If you ever bought into the idea that hard work can make you rich then sadly you were ill advised. Hard work will never make you rich; it has never made anyone rich. You were given wrong advice, and by following it you have wasted your life. I am hoping this note wakes you up early enough in your life so you can still do something about it.
My primary motivation for writing this essay is my kids. They work very hard on their studies. Their school hours are very long. When they come home, they spend most of their time doing homework, preparing for the next day’s work, preparing for class tests and semester exams, and so on. I am a proud father of two very studious children, yet it breaks my heart to say that one day they too will discover what I was able to discover much later in life: hard work does not pay. There is more to the story that is never taught at schools.
I write this note for my children, for my nephews and nieces, and for all the young children in schools who toil and sweat and want to make it big in life. They are willing to push themselves harder and harder in pursuit of their dreams.
When I talk about rich people, I am talking about really rich people. Rich is a very subjective term. I am talking about rich in purely financial terms. These are people who drive cars we can only see in magazines and say, “Wow!” These are people who court women we also usually see in magazines (of a different type) and say, “Double wow!” These are people who live in houses we are only able to see in movies and think, What would it take to get there? They don’t buy airplane tickets when they go somewhere; they buy airplanes and a crew to fly it. These are the people I am talking about.
Deep down most of us, if not all, at some point in time have wanted to own that hot sports car and drive it around with the roof open, sitting next to a partner who is even hotter than the car. Then we want to park it in a palace of a house where you don’t have to reverse the car to get it out of the house. All of this and more is indeed possible, and believe me, there are many who have it. I have known these people and have been in their cars, their houses, and their lives. Unfortunately for you and me, none of them (and I’d like to emphasize these three words again: none of them) got there by hard work alone.
Hard work offers limited return. Let’s take the example of labourers and factory workers. Who works harder than these guys? They sweat and toil, often in sub-human conditions, constructing tall buildings and towers, assembling magnificent products, and what do they get? Millions of these hard-working people live in poverty. What are the odds that a brick layer will ever make it big just by laying bricks? He can be the best brick layer in the world, but it will not take him from rags to riches. What are the odds a janitor will one day own the building where he cleans washrooms because he cleans the washrooms very well? He may be the best janitor in the world, but that is what he is. There is nothing wrong with being a brick layer or a janitor or a factory worker. These are honest and honourable jobs. My point is that these people work very hard, but they never become rich. If hard work alone was needed to be rich then these people should be the first ones to be rich, so obviously something else is needed.
This brings me to the second piece of the puzzle. Often not as well-known as working hard cliché but still decently well-known is the concept of smart work. This is where educated people like you and me come in. We acquired the skills of working smarter and hence increased our income. We became doctors, lawyers, accountants, and so on. We acquired skills that allowed us to sell our products and services better. We learned to work not only hard but also smart. We learned to use our workday more efficiently. Time and energy is limited, so let’s use these in a smarter way. This combination of working hard and working smart did wonders. Millions of people around the world live comfortable lives through a combination of working hard and working smart.
This word comfortable can mean different things to different people, and I find it extremely difficult to define because the concept is very subjective. In my experience, I have seen people making very comfortable livings, owning houses and cars, educating their children well, travelling around, and having generous savings through a combination of hard work and smart work. They are not rich (by my definition of rich), but they do manage to live comfortable lives.
It is surely not possible to get rich by only working hard. However, it is definitely possible to live a comfortable life by working hard and smart. If you cannot do more, at least work hard in acquiring some skills you can later sell smartly.
For those of us who aim to go beyond comfort, there is more to give. Let me introduce you to the third piece of the puzzle: risk.
I don’t remember any teacher of mine in my primary, secondary, or even early college years ever walking up to me and telling me that in addition to the hard work I was putting in getting good grades I would be required to take risks. The first time I was properly introduced to the concept of risk taking for money making was when I enrolled in a business school. I clearly remember the day when, for the first time, I read, “The higher the risk, the higher the return.” I was annoyed at the sudden introduction of this new dimension to my money-making model.
