How the top 5% do it?

[COcheesehead]

I got there by 2 of the 4 paths. Big saver, entrepreneur.

 

[jollystomper]

Oh, I don't disagree with any of that. Uncle Pat's lucky radio did not make me an electrical engineer; I had to work for that. But it did serendipitously launch me in the right direction.

Re your story, I would guess that you had to work harder than some of us who had improved odds. Regardless of what combination of luck, skill, and hard work put you where you are, it's great to hear the story.

Thank you. In some areas I did have to work harder to get noticed. My parents told me and my six siblings (who have all achieved better than me, even though I am the smartest ) to expect that. But, they also said "if you work harder...and smarter... you may end up not just 'equal', but 'better'". And in many cases they were right. I do not regret having to work harder one bit.

During my college and Megacorp years, I have dozens of chances to go to many schools and talk about "success". What I learned is that one has to be very careful in how one uses the phrase "luck". There are many who will not even try because they believe it is all luck. Like not applying for something not because they are not qualified, but because "you know they only want white people for that". I also found it important to highlight to them that there are no guarantees. The issue is not if you will fail, but what you will do when you fail. Again, doing your best and working hard and respecting others may not lead to success. But it gives you better odds to go further and maybe be in the 20%, 10%, 5%, or 1% than not even trying and choosing to spend the majority of your time on "personal pleasures".

 

[LOL!]

My impression is that a lot of people participating on these forums are in the top 5% which allowed them to retire early. Isn't it a rather low bar to achieve by age 55 or 60?

The CEOs of those 500 big companies had better be in the top 1% which is a whole 'nother matter.

Conversely, many of us don't really have a good idea about the bottom 50%.

 

[kgtest]

I am fine with being in the "normal" range because I refuse to work 10-15 hours a day for Megacorp. I value my home time on the farm more than chasing elusive $$ in the corporate world.

I don't consider myself lucky, but many others do. They are the ones who continue to smoke, drink, cheat on their wives, and live for the day, rather than saving for the future.

I also have the great gift of contentment, and being happy with my wife, kids, home, cars, job, and basically good health regardless of all the life threatening illnesses I have had.

+1. If someone said to me, hey you don't need to put in 4 extra hours/day and you will still end up in the top 10% of your financial class...it's a no brainer.

As for the bottom 50%...even with parents and grandparents who started out with little to average wealth... they did manage to put in the time over their long working years, being relatively healthy allowed them to show up everyday and presumably build that "lucky" foundation that I came into this world upon.

I remember a fun story grandma always tells me...they moved for a better opportunity. Once they hit the highway they had 2 choices that paved my future... to the right they head to Green Bay, WI, to the Left the head to Minneapolis, MN...Grandma told Grandpa to take a left, and the rest is history.

 

[marko]

For this to be an honest discussion I really believe we need to leave the comparisons of third world people out of it. I hope this isn't taken wrong but it's an apples to oranges comparison.

It's like the old "only 10% of the world has made a phone call" game. It doesn't matter that the garbage picker in India will never be CEO of GM.

I know a dozen people born into mega-wealthy families (and white, tall, privileged, smart and Ivy educated) who are complete financial failures mostly because they didn't apply themselves and want to do the work.

As jollystomper noted, it is more about seizing the opportunities that are presented to you.

Not trying to be provocative but IMO we should compare first-world issues with first-world opportunities and not drag the unlucky third world into it and say "we're just lucky", implying that very little other effort is required. It just skews the perspective needlessly.

We always seem to get into this "hard work or luck" spiral. Ok, you were lucky to be born in a country that presents opportunities galore; after that, it really gets down to hard work and living smart.

 

[Mdlerth]

I was deep in the bottom 50% when I started out

My impression is that a lot of people participating on these forums are in the top 5% which allowed them to retire early. Isn't it a rather low bar to achieve by age 55 or 60?

I don't know if achieving the top 5% is a particularly low bar at any age, but otherwise you've nailed it. Most people move up (and down) among the $$ percentiles throughout their lives.

Tracking the same households over time shows significant income mobility - AEI

 

[daylatedollarshort]

On the Reddit FIRE forum, many of the posters (younger crowd than here) are simply highly paid software engineers. It just a field that pays a lot for a 4 year or even no college degree. And because it attracts INTJ types, many are good savers and aren't spending money on luxury goods.

 

[HenryD]

On the Reddit FIRE forum, many of the posters (younger crowd than here) are simply highly paid software engineers. It just a field that pays a lot for a 4 year or even no college degree. And because it attracts INTJ types, many are good savers and aren't spending money on luxury goods.

Speaking as an INTJ software developer in the 5% I can tell you that it isn't that simple

 

[Chuckanut]

The problem I see is that there are a lot of people working 50-60 hours a week with no possibility of getting into 'senior' management.

I saw that long ago in my career, which is why I became a serious LBYM person and and investor. I am not in the 5% or even in the 10%, but I did not burn myself out working 60 hours a week in the hopes that I would 'get my reward.'

