Original question from Quora:
How can one become part of the 1%?
Well, for the sake of this question, I am going to assume you are talking about top 1% of earners or possibly top 1% of wealth, which is not the same thing really. You can earn a lot and spend even more and have a negative net worth.
After digging around on the internet, it looks like you need an income of about $500,000 per year to be in the top 1% of earners and to have about $5,000,000 of liquid assets (not including your house).
So, that’s the target. Half a million in income to reach the top 1% income. Five million to buy your way into the top 1% wealth.
Now that you have the target, the mechanism to get you there can be many, many things. But, there are really two things you need to focus on. But, before explaining those two things, I should tell you a story that makes it obvious.
So, there was this plumber who went on an internet reality television show about making money online. He believed that if he learned enough about this internet marketing stuff that he could quit his job as a plumber and make a full time income online.
He didn’t know a whole lot about affiliate marketing or any other make money online stuff, but he learned quickly and soaked up some knowledge. He figured out that he could build websites that would promote weight loss products and they could make him a few hundred dollars or more.
So he built a site or two and built them up to around $50 or $100 per month. That’s a decent amount of money, but he wasn’t retiring anytime soon. Even worse, he couldn’t seem to make any more money than what he was doing. He hit a ceiling.
He told an entrepreneur named Kris Jones about his situation and Kris gave him this bit of advice, which I’m paraphrasing. “You found a way to make money, now repeat that as many times as you can.”
Suddenly, the lightbulb went off. If he had 2 sites making $100 a month, maybe 200 sites would make $10,000 a month…
And that’s just what the plumber did. He cranked out as many sites as he could in an industrial fashion. They all looked similar and they all sold similar products, but each targeted different keywords.
The money started to come in. He kept at it. Eventually, he was making $10,000 a month and had a full time, six figure income. He could quit his job as a plumber and spend more time with his family.
I don’t know what happened after that. The plumber stopped blogging and I don’t think his site is even online anymore. But, he got to where he wanted to be, even if for a little while.
Do you want to know what his secret was? Two important things happened.
First, he changed his belief about himself and his future and took action on that belief. Instead of doing what all the other plumbers do, he had a belief that he could make a full time income on the internet. Then he took action to make that a reality.
Second, he figured out something that worked and maximized it. Instead of trying every new trick, he found one trick that worked and repeated the hell out of it. That is the basic mechanism of income generation - find a profitable transaction and repeat it a lot.
From what I’ve seen, those two things are enough to get many people to a 6 or 7 figure business.
Now, back to your question of making it to the top 1%…
You probably aren’t going to make $500,000 per year working a normal job unless you are in sales or you want to slog through 20-30 years of effort to reach the C level executive positions. Even doctors and lawyers will struggle to hit half a million a year in income.
So, sales and/or entrepreneurship is your best bet.
Here’t the thing. You have to believe that you are the kind of person who will build a successful business that pays you $500,000 a year. Based on profit margins of anywhere from 10-50%, that means you need to build a 7 figure business.
You need to believe you are building a 7 figure business. Then, you take action to make it real.
To make a 7 figure business, you need a profitable, repeatable transaction. It doesn’t matter what the transaction is really. It could be selling books, household services, advertising, just about anything you can think of.
It needs to be profitable and repeatable.
Once you find something that is profitable and repeatable, you repeat it a lot. Maximize the number of times you repeat it and how much you profit each time.
With enough focus and repetition, you’ll be well on your way to the half a million dollar income. To reach that five million dollar wealth level, you have to take your income and reinvest it smartly.
After you reach say, $100,000 per year in income, you are upper middle class and should be able to live comfortably on that income. Anything else you spend is basically luxury.
So, as a though experiment, imagine you invest $400,000 per year…
If you invest that and get a 5% compound interest rate, you’ll be at just over $5,000,000 in about ten years. This is conservative and you can possibly get a much better return investing in your own business than someone else’s, but either way 5% is achievable for a savvy entrepreneur.
I would estimate it takes five to ten years to get to that $500,000 income level from a business, and if it takes 10 more years to reach the $5 million mark, then the whole process from start to finish is going to take say 15 to 20 years of focused effort and smart reinvestment.
If you look a the people who have made it to the top 1% of either category, they’ve often spent a decade or more of time and effort and focus and investment to get there.
So, if you want to get there, you have to believe that is who you are and what you want to do with your life. Then put the effort forward to make that real.
Sadly, you aren’t going to make it real by asking questions on Quora. You have to actually create the business or skill that is worth that kind of money.
I believe in you.
P.S. I unpack more ideas in Creative Genius.