Risk is the missing piece of the puzzle. No rich man has ever made it to where he is without taking risks. Lack of a risk appetite is what keeps people in their comfortable zones and never lets them grow to be a part of the rich list.
Let me give you an example. A certain person works hard to acquire a certain degree, on the basis of which he is then able to find a good job. He works smartly and starts to live a comfortable life. He amasses a certain amount of savings, which he then invests in real estate or some business venture. Property investment doubles, business becomes a huge success, and this person moves up higher in the economic value chain. He worked hard, he worked smart, and then he took risks with this capital (savings) by investing in a property or a business. His investments were well timed and well judged. He made huge profits and is now richer than before. This is a nice, simple example, but note that risk taking does not always go your way, and that is why it is called risk. His investment/business could have gone south, and his savings could have been lost.
Business schools teach about the advantages and disadvantages of risk taking. But what is wrong is that it almost always covers capital risk only. In reality, risk is not always about capital, and there is much more to risk taking than just investing money.
I left my business school with a reinvented money-making model. Work hard, work smart, take risks, and invest savings. For the last two decades, I have been religiously following this model. To be honest, the combination of hard work and smart work worked really well. The investments part did not really work that well. Some investments made money and some did not. Even today I stay moderately positive on my investments, but no big jumps in my net-worth followed as a result of my investments, although I am still hopeful.
I am of the opinion that rich people are not necessarily smarter, and they definitely do not work harder than most of us. So what is different? What makes them the owner and us the employees?
The rich are brave, plain and simple. Sometimes they are foolishly brave, acting on hunches and impulses, and sometimes they take calculated risks. They have an appetite for risk, and money is not the only thing they risk.
It is naïve to assume that rich people only take risks with their money. Nothing could be more misleading. Let me introduce you to some other risks the rich take regularly: legal risks, regulatory risks, reputational risks, political risks, social risks, religious risks, etc.
This is not an exhaustive list, and I can definitely think of more. However, for now these shall suffice to explain my point. Big money making calls for big risk taking. The statement, “The higher the risk, the higher the return” is indeed true; however, most of us fail to comprehend its broader meaning. At some point in time, the rich have taken one or all of the above risks (in addition to risking their money), and this is how they became rich.
As an individual, perhaps you do not want to circumvent laws; do want to comply with the regulatory environment; treat your reputation as sacred and would not like it to be tarnished; do not align yourself politically with a certain power group to seek business or personal favours; do not engage in socially deplorable behaviour; do believe in a God and that one day you will stand before Him and defend all your actions. If so, then your chances of being rich are pretty slim. You can no doubt live a comfortable life because hard work, smart work, and taking risks with your capital do work. But your ambitions of making it to various rich lists in the world are likely to be adversely affected because of your inability to take other risks listed above.
Rich people break laws and hire top lawyers to defend them. All is good as long as the compensation paid is less than the money earned by breaking the law. Recently financial institutions all over the world have made a mockery of regulations. Fines have been paid, but surely what has been paid as a penalty is far less than what has been earned. Oil companies, pulp and paper businesses, cigarette manufacturers, the arms and ammunition industry, drugs, the pornography industry, etc., continue to flourish though they are clearly involved in socially deplorable behaviours.
Please do not get me wrong. I am not against being rich or making money, and I am definitely not judging anyone. I believe anyone can achieve anything in life provided he is willing to pay a price for it. To grow financially beyond a certain level would force you to take risks and not just capital risks. If you are willing to take such risks then there is no limit to what you can achieve in financial terms. In fact, look around and see how many of today’s iconic businesses are taking these risks in broad daylight and getting away with it as well.
If money is all you want, then take risk taking to a higher level, and don’t just stop at risking your capital. Nothing short of such behaviour is likely to get you there. As for me, I decided a long time ago that I have no appetite for legal, regulatory, reputational, political, social, and hereafter risks. I will probably never make it to a famed rich list, but I do live a very comfortable and content life. Ultimately it is a personal choice, and no one can make this choice for you. You decide for yourself what you need, what you want, and how much risk you are willing to take for it.
