In the world of finance and entrepreneurship, there exists a certain allure, a siren call that beckons many but is heeded by few: the dream of building a net worth exceeding $10 million. Does that interest you? If so, keep reading.
So why do I want to write about building wealth? Pretty simple, actually. I worked in wealth management for 15 years and learned a thing or two while doing it. I met with plenty of prospects and clients worth $100 million or more, and even a few billionaires.
At the time, my goal was to manage their financial affairs, most of which were extremely complex. Fortunately, I came equipped with an all-star team most of the time. Goldman Sachs does not send unqualified people to meet with the world’s wealthiest people. The top firms send the heavy hitters, the experts in finance, the people who can handle complexity and nuance extremely well.
I’ve had quite the ride along the way. When you meet with the super-wealthy, and get to know their families, their desires, their methods – some of it rubs off on you. A lot of it rubbed off on me. My dad wrote several books in his lifetime, and I have the same desire to tell my story, but I don’t think a book is the best way to do it. That’s why I’ve decided to write this blog instead.
Note: This is my first blog post of ten over the next ten weeks or so, in my current series called “Advanced Financial Insights For The Entrepreneur.”
What qualifies me to write this series? After getting my MBA in Finance in 1997, I worked for several top-tier investment banks over the next 15 years. These included stints of increasing responsibilities at Goldman Sachs, Bank of America, Citigroup, and JP Morgan.
Additionally, I am the founder of Sugarloaf Capital Group, a hedge fund with advanced quantitative strategies for wealthy families.
I have fairly deep knowledge and experience in all of the blog topics in this current series. Let’s dive in to building wealth!
Who Is The Audience?
Let’s discuss for a moment who the audience really is here. In my experience, I’ve identified four broad types of individuals who have fortunes of $10 million or greater. Some of them have more talents or abilities than others. Some work harder than others. Some even got luckier than others. All, however, want to preserve and grow their assets.
These four broad groups are:
- The Ambitious Entrepreneur
- High Earners (looking to scale)
- The Aspiring Wealthy
- The Established Wealthy
The Ambitious Entrepreneur
In the dynamic world of business, there’s a certain breed of individuals who stand out from the crowd—the ambitious entrepreneurs. Maybe this is you! These people are not just those who are content with a steady inflow of profits or the mere thrill of owning a startup. These folks want to get big – real big.
$10 million for them is just an early stepping stone to their ultimate goal. Ambitious entrepreneurs have vision, they want to scale as large as they possibly can in one lifetime.
For an ambitious entrepreneur, the journey starts long before the first dollar is earned or the first product is launched. It starts with an idea, a spark, a vision that refuses to dim even in the face of overwhelming challenges. It’s this very spirit that differentiates a regular business owner from a trailblazing entrepreneur.
In my fifteen years of professional business meetings, I enjoyed meeting these folks the most. I found myself catching them halfway up the financial ladder. They were wealthy enough to attract the attnetion of bulge-bracket Wall Street firms. But usually, they were not anywhere near done building their empires.
The Early Stages
When you’re at the inception of your entrepreneurial journey, every day presents a new challenge. For me, the trick was meeting them early enough, before other firms sent their reps and made it a competitive situation.
From securing seed funding and refining the business model to acquiring the first set of customers, the initial stages are a whirlwind of activity.
However, what sets the ambitious entrepreneur apart is not just the ability to manage these tasks, but the foresight to see them as foundational steps toward a much grander vision.
EVERY decision, no matter how minute, is viewed through the lens of scalability and long-term growth.
When I meet with them, the conversation inevitably turns to ideas and possibilites, not barriers and impediments. They just assume they will overcome everything in their path. They never tell me they are going to stop when they hit a certain number.
The Successful Business Phase
For those who have crossed the turbulent waters of startup challenges and now head a successful business, the journey doesn’t end. For many of these guys, this was less fun than the early stages of growth.
Once they prove a concept in the business world, they tend to hand the operations off to others, so they can focus on the next big idea. The goal is not just to maintain success but to amplify it exponentially.
Why This Series?
If the above resonates with you, then this financial series is tailored for your entrepreneurial appetite. While ambition and vision are intrinsic, the path to achieve them requires knowledge, strategy, and actionable insights.
Through this series, I aim to equip you with advanced financial strategies, investment opportunities, and networking techniques that can propel your business to the stratosphere. I want to give you actionable ideas you can implement to become an ambitious entrepreneur yourself.
