So you want to get really, really rich in America?

[Quantum]

Here's information to start the discussion.

Although I'm concerned with the top 0.1% of the wealthiest in America (the top 0.1% top wealthiest in America is defined as ~$20M (USD value in 2012)), I haven't yet invested the time yet for the characteristics of the top 0.1%; however, here are some interesting chacteristics of the top 0.5%. Right now, if you want to get really, really rich in America, go into "financial services or banking industry, real estate development involved with those industries, or government contracting."

"Membership in this elite group is likely to come from being involved in some aspect of the financial services or banking industry, real estate development involved with those industries, or government contracting. Some hard working and clever physicians and attorneys can acquire as much as $15M-$20M before retirement but they are rare. Those in the top 0.5% have incomes over $500k if working and a net worth over $1.8M if retired. The higher we go up into the top 0.5% the more likely it is that their wealth is in some way tied to the investment industry and borrowed money than from personally selling goods or services or labor as do most in the bottom 99.5%. They are much more likely to have built their net worth from stock options and capital gains in stocks and real estate and private business sales, not from income which is taxed at a much higher rate."
(http://www2.ucsc.edu/whorulesamerica/...)

I reference the following articles:

https://www.theguardian.com/business/...

http://blogs.reuters.com/david-cay-jo...

http://www2.ucsc.edu/whorulesamerica/...

http://www2.ucsc.edu/whorulesamerica/... (by a University of California Santa Cruz professor)

[Bob]

The easiest way is to choose parents who used to be criminals then laundered their wealth into legit businesses. Think Koch brothers, whose father stole a patent, then traitorously established his business in the USSR.
:)

[Quantum]

Bob wrote: "The easiest way is to choose parents who used to be criminals then laundered their wealth into legit businesses. Think Koch brothers, whose father stole a patent, then traitorously established his ..."

i generally know about the koch brothers and their tea party links. do you have a link or book for your statement. i'd like to do more research.

[Nik]

I've no idea about Koch brothers, but found this article:
http://www.rollingstone.com/politics/...
Not sure it's not tendentious, but probably gives some idea...

[Nik]

Alex G wrote: "Right now, if you want to get really, really rich in America, go into "financial services or banking industry, real estate development involved with those industries, or government contracting."..."

This is old economy... Not that it's dead, it's very much alive, but not so sexy.. -:)
High-tech, bio-tech are still less barred for newcomers than banking or real-estate and still offer many opportunities.
If talking about going to America to become rich, I like Sergey Brin's story: https://en.wikipedia.org/wiki/Sergey_... with his father complaining about not being able to engage in something he wanted, because of being Jewish, and the enrichment heights their son achieved in the States, co-founding Google

[Anita]

Bob wrote: "The easiest way is to choose parents who used to be criminals then laundered their wealth into legit businesses. Think Koch brothers, whose father stole a patent, then traitorously established his ..."

Or think Kennedys, who's fortune was made in bootlegging.

[Nik]

Anita wrote: "bootlegging.."

Should really be called 'philanthropy' if folks are boozeless, if you ask me -:)

[J.J.]

Chicken or egg argument, but if the rich got to the top .5% through investments in real estate and stocks, did they start off in those fields, or did they work in another field first that allowed them the disposable income to invest?

[Nik]

J.J. wrote: " the disposable income to invest.."

Don't know whether it works this way everywhere, but my own experience with working with large scale developers - they hate to invest their own funds, only the required minimum (usually around 10%) to achieve bankability and presales. For them that's the art - with 1mln or less to perform 10 mil project. Many are leveraged to the max. And most loans they take are non-recourse - if anything goes wrong, they can just move on..

Don't know how accurate 'Pirates of Silicon valley' is or a movie about Facebook, but sometimes you can just 'borrow' ideas and turn them gold - that's real alchemy: billions from nothing -:)

[Quantum]

Nik wrote: "And most loans they take are non-recourse - if anything goes wrong, they can just move on.."

what is a "non-recourse" loan?

J.J. wrote: "Chicken or egg argument, but if the rich got to the top .5% through investments in real estate and stocks, did they start off in those fields, or did they work in another field first that allowed them the disposable income to invest?"

Nik wrote: "This is old economy... Not that it's dead, it's very much alive, but not so sexy.. -:)
High-tech, bio-tech are still less barred for newcomers than banking or real-estate and still offer many opportunities."

all good points. as the old saying goes, "it's easy to make money when you have money.' once you have some, then you can "leverage" it. even from book sales. ;)

"2005: Obama earns just over $847,000 off a book advance with Random House, plus $378,000 off book royalties.
2007: Obama earns $3.3 million off book royalties from Random House and $816,000 from Dystel & Goderich Literary Management."
(all before he became President. I think it's this book: Dreams from My Father: A Story of Race and Inheritance.
http://time.com/money/4439729/barack-...)