My primary motivation for writing this essay is my kids. They work very hard on their studies. Their school hours are very long. When they come home, they spend most of their time doing homework, preparing for the next day’s work, preparing for class tests and semester exams, and so on. I am a proud father of two very studious children, yet it breaks my heart to say that one day they too will discover what I was able to discover much later in life: hard work does not pay. There is more to the story that is never taught at schools.
I write this note for my children, for my nephews and nieces, and for all the young children in schools who toil and sweat and want to make it big in life. They are willing to push themselves harder and harder in pursuit of their dreams.
When I talk about rich people, I am talking about really rich people. Rich is a very subjective term. I am talking about rich in purely financial terms. These are people who drive cars we can only see in magazines and say, “Wow!” These are people who court women we also usually see in magazines (of a different type) and say, “Double wow!” These are people who live in houses we are only able to see in movies and think, What would it take to get there? They don’t buy airplane tickets when they go somewhere; they buy airplanes and a crew to fly it. These are the people I am talking about.
Deep down most of us, if not all, at some point in time have wanted to own that hot sports car and drive it around with the roof open, sitting next to a partner who is even hotter than the car. Then we want to park it in a palace of a house where you don’t have to reverse the car to get it out of the house. All of this and more is indeed possible, and believe me, there are many who have it. I have known these people and have been in their cars, their houses, and their lives. Unfortunately for you and me, none of them (and I’d like to emphasize these three words again: none of them) got there by hard work alone.
Hard work offers limited return. Let’s take the example of labourers and factory workers. Who works harder than these guys? They sweat and toil, often in sub-human conditions, constructing tall buildings and towers, assembling magnificent products, and what do they get? Millions of these hard-working people live in poverty. What are the odds that a brick layer will ever make it big just by laying bricks? He can be the best brick layer in the world, but it will not take him from rags to riches. What are the odds a janitor will one day own the building where he cleans washrooms because he cleans the washrooms very well? He may be the best janitor in the world, but that is what he is. There is nothing wrong with being a brick layer or a janitor or a factory worker. These are honest and honourable jobs. My point is that these people work very hard, but they never become rich. If hard work alone was needed to be rich then these people should be the first ones to be rich, so obviously something else is needed.
This brings me to the second piece of the puzzle. Often not as well-known as working hard cliché but still decently well-known is the concept of smart work. This is where educated people like you and me come in. We acquired the skills of working smarter and hence increased our income. We became doctors, lawyers, accountants, and so on. We acquired skills that allowed us to sell our products and services better. We learned to work not only hard but also smart. We learned to use our workday more efficiently. Time and energy is limited, so let’s use these in a smarter way. This combination of working hard and working smart did wonders. Millions of people around the world live comfortable lives through a combination of working hard and working smart.
This word comfortable can mean different things to different people, and I find it extremely difficult to define because the concept is very subjective. In my experience, I have seen people making very comfortable livings, owning houses and cars, educating their children well, travelling around, and having generous savings through a combination of hard work and smart work. They are not rich (by my definition of rich), but they do manage to live comfortable lives.
It is surely not possible to get rich by only working hard. However, it is definitely possible to live a comfortable life by working hard and smart. If you cannot do more, at least work hard in acquiring some skills you can later sell smartly.
For those of us who aim to go beyond comfort, there is more to give. Let me introduce you to the third piece of the puzzle: risk.
I don’t remember any teacher of mine in my primary, secondary, or even early college years ever walking up to me and telling me that in addition to the hard work I was putting in getting good grades I would be required to take risks. The first time I was properly introduced to the concept of risk taking for money making was when I enrolled in a business school. I clearly remember the day when, for the first time, I read, “The higher the risk, the higher the return.” I was annoyed at the sudden introduction of this new dimension to my money-making model.
Risk is the missing piece of the puzzle. No rich man has ever made it to where he is without taking risks. Lack of a risk appetite is what keeps people in their comfortable zones and never lets them grow to be a part of the rich list.