I will warn you, however … ambitious entrepreneurs are almost always born, not made. You either have the spark or you don’t. If you have it, there is an incredible amount of good information within this series.
High Earners (Looking to Scale Higher)
The next broad group is the one you may be most familiar with. These are high-income workers like doctors, successful lawyers (there are lots of unsuccessful ones), partners at consulting firms, etc. They don’t necessarily want to be entrepreneurs at all; they would rather be well-paid specialists with an established career path.
Annual earnings of $500,000 – $1 million or more are not uncommon among this group. While high earners revel in the comfort of a plush paycheck, the true hallmark of financial success and security lies in amassing a significant net worth.
The Paradox of the High Earner
One might assume that a substantial income naturally leads to a high net worth. However, this isn’t always the case. Many high earners, be they top-tier executives, renowned surgeons, or leading lawyers, often find themselves caught in a golden handcuff scenario.
A lifestyle inflation often accompanies their income surge, where higher earnings lead to more lavish lifestyles, from upscale residences to luxury cars.
While there’s undeniable pleasure in such indulgences, they can also tether professionals to a perpetual earning cycle, preventing substantial wealth accumulation. In other words, the more they earn, the more they spend.
Why Net Worth Matters
While a high income can offer a luxurious life, a robust net worth provides financial resilience and freedom. It’s the safety net during economic downturns, the leverage in business deals, and the legacy left behind for future generations. High earners need to have a solid savings plan in place to join the ranks of the $10 million club, but it can certainly be done.
Furthermore, with a significant net worth, one can harness the power of investments, be it in stocks, real estate, or startups, to generate passive income streams, thus reducing reliance on active earnings.
Navigating the Transition
For high earners looking to elevate their financial game, the journey from mere earnings to wealth creation can be nuanced. It demands a shift in mindset—from immediate gratification to long-term vision. This involves:
- Financial Literacy: Understanding investment avenues, tax implications, and wealth preservation strategies becomes paramount.
- Lifestyle Choices: While one needn’t adopt extreme frugality, being mindful of expenditures and avoiding debt traps is essential.
- Diversification: Instead of solely relying on one’s profession, exploring varied investment opportunities can offer compounded growth over time.
Why This Series?
If you’re a high earner poised at the precipice of this transition, this series is your compass. High earners need financial guidance more than some of the other groups mentioned, simply because they are rewarded with a paycheck every 1-4 weeks, which creates a focus on immediate gratification and needs, rather than long-term planning.
The Aspiring Wealthy
Wealth, in its most profound sense, transcends the mere accumulation of material possessions or the numbers reflecting in a bank statement. It embodies a realm where financial freedom reigns, security is a given, and the power to effect change is tangible.
This holistic understanding of wealth resonates deeply with a unique group: the aspiring wealthy. These individuals are not just chasing monetary milestones; they’re in pursuit of a legacy that outlasts them, of an influence that shapes societies and of a life not just lived comfortably but meaningfully.
A Vision Beyond the Bank Balance
For the aspiring wealthy, financial aspirations aren’t merely limited to affording luxuries. It’s about crafting a life where choices aren’t dictated by financial constraints, where one’s passions and desires seamlessly align with possibilities.
This perspective is rooted in the desire for autonomy—having the resources to decide how one’s time is spent, whom to associate with, and which ventures or causes to support.
The Security Blanket
One of the primary drivers of the aspiring wealthy is the pursuit of security—for oneself and for loved ones. This is critical for members of this group. Unlike high earners, they are super-focused on the long-term, but may not have the entrepreneurial spirit.
This isn’t just about weathering economic downturns or personal financial crises. It’s about ensuring that their family’s educational, health, and even aspirational needs are met without a hitch. It’s about creating a cushion, a safety net, that allows them and their lineage to pursue dreams without the looming shadow of financial peril.
Champions of Change
Perhaps the most distinguishing trait of the aspiring wealthy is their vision of wielding wealth as a tool for change. Be it through philanthropic endeavors, supporting grassroots movements, investing in sustainable ventures, or even shaping policy through thought leadership and influence, they view their wealth as a means to leave an indelible mark on society.
These folks are most focused on building their legacy, and leaving the world better off when they are gone.
