions with every stint. There was this regular engineer who managed to build a massive fortune by just being at the right places at the right time. He then eventually bank rolled his money into a company he founded that netted him at least double his net worth in a span of 8 months. Life flies around here I guess and some were born with a clover leaf tattooed on their bum. Of course that is the exception, but you can’t help but find inspiration in that. Main Asset: Luck
#5 Consultant (or Contractor)
This has worked well for those who ride any kind of job boom such as the tech wave in Silicon Valley in the previous decade. Depending on the job market, this can be a lucrative strategy. During a tougher job market, then your skills and knowledge will be responsible for getting you those higher consulting fees. If you want a big income as a consultant, it’s all a matter of being an expert in a competitive field. Or being the only one offering such a service. Main Asset: Skill
#6 Web Site Creator / Internet Guru
We’re saturated with web sites everywhere but the internet is something I’ve always loved. It’s a source of great alternative income for those who care to stay committed to it. It’s also the new-fangled way that people are building their wealth. Just check out the domain hoarders out there, some top bloggers or web site creators who’ve found success. Lots of small business owners are earning a good living this way. Main Asset: Creativity
#7 Traditional Business Owner
There was this guy who repaired our fence one time, and he told me how he now owned a bunch of real estate in some affluent areas in the Bay Area. A couple of enterprising friends who graduated with landscaping degrees now own thriving businesses serving the wealthy. There’s a market to be tapped here — a lot of financially successful folks actually own businesses who service well-paying clientele. With such businesses addressing this niche, it didn’t take long before the business owners began owning some pretty good real estate right by their customers! Main Asset: Enterprise
#8 Startup Founder
I’ve already mentioned how regular people can try to launch a startup on their own, though success here is sporadic. People who get into this somehow enjoy the journey regardless of how things turn out. Here’s a not very well kept secret. My spouse is involved in an entrepreneurial scheme right now at a startup. He’s been at it for a year full-time and bootstrapping it through our savings. Another secret was that he’s done this before and is basically what you call some kind of “serial entrepreneur”. Here’s what I’ve learned about this: it’s far from a job and it’s not just a business but a lifestyle. It’s something you can’t fight, which I learned the hard way. Main Assets: Guts and Sacrifice
#9 Frugalist/Coupon Clipper
You can’t go wrong with being frugal. No matter how much you make, if you aren’t living within or below your means, you won’t be getting too far ahead. We’ve got teachers in our family who saved and scrimped all their lives. It allowed them to buy real estate many decades ago when the Bay Area was still easily affordable. Their ways allowed them to trade up with time and ride the real estate boom here. With their teachers’ salaries, it wouldn’t have been possible without their frugal saving habits to bank on. Given the much tougher cost of living situation we have today, I’d offer a suggestion (not an original one by any means): find a cheaper, promising, developing part of the nation, move there, work a decent living and be frugal. If we did this, we’d probably have the same luck as my relatives enjoyed 30 years ago. Main Asset: Frugality
#10 The Careerist and Professional
This is your quintessential corporate guy. Sometimes I get very annoyed by people like this, whom I’ve had the fortune to meet several times throughout my career. They are obviously very ambitious and are out there to climb that career ladder, and can they play office politics! Blech! But still, it’s a way to success and if you’re built with a lot of tolerance for this sort of “game”, and you see yourself rising up the corporate chain and making $7 million a year as a big company CEO, then my hats off to you.
Main Asset: Ambition
What is noticeable here is that nobody’s trying to make it by winning the lottery (hah!), although that occasional office pool doesn’t hurt. Many have succeeded by having the right skills, education, information, risk management abilities, hard work and drive. When I recall the stories of several co-workers who were children of immigrants who came here but a mere 25 years ago with *nothing* and who are now top engineers in their field, I can’t help but think there’s no excuse for people *not* to be successful. These families sacrificed greatly for their children to make it — with the parents taking jobs as fishmongers, assembly line workers, hotel housekeepers or short order cooks. Many families are at this very moment bootstrapping themselves out of difficult financial circumstances while the rest of us are borrowing ourselves to serious debt. I am awed by the juxtaposition I see everyday between people pursuing the American Dream and those I see squandering it.
Moral of these stories: wealth building is doable by everyone and marvelous when it actually changes the lives of families for generations to come. Here are more thoughts I’ve shared on wealth-building.
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