 

[Which Roger]

This has also been my observation. At MegaMotors, the top executives were almost all over 6' 3" - it was almost laughable to see them all in one photo. It looked like a men's basketball team in suits.

I read somewhere that if you're at least 7 feet tall, you have a 1-in-6 chance of being a millionaire while still in your 20s. The rationale is that an estimated 1/6 of 7 footers make the NBA, and even earning the minimum salary is enough to put you over the top.

 

[Mdlerth]

Phooey on your intellect! I can go for days without a pee!

The problem I see is that there are a lot of people working 50-60 hours a week with no possibility of getting into 'senior' management.

I saw that long ago in my career, which is why I became a serious LBYM person and and investor. I am not in the 5% or even in the 10%, but I did not burn myself out working 60 hours a week in the hopes that I would 'get my reward.'

At my megacorp, either you got anointed as "corporate promotable" early on, or you were permanently out of the running. Both the existence of The List and the criteria for getting on it were secret.

Of course, judging by many of the senior execs I encountered, I suspect the key requirement was a high bladder-to-brain ratio which enabled them to endure lengthy meetings of mind-numbing tedium without a break.

 

[travelover]

At my megacorp, either you got anointed as "corporate promotable" early on, or you were permanently out of the running. Both the existence of The List and the criteria for getting on it were secret.

Of course, judging by many of the senior execs I encountered, I suspect the key requirement was a high bladder-to-brain ratio which enabled them to endure lengthy meetings of mind-numbing tedium without a break.

I definitely saw this at MegaMotors, as well. It was kind of amazing how some people seemed to have an invisible string tied to them helping them rise. Also saw that string break for a few people when their Godfather retired or fell out of favor.

So glad to be out of that rat race.

 

[Dean56]

At my megacorp, either you got anointed as "corporate promotable" early on, or you were permanently out of the running. Both the existence of The List and the criteria for getting on it were secret.

Lol, I think we worked at the same Megacorp.

 

[pb4uski]

"If you were to boil it down, the rich became rich by pursuing wealth in at least one of four ways — though I found there to be overlap between all four paths:

49% were Saver-Investors, or average people with modest incomes who consistently saved 20% or more of their income and prudently invested their savings over a period of 32 years
18% were Big Company Senior Executives
7% were Virtuosos, or top experts, in their field
51% were Dreamer-Entrepreneurs (Twenty-seven percent of these Dreamer-Entrepreneurs failed at least once in business)"

Guess I'm a joint member of the Saver and Dreamer gangs. Also American, tall, deep voice and male, which the author neglected to mention as contributors to success.

I got there by 2 of the 4 paths. Big saver, entrepreneur.

Similar here.... big saver and virtuoso (specialist but with earnings like a small-mid public company executive).

 

[CardsFan]

I guess I qualify as a big saver (don't fit the other categories), but I think it was that we were not big spenders. We were satisfied with a comfortable middle class lifestyle, and as the earnings increased, spending lagged.

It's interesting that we never came close to the top 5% in earnings, but now we are in the top 3% in wealth (based on this site: https://dqydj.com/net-worth-percentile-calculator-united-states/ )

I suspect a lot of those high earners also lived in HCOL areas, and/or had more of a "keep up with the Jones" mentality.

 

[NYEXPAT]

I was in the top 5%, while I was working. My key to success was being "extremely handsome" and having a upscale Female clientele. My ex who was my partner in business looked like a young Victoria Principal from TV's "Dallas" and she would handle the Male clientele. It worked like a charm and we made Millions together!

 

[daylatedollarshort]

Speaking as an INTJ software developer in the 5% I can tell you that it isn't that simple

Oddswise still a lot simpler than becoming a successful author, successful actor, surgeon or CEO, in the context of the article. My megacorp tech job was hard work, but when I had my own business it was fairly low stress, enjoyable work with a pretty short work week since I set my own hours.

 

[Svensk Anga]

I find it hard to believe, but we are probably in the 5%. There are so many people living larger.

We got there being super-savers. I think I was regarded as a virtuoso at megacorp, but I did not put in the effort to become so. It just sort of happened over the years. I certainly did not put in lots of hours. I was at work 40, maybe 45 hours a week, but I really identified with the recent “downtime at work” thread. The last few years, my major office task was refining my FIRE spreadsheets. I have just a BS degree. DW has a masters, but I always out-earned her. She did what she liked, not what was lucrative.

It just doesn’t seem that hard to work ones way up the wealth scale, maybe not to 5%, but to a comfortable retirement in reasonable time sure seems doable from my perspective.

 

[RenoJay]

Interesting about the work hours. Not to sound overly boastful, but I hit the 1% while rarely working more than 40 hours/week and often less than 10. I find that wealth comes down to a small handful of important decisions and actions that are not time-consuming. Usually the time-consuming stuff is trying to please others ie attending meetings, flying cross country for something that could be done via Skype, etc.

 

[RobbieB]

You only need 2.4 million of net worth (not even investable assets) to be the 5%.

