I saw an article the other day that said Asia now had more millionaires than Europe. The main reason was that the stock markets and property values have continued to rise in Asia while the rest of the world has been in an economic recession.
This made me take notice that wealthy people benefit greatly from rising stock market and real estate prices. This makes complete sense, but then I wondered if the wealthy people started making money this way or if they are just benefiting from it once they have money to invest.
I wonder how many people get wealthy by investing in stocks and real estate compared to the number of people who got wealthy through business, inheritance, lottery winnings, etc...
People on Wall Street and in hedge funds seem to get multi million dollar bonuses. There definately are a lot of people getting wealthy just from trading stocks on a full time and professional basis.
I suppose it would be pretty easy to figure out how many people made their money just from investing since there is a lot of data kept about the world's wealthiest people. For example, the richest person in the world is Carlos Slim Helu who built a telephone business in Mexico. Second and third on the list are Warren Buffet and Bill Gates. Gates built a software company and Buffet made his wealth from investing. So out of the top three, two are business leaders and one is an investor.
The rest of the top ten seem to be steel, oil, and business based. Some of it was inherited, but most of it was built with solid businesses. Of course the wealth grows the more the stock prices of these companies grow, but the wealth itself was not built through investing other than by Warren Buffet - who buys instead of builds businesses.
I'm sure the stats will be different once you get out of the top ten. However, I still think making money in business and then investing the money is a good strategy instead fo just trying to become wealthy through investments alone.
In order to get wealthy will you spend more time trying to build a business or more time investing?
I think it matters what you are interested in doing. If you enjoy working a lot of hours with a lot of stress and responsibilities, then running your own business might be for you. Most businesses fail and the successful ones rarely achieve the type fo success that makes people one of the richest people in the world.
For me, I prefer to invest in companies. You get to pick winners and losers without doing all of the work of running a business.
It also matters if you want to do it really fast or achieve wealth over a long period of time. If you want to achieve wealth really fast, you will have to be more creative and either start a great business or have really good investment skills.
If you are like most people, you will need some form of stable income that can be invested each month for many decades.
I think the best way to get wealthy by investing is to invest other people's money. This is how most hedge funds and big investment firms make their money. It gives you the money needed to make large bets, but also limits your personal risk of loss.
I suppose if I am going to put the time and effort into watching and understanding the market, it would make sense to have a lot of money available to invest. I like the idea of other people taking the risk while I take a percentage of the winnings. No wonder hedge fund managers do so well.