All the advice you've heard about getting rich is bullshit.

How do I know? Because I've tried it all and I'm still broke.

Invest in real estate, manage your portfolio, compound interest, diversify, blah blah blah…all nonsense. Do that and you'll remain poor forever.

Becoming wealthy vs Investing your wealth

Most of the advice on how to become wealthy is given by millionaires, nothing wrong with that, you would not listen to a broke person giving advice about money, right?

However, these gurus tell you how to invest your money ONCE you've got it, but not how to get it in the first place! And that's what you need to know!

Take Robert Kiyosaki for example. Great guy with a lot of sound strategies, but his advice is mainly: start a business, buy real estate, and buy gold.

Is that how he got rich? No. He made his fortune selling books.

He did start a business but failed. He has made money in real estate but as a very long term investment (25 years or longer) All that thanks to getting cheap credit by leveraging his wealth.

He proposes many interesting ideas, some of which I follow but the point is: to become rich starting from zero you need a highly scalable product or service, something that can be distributed at low cost to millions.

Myths about wealth creation

Compound interest

'Compound interest is the 8th wonder of the world'

Einstein

My apologies Dr. Einstein but that's just not true. At least not nowadays.

Try to find a bank that gives you more than 0.5% on interest in your cash, you can't. Even if you invest $10,000 and leave it there for 20 years, it'll become $11,048, that's a gross profit of $1,048. That wouldn't even keep up with inflation so, virtually you would be losing money.

Compound interest was great 40 years ago but now is peanuts. Forget about it.

Real estate

Property is the other safe way to riches according to many.

You get a flat, no money down, rent it out to pay the mortgage and in 25 years you'll be the owner and the value will increase 3x, all that without investing a cent of your own pocket. Sounds great, right?

Well, before you rush to get that mortgage here's a few caveats:

• Property values have been stagnant for a decade and will probably remain so for the foreseeable future
• It's not easy to get mortgages post 2008 bubble. You need a large deposit and interest rates are higher
• As an owner, you'll incur many expenses and risks. Maintenance, tax, bad tenants, drop in value, etc
• Illiquidity. When SHTF you won't be able to sell or even rent for years. Can you afford that? For how long? Property is a very illiquid investment and that makes it extremely risky in the current climate
• Tax. You pay tax through the nose when you buy and when you sell. During a recession, you'll pay more tax because the government will run short of cash and will milk those assets that can't escape
• It's a long, long game. By the time you become wealthy (if at all) you'll be an old person so. what's the point?

Even Kiyosaki advises against buying the house you live in, recommending to rent instead. That's because is not such a great investment after all.

The stock market

Stocks seem like the perfect investment. Low entry barriers, high liquidity, and positive overall performance. However, there are number of caveats:

• Stock prices go up slowly and down very fast. It's easy to burn your fingers. It's been compared to picking nickels in front of a bulldozer
• The big players move the market. The price doesn't move up because of the economy or how well the company is doing, it's the big investment funds buying and selling to manipulate the price. If you try to time the market you'll lose your shirt
• Historical performance doesn't guarantee future performance. The stock market has had a great run for the last 100 years or so but, is that going to continue? No one knows. When the baby boomers start selling the whole thing could come to a crash

Keeping all that in mind I still think the stock market is still a viable option providing you follow two rules:

• Buy and hold for at least 10 years
• Buy index funds like the S&P500

Just don't expect to become a millionaire any time soon.

Diversification

Don't put all your eggs in one basket.

That's a sound strategy to avoid losing too much but it clearly won't make you rich. Again this is what you should do once you are already wealthy.

Investments

By definition to invest you need capital, if you got capital you are already rich…need I say more?

So, What can you do to become wealthy then?

As you can see, all the above options are for managing your wealth but if you got nothing to manage then…

To become rich you don't have to act like the rich, you have to act like they did when they became rich and adjust for the different scenarios.

Start a business

This is the number one source of riches. It comes with many caveats and risks but it's still one of the safest ways. Here are some caveats:

• Scalability. Don't do anything that doesn't scale easily. Informational products, coding, intellectual property, patents, etc
• Chose a low capital business. Most businesses fail for cash flow problems
• Outsource everything. Keep your fixed costs low by outsourcing everything except your main activity
• Design a system in which there are no bottlenecks. You, as the owner, are the biggest bottleneck, make sure you are not indispensable

Invest aggressively

Extremely risky investments are very profitable when they pay off. In 99% of them, you'll lose the lot but the other 1% will make you a millionaire.

The trick here is to go small and never invest anything you are not prepared to lose.

Two examples of this are startups and cryptocurrencies. Study the market, do your homework and eventually, it'll pay off.

Software products

Make an app or a program (or outsource it) that solves a problem and with the right marketing, it can grow exponentially.

Windows, eBay, PayPal, Zoom, WhatsApp, Uber, Strava, and many others are examples of this. Don't get intimidated by these giants, you could find your niche and do the work. The main benefit of software is scalability, use it to your advantage.

Information products

Most of the gurus you follow became millionaires by selling books, courses, subscriptions, podcasts, YouTube videos, etc.

This is something that requires very little capital and you could start doing it today. It takes time and effort but is one of the best ways to scale.

Kiyosaki, Altucher, Tim Ferris, Seth Godin, and many others became very successful following this model. Do what they did and not what they say.

Conclusion

Becoming rich is hard work and takes time but since you are already working hard as an employee you might as well give it a go. Your future self will be grateful that at least you tried.

Trust your self and do the work, the riches will come.