Wealth doesn’t come from salary this is very important to know and seems obvious once you know. If you know this it can be hard to know what to do with this knowledge don’t worry, we will talk about how to do this. I will repeat one more time Wealth doesn’t come from salary.
However, many people are told from young age that if you go to college and air quote “get good job you are set for life” to be honest this way I think it should be. However, the two major problems with this if you have one source of income you are not diversified as happen in the recession if job become redundant it can be harder to get another and second real terms wages have been falling despite increases in despite in real terms people are now more productive than ever in jobs. “From 1973 to 2013, hourly compensation of a typical worker rose just 9 percent while productivity increased 74 percent.” This is a systemic fault of society that needs to be address.
There was research done by Tax Policy Center on the different income level looked at the sources of income for American taxpayers from different income level and the research found that the higher your income level the higher the share came from different sources of income such as investments, business income and selling of assets which is other way of saying the wealthier person is the more diversified their income will be.
The survey found that “For the 99 percent of taxpayers making less than $500,000, (I have point out this people earning less half million this people on average salary) or less salaries and wages account for 75 percent of their adjusted gross income for 2012, the latest period available from Internal Revenue Service returns. Of the remaining income, about half came from retirement programs such as pensions, annuities and Individual Retirement Accounts”
The Survey found for “taxpayers making $500,000 to $1 million, salaries and wages account for more than half of earnings”.
While this is big increase when you can to Americans making $10 million or more “salaries and wages only account for around 15 percent of their income. Their real money comes from capital gains, with capital gains accounting for about half of their earnings. Another 15 percent to 20 percent came from interest and dividends. About 25 percent of their income came from business income, which means they owned or held a stake in a private company.”
This shows the wealthy people become the less they depend on wages which shows the conventional wisdom that having good job is not enough. By having income diversified these people are better able to deal will downturns as they have more diversified income.
Hope this plant the seed that huge salary won’t get you wealthy on it own. The important of investing for growing money. If you came from middle class/working class background were well paying job in financial terms is the high of success in real terms a well-paying job will only you get so far. You need to invest and have retirement fund this Genesis for this is part of the financial plan give you the investing plan.
Now it worth pointing out that some of assets that were sold be people making over 10 million Roberton Williams of the Tax Policy Center said “A lot of the people at the very top are there because they sold a major asset or business they’ve built for years,” he said. “It’s a one-time big payday.” This asset can also be shares from their investment accounts that have been own for years.
However, their income is still very diversified even taking account. The majority of people 99 percent of taxpayers making less than $500,000. Depend on their wages.
Another way of thinking about Salary, you are pay for you time while wealth produces money while you sleep. So how to create wealth this is something we have talk about and will talk about in this book. So basically, you want money working for you think money as robots once you get one robot working for you can more robots. First thing to get your money working for you is saving put least 10% of your money away this save money later on can be use later create wealth and to stop debt. Of course, even small interest rate from saving is create small amount of wealth. Of course, investing money great way of letting money grow long term. Of course, other ways of making money starting businesses and licensing. Of course, spend less than you make because some people no matter how much they make will spend it as we have talk about.
LINK
Read More How much these CEOs earn in an HOUR https://www.cnbc.com/2015/04/09/where-the-rich-make-their-income.html
