I read how are you building your net worth? at The Digerati Life a few days ago and I found it a very interesting article – one of the most interesting I’ve read in a long time. She breaks down her overall wealth accumulation into a 8 basic areas – Debt control, Business or Entrepreneurial Endeavors, Liquid Investments, Real Estate, Frugality, Jobs, Savings, Windfalls. This is pretty comprehensive list. Though I don’t what category you’d put the people who worked at YouTube in. Those employees seem to fit Entrepreneurial Endeavors, Jobs, and Windfalls all of once. Actually now that they have Google stock they have Liquid Investments. While we are talking about Liquid Investments, I wonder if retirement accounts (401k, Roth IRA, etc.) would fit in here. They aren’t typically “liquid” but they don’t seem to fit into any other category. I’ll assume that they fit in that Liquid Investments category for now.
It seems to me that most people are reliant on just their jobs and maybe Real Estate. Many people have a lot of consumer debt (no Debt Control), which leads to no Savings. While I find certain acts of frugality fun, most people want no part of it. More and more people have Liquid Investments investments through 401Ks and Roth IRAs, but I wonder if it’s enough to support them in retirement. Of course you could hope for a Windfall, but, by definition, you can’t plan for them.
Lastly, very few people seem to go after Business or Entrepreneurial Endeavors. I was president of that group when I started this website. In fact, it’s the single reason behind the name, Lazy Man and Money. I don’t have the drive necessary to do all the things it takes to start a successful business. And in a paradoxical way, the fact that I’m too Lazy to start a business has turned into my business.
The great thing about the The Digerati Life’s wheel is that it is well balanced and diversified. I truly believe this is one of best paths to a high net worth. There will be some that suggest starting a business or real estate should comprise a large portion of the wheel. You take on a lot of risk if those areas get too big. Casey Serin found this out the hard way when he couldn’t flip his properties of a big gain. Countless other business owners have also discovered the pain of losing their life savings.
What does your Wheel of Wealth look like?