I often write on Quora.com, where I am the most viewed writer on financial matters, with over 466.9 million views in recent years.
In the answers below I focused on the following topics and issues:
- Why are most genuinely wealthy people simple in outlook and conduct?
- In the near future, which developed, first world country is most likely to fail first?
- Realistically how fast could one burn a one million dollar lottery win?
- What is the easiest way to start a multi-million dollar business?
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Source for all answers – Adam Fayed’s Quora page.
Why are most genuinely wealthy people simple in outlook and conduct?
You are right. The majority, but not all, wealthy people aren’t as flashy as people expect.
The main reasons tend to be:
Wealth is something which goes up with age, whereas it is more normal for income to peak earlier. There are some high-income people in their 20s, especially in Silicon Valley and some other areas.
There are few wealthy people in their 20s, especially early-mid 20s, compared to those in their 30s, 40s, 50s, 60s, and 70s.
If people acquire something later in life, they are less likely to be flash. Younger people who can get wealthy quickly, like some sports and entertainment stars, are obviously an exception, as are some people who inherited the money.
2. Been there, done that
Let’s say you are a start-up founder. At first you work long hours, and are paid less, in some cases, than the cleaner you employ, let alone some other staff.
You get wealthy after a certain number of years, against the odds. What is the first thing you might do, after you sell your business?
It is normal to go on a spending spree, now you have more money and sometimes more time, after selling a business.
I heard the Shark Tank billionaire Mark Cuban speak about getting lifetime airline memberships and all sorts of things after he sold his business.
Over time, things become normal. That business or first class flight is exciting the first time. Less so after the twentieth time.
Even if it doesn’t become boring, you certainly don’t need to boast about it on social media, unless you are an influencer who needs to keep up appearances to make more money.
Having more money is usually seen as easier, and more convenient, than struggling, and with good reason.
Yet it hits a tipping point if you make the wrong decisions. If you go from a small studio apartment to a luxury one, or a big five-bed house, then the extra work is manageable.
You can hire somebody two or three times a week, or do more yourself. If your house gets too big, or you have too many second homes, then you might have a lot of work to do.
More light bulbs break, there are more floors to clean, staff to pay etc. Not everybody wants that.
4. Getting more things for free
The ironic thing is that the more money, power or even influence you have, the more you are offered things for free.
People pay to have meals in luxury restaurants with famous business people, and sometimes these establishments pay if they will allow them to post a picture from social media. That isn’t to mention professional conventions and other events.
Then there is the issue of managing risk, as no matter how much you do or don’t have, you still need to be careful.
Type in “ex multi-millionaire” or even “ex-billionaire” into Google and you will see that not everybody keeps their wealth and lifestyles forever.
In the near future, which developed, first world country is most likely to fail first?
It depends what you mean by fall fast.
If you mean won’t exist at all, i don’t see any obvious candidates amongst developed nations, but nobody can predict the future with certainty.
In the next fifty or a hundred years, the depopulation issue could ensure that the following countries are in danger:
Basically, any country with a low birthrate and a lack of history of migration.
Many European countries such as Portugal also have low birthrates, but it is likely that integrating immigrants will be harder.
China, Thailand and several other mid-income countries could also be in trouble for the same reason.
Yet your question was “the near future”. I just don’t see any advanced country collapsing in the near future, if you define advanced as having a GDP per capita over 30k.
Of course, the conflict between Ukraine and Russia increases risks for both, but neither has a per capita GDP even close to 30k.
What is more likely is political uncertainty and problems, rather than collapse.
The UK has gone to the IMF twice in living memory, as have plenty of countries now in the EU.
In the next few years, it wouldn’t be inconceivable that an advanced country needs to go to the IMF, but that doesn’t mean complete collapse.
Plenty of countries can come back stronger from that. Look at how a country like Ireland came roaring back after a tough 2008–2013.
Realistically how fast could one burn a one million dollar lottery win?
You could do it in a day.
This is what a $4m home looks like in some parts of California:
A one million Pound house looks like this in some parts of London
Some luxury cars like this one could cost you 200k plus:
Now of course, you can get a mortgage or car loan, to reduce how much you put down upfront.
The point is, it doesn’t go as far as you think if you don’t manage the money well.
You could be broke in a few years like some of these lottery winners:
Even if you don’t spend unwisely, $1m will be lost to inflation in a few decades if left in cash.
$1m in a well-diversified, low-risk, portfolio, right yield $30,000-$50,000 a year.
You can only earn consistently more by taking much higher risks.
So, the income you could safely get from $1m is comfortable in some countries, but isn’t enough to live on in others.
Therefore, the money has to be managed very carefully.
What is the easiest way to start a multi-million dollar business?
The easiest way is to inherit money, alongside knowledge. Most people don’t have that, at least when they are younger.
Assuming it is a self-made situation, it isn’t about having great ideas and a light bulb moment:
Rather, the easiest way to start a seven (or multi seven) figure business is:
- Get a job, ideally for 5+ years
- Get good at it and on the side in your spare time, work on good extra skills. This could be digital marketing, accounting or any skill which helps you save money, or make money, if you want to start a business.
- Then start your own business with that knowledge. Start small
- Over time, as you get stronger, focus on outsourcing and leveraging through technology.
- You work for a health insurance brokerage firm. You get good at managing client relationships, you see how clients are acquired and any other important business knowledge.
- Then you start your own business and build it up. You might start small and organically at first
- You test twenty or thirty online adverts, and find one or two adverts with an excellent return on investment (ROI). You then increase the spending related to those adverts
- Over time, you get better with processes, and can outsource more, focus on strategic relationships and so on.
Of course, the above is only one way to do it, but it works better than most of the alternatives.
Most start ups go bust within the first five years. The success rate is much higher if the start up founder has experience in the domain.
You don’t have to reinvest the wheel, or become the next Bill Gates.
There are loads of very successful doctors practices which were just started with doctors who got jobs. The same with recruitment firms, lawyer practices and tones of other businesses.
Now sure, it is good to be inventive, break industry norms, be controversial and be the first (or one of the first) to try out new ideas. That doesn’t mean you need to invent the next big technology or energy source!
Some would argue that an easier way is to focus on a big idea, get loads of funding using other people’s money (OPM) and leverage that way.
That can work, especially for those huge stand out successes, which are also known as unicorns in the start up space.
Yet those often have a tiny rate of success. I have seen people who follow the above, simple and boring formula, have a 1/3 or even 1/2 chance of being in business in five years, and a much higher percentage start seven figure businesses compared to those who don’t have experience in the domain.
Why do most businesses fail? Cashflow. They can’t acquire customers for below the lifetime ROI of the client, which is just a fancy way of saying they kill themselves by advertising, or via high fixed costs, without having the revenue to justify the cost.
How many times have you watched an episode of Dragons Den, or Shark Tank, and seen somebody whose big plan is to hire a salesperson, a marketing agency or somebody else.
If somebody already has experience in the domain, it is more likely they know how to do the basics themselves.
That person who is heading up the department in the insurance company (or any other industry), and therefore needed to budget and manage the sales team, should know the basics about cashflow management, how to keep costs down and acquire clients.
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