[Marie Silk]

Dang. Those would be some comfortable royalties.

[Nik]

Alex G wrote: "what is a "non-recourse" loan?..."

That all collateral come from within the project (usually property) and the bank doesn't have a recourse against the borrower or its shareholders....

[Quantum]

Marie wrote: "Dang. Those would be some comfortable royalties."

IKR.

Nik wrote: "Alex G wrote: "what is a "non-recourse" loan?..."

That all collateral come from within the project (usually property) and the bank doesn't have a recourse against the borrower or its shareholders...."

so, if i was a land developer and i'm building condos on some land that i own then i could use that land as collateral and if i defaulted on the non-recourse loan, then i'd only lose the land--even if the land value at that time was less than the loan?

[Nik]

Yeah, pretty much, Alex. However it's usually a little more complex than that and bank tries to mitigate risks by releasing loan funds gradually according to construction project's progress. That's for construction loans. But you can always mortgage land and take a certain percent of its value as a loan...

BTW, following Denise's question, do you see any escort-service owners among top 0.5%?-:)

[Kevin]

If you want to be rich, choose your parents carefully!

[Kevin]

Also remember that you can marry more money in 5 minutes than you can make in a lifetime!

[Nik]

Seek them, find, get married or adopted -:)

[Michael]

Denise wrote: "What about the oldest profession? I mean, if I ran an influential call-girl operation, I could make millions, and then close up shop, take those millions, invest in the market, real estate, retire,..."

Yes you could.

Nik wrote: "BTW, following Denise's question, do you see any escort-service owners among top 0.5%?-:) "

You never will. I know alot of people that fit the Top .1% who have made their money from not-so-reputable industries but you will never see their names on a Forbes list. A friend of mine just bought an island off of Greece. Its small and undeveloped, but he owns an island.

[Ian]

I think that you have to consider the time you live in. The 1980s - 1990s were abnormal because what we call the information age was starting. Gates got rich because somehow managed to persuade IBM to use his operating system, even though it was far from the best. IBM, the giant, could not be bothered because it did not see what was happening. Gates would then use the IBM endorsement to fund what he was doing. People could see that with IBM behind Gates, it was a licence to print money. Apple could have sunk them, but it was too arrogant/greedy. Soon after, he who came up with a good search engine would prevail. Originally, I felt that Alta Vista would win through, but they stopped development. Similarly, Zuckerberg saw social media as a way to make billions. These tend to be one-off opportunities and once someone claims them, the opportunity is gone.

A large number of people made huge amounts of money "trading". Our Prime Minister made something like $70 million working for one of the banks. Working for the bank means you don't have to front up the capital, and if you work in a boom, when it is extremely difficult to lose, you get rich. The problem is, not so easy in turbulence.

Property development is the other classic way. Form some sort of corporation, borrow in the non-recourse way, go big, pay yourself some fees, and you can't lose, as if the corporation goes bankrupt, tough - you walk away. The key is to find a way where if you win, you cart away huge sums; if you lose, someone else carries the loss.

[Nik]

Ian wrote: "Similarly, Zuckerberg saw social media as a way to make billions. These tend to be one-off opportunities and once someone claims them, the opportunity is gone .."

Not sure, Gates or Zuckerberg necessarily foresaw billions. They just tried to make money, maybe at first aiming at millions, but ending up with bills. Agree that after one claims the opportunity - it may be gone, especially since the one who realized it will try to prevent a dangerous competition, but in high-tech it seems there are still many - I might be wrong, but still hundreds of start-ups are being sold or IPOed for 100mil+ every year. Even something 'silly' - like 'Angry Birds'. Whatsapp - 16 bills, Waze - 1 bill and so on - all pretty recent. Virality equals immediate capitalization. Might not last forever though..

Ian wrote: "The key is to find a way where if you win, you cart away huge sums; if you lose, someone else carries the loss. .."

The biz is also an art (some say - con art -:)) - and that's an artistic part. You can't acquire it studying MBA -:)

[Ian]

I am not suggesting that Gates or Zuckerberg foresaw billions.My gut feel is the really successful don't really think too deeply about their own personal riches, but rather they focus on what needs to be done to keep the business going, and eventually the really big money takes care of itself, IF they were lucky and got everything right.

Yes, there may be additional opportunities, but I doubt that an individual will find it easy to get there now. Angry Birds might have made a lot of money, but there would be serious costs ion getting there, and those costs will presumably spread the equity.