The Road to Holistic Wealth
The journey to this comprehensive form of wealth demands more than just astute financial decisions or lucrative investments. It requires a blend of financial literacy, ethical considerations, strategic foresight, and often, a touch of audacity.
Why This Series?
If you find yourself resonating with the ethos of the aspiring wealthy, this series is tailored for you. We’ll navigate the multifaceted landscape of wealth creation and preservation, delve into investment strategies that align with ethical considerations, and explore avenues to translate wealth into meaningful influence.
This isn’t just a series about getting rich—it’s about enriching lives, communities, and legacies. Embrace this journey, for it’s not just about reaching a destination but about transforming the very essence of wealth along the way.
Established Wealthy Individuals
Some of you (ok, a few of you) have already reached the $10 million number in liquid assets and want to grow it further. For those who have reached the zenith of financial success, the journey doesn’t merely culminate in the achievement of significant net worth.
A combination of active and passive income is usually the ticket to added success for the already wealthy. You cannot completely coast once you’ve hit a certain number, but you can certainly take your foot off the gas pedal.
It’s time to let the magic of compounding happen. The effort you put in is essential to making sure it compounds favorably for you.
The Fluid World of Finance
The financial realm is not static. From the emergence of disruptive fintech innovations and cryptocurrencies to changing global economic dynamics and regulations, what worked a decade or even a year ago might not be the optimal strategy today.
Moreover, with considerable wealth comes increased exposure to global market volatilities. This underscores the need for the affluent to be constantly attuned to these changes, ensuring they’re always a step ahead.
Diversification: The Golden Rule
No matter the scale of wealth, diversification remains a cornerstone of prudent financial management. For the established wealthy, this takes on an even more nuanced dimension.
Beyond traditional asset classes like stocks, bonds, or real estate, there’s a world of alternative investments—private equity, hedge funds, commodities, art, and more.
If you’ve got well over $10 million, these alternative investments start to become essential for you, for a variety of reasons. Tapping into these not only offers potentially higher returns but also provides a buffer against traditional market unpredictabilities.
Advanced Strategies for the Affluent
While basic financial tenets apply to all, the established wealthy require advanced customized strategies. Tax optimization, for instance, becomes crucial at this level, ensuring maximum wealth retention. Your accountant becomes a very important part of your financial team once you reach this level.
Estate planning, wealth transfer, and setting up philanthropic ventures might also be on the radar, requiring specialized insights and expertise. You need a good trust and estate lawyer on your team, as well as one or more financial advisors. These advisors must have the ability to give you access to alternative investments.
Why This Series?
If you’re among the established wealthy, you might wonder, “What more do I need to know?” This series aims to answer that very question.
Tailored for individuals who have already achieved considerable financial success, our focus will be on advanced strategies, emerging investment avenues, and up-to-date market insights. We’ll delve into sophisticated topics, from leveraging in investment strategies to navigating the intricacies of global finance.
Why the Emphasis on $10 Million?
While wealth is relative and the number might appear arbitrary, there’s a method to the madness. Achieving a net worth of $10 million places an individual within the top echelons of wealth globally. At this tier, not only do you achieve financial freedom, but you also possess the capacity to make significant investments, influence industries, and even shape societal paradigms.
A $1 million net worth is admirable, but you don’t have complete financial freedom at that level. Taking out 5% per year to live on is only $50,000. At the $10 million level, it’s $500,000 per year. Big difference!
I’ve seen lots of $1-3 million guys blow up and lose it over time, but it’s extremely rare to see that happen once you get to $10 million. The compounding starts to really help you at that point, and it’s nearly impossible to go backwards.
What Can You Expect?
I’ve worked at the highest levels of finance in America, from Wall Street, to commercial banks, to hedge funds, to venture capital. So I’ve got a lot of stories to tell, both good and bad. Over the course of this series, I will unravel the complex tapestry of the financial world for you.
Our exploration together will be extensive and thorough. We’ll delve into advanced investment opportunities, demystify the world of private equity and venture capital, and even take a futuristic dive into the realm of cryptocurrencies and other nascent financial technologies.
We will also dive into the nitty-gritty aspects. How do you get jobs in finance? How do you make a million bucks a year? How do you know if your financial advisors are treating you poorly? How do you manage debt appropriately, like the bigwigs do? These are all important questions.
I would like you guys to participate heavily on this blog, both in the comments section and on email. If you have a topic you would like me to write about, please let me know!
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