Let me give you an example. A certain person works hard to acquire a certain degree, on the basis of which he is then able to find a good job. He works smartly and starts to live a comfortable life. He amasses a certain amount of savings, which he then invests in real estate or some business venture. Property investment doubles, business becomes a huge success, and this person moves up higher in the economic value chain. He worked hard, he worked smart, and then he took risks with this capital (savings) by investing in a property or a business. His investments were well timed and well judged. He made huge profits and is now richer than before. This is a nice, simple example, but note that risk taking does not always go your way, and that is why it is called risk. His investment/business could have gone south, and his savings could have been lost.
Business schools teach about the advantages and disadvantages of risk taking. But what is wrong is that it almost always covers capital risk only. In reality, risk is not always about capital, and there is much more to risk taking than just investing money.
I left my business school with a reinvented money-making model. Work hard, work smart, take risks, and invest savings. For the last two decades, I have been religiously following this model. To be honest, the combination of hard work and smart work worked really well. The investments part did not really work that well. Some investments made money and some did not. Even today I stay moderately positive on my investments, but no big jumps in my net-worth followed as a result of my investments, although I am still hopeful.
I am of the opinion that rich people are not necessarily smarter, and they definitely do not work harder than most of us. So what is different? What makes them the owner and us the employees?
The rich are brave, plain and simple. Sometimes they are foolishly brave, acting on hunches and impulses, and sometimes they take calculated risks. They have an appetite for risk, and money is not the only thing they risk.
It is naïve to assume that rich people only take risks with their money. Nothing could be more misleading. Let me introduce you to some other risks the rich take regularly: legal risks, regulatory risks, reputational risks, political risks, social risks, religious risks, etc.
This is not an exhaustive list, and I can definitely think of more. However, for now these shall suffice to explain my point. Big money making calls for big risk taking. The statement, “The higher the risk, the higher the return” is indeed true; however, most of us fail to comprehend its broader meaning. At some point in time, the rich have taken one or all of the above risks (in addition to risking their money), and this is how they became rich.
As an individual, perhaps you do not want to circumvent laws; do want to comply with the regulatory environment; treat your reputation as sacred and would not like it to be tarnished; do not align yourself politically with a certain power group to seek business or personal favours; do not engage in socially deplorable behaviour; do believe in a God and that one day you will stand before Him and defend all your actions. If so, then your chances of being rich are pretty slim. You can no doubt live a comfortable life because hard work, smart work, and taking risks with your capital do work. But your ambitions of making it to various rich lists in the world are likely to be adversely affected because of your inability to take other risks listed above.
Rich people break laws and hire top lawyers to defend them. All is good as long as the compensation paid is less than the money earned by breaking the law. Recently financial institutions all over the world have made a mockery of regulations. Fines have been paid, but surely what has been paid as a penalty is far less than what has been earned. Oil companies, pulp and paper businesses, cigarette manufacturers, the arms and ammunition industry, drugs, the pornography industry, etc., continue to flourish though they are clearly involved in socially deplorable behaviours.
Please do not get me wrong. I am not against being rich or making money, and I am definitely not judging anyone. I believe anyone can achieve anything in life provided he is willing to pay a price for it. To grow financially beyond a certain level would force you to take risks and not just capital risks. If you are willing to take such risks then there is no limit to what you can achieve in financial terms. In fact, look around and see how many of today’s iconic businesses are taking these risks in broad daylight and getting away with it as well.
If money is all you want, then take risk taking to a higher level, and don’t just stop at risking your capital. Nothing short of such behaviour is likely to get you there. As for me, I decided a long time ago that I have no appetite for legal, regulatory, reputational, political, social, and hereafter risks. I will probably never make it to a famed rich list, but I do live a very comfortable and content life. Ultimately it is a personal choice, and no one can make this choice for you. You decide for yourself what you need, what you want, and how much risk you are willing to take for it.
***
From the book - A Chronicle of Amends