 

[BeachOrCity]

I think it just boils down to either
A) stumble into it or inherit it or
B) set goals and make it happen.

In the US If someone sets out while young to be in the top 5 percent, stays motivated, works hard in a field that allows them to earn the income needed (or start a business) and saves hard.... they have a very solid chance at becoming part of this group. Not a guarantee but a good shot

 

[armor99]

I didn't say that. It seems intuitive that there is some correlation but there are many people who work hard and save but still do not achieve financial success. So I think the correlation is probably weak.

But my point is that the kind of junk science referenced in the OP's post tells us nothing. IIRC you are a physician; you certainly understand how competent studies are designed and conducted.

I disagree on the "mostly." For example, I was born with all that USA/white/male luck and a physician father in a stable family, but I got my launch at megacorp because I spent a lot of time playing gomoku with a Taiwanese friend in the back row of graduate school classes. One day he said to me "Megacorp is looking for another part-time student electronic technician. I can give you the contact if you are interested." From that luck a career was launched. I was qualified for the job because I had both ham radio and FCC commercial radiotelephone licenses. I got interested in electronics because my uncle, an inveterate garage sale shopper, spotted, bought, and gave me an ancient short wave radio when I was in 7th grade. More luck. I also have enjoyed excellent health, never even dying along the way to FI. More luck.

Well said..... when it comes to luck, I tend to think about it this way. Good luck and bad, comes to visit us all. It is more about what you choose to do, when that randomness comes knocking.
What have you done to maximize the good luck, and minimize the bad? Those are things somewhat under your control. I have been laid off for a long period of time twice now in my career. The first time came very close to bankrupting me. It was early in my career, and I almost lost everything. After that I came to the understanding that if fate is coming to kick my butt, the best I can do is pad my behind between ass kickings. So I saved, invested, etc, and the next time was not nearly as bad.
Life is often harsh and unfair, but it is rarely completely unpreventable. There are almost always things you can do, to try to stack the deck of life in your favor.

 

[travelover]

I was in the top 5%, while I was working. My key to success was being "extremely handsome" and having a upscale Female clientele. My ex who was my partner in business looked like a young Victoria Principal from TV's "Dallas" and she would handle the Male clientele. It worked like a charm and we made Millions together!

And yet you've managed to stay so humble.

 

[pj.mask]

Still amazed people are so self focused that they can’t understand: given the exact same situation (luck and hard work to get to point “A”) - not everyone has the capability to make decisions to get to point “$”.

Sure, if I look at other people’s situation - I can see what *I* would do to make their situation more like I have made mine. What isn’t obvious is how they see things (what can they endure, can they visualize long term goals, etc) and their capabilities to make the same decisions I would.

I know someone who always makes bad decisions because “I probably won’t be alive later” - they most likely think that because the results of previous bad decisions. It is cyclical. To just try and understand that mentality blows my mind.

You joined national guard (what luck you weren’t forced into any number of countries army/rebels without college benefits).

You went to war 3x (what luck you didn’t die or get a debilitating injury - what luck you had a choice to sign up for war in Afghanistan rather than have some foreign country start a war in your home town!)

You went to school at a single father while being out of country for ~2 years? (Has me scratch my head a bit - how can someone be a single father and be at war for 2 years - did you bring the kid with you in a strap on child carrier? What luck the army pays more for dependents, what luck someone took care of your kid while you were gone and in school, what luck you bypassed some of the hardest years of raising a child (0-18mo) while someone else raised your kid.

Dude, it’s awesome you were successful and it’s likely you would have been successful in any range of circumstances. But without the lucky cocktail of what makes you - you, probably 75% of others put in your situation would be able to cope and reach success.

 

[daylatedollarshort]

Still amazed people are so self focused that they can’t understand: given the exact same situation (luck and hard work to get to point “A”) - not everyone has the capability to make decisions to get to point “$”.

Sure, if I look at other people’s situation - I can see what *I* would do to make their situation more like I have made mine. What isn’t obvious is how they see things (what can they endure, can they visualize long term goals, etc) and their capabilities to make the same decisions I would.

I know someone who always makes bad decisions because “I probably won’t be alive later” - they most likely think that because the results of previous bad decisions. It is cyclical. To just try and understand that mentality blows my mind.

You joined national guard (what luck you weren’t forced into any number of countries army/rebels without college benefits).

You went to war 3x (what luck you didn’t die or get a debilitating injury - what luck you had a choice to sign up for war in Afghanistan rather than have some foreign country start a war in your home town!)

You went to school at a single father while being out of country for ~2 years? (Has me scratch my head a bit - how can someone be a single father and be at war for 2 years - did you bring the kid with you in a strap on child carrier? What luck the army pays more for dependents, what luck someone took care of your kid while you were gone and in school, what luck you bypassed some of the hardest years of raising a child (0-18mo) while someone else raised your kid.

Dude, it’s awesome you were successful and it’s likely you would have been successful in any range of circumstances. But without the lucky cocktail of what makes you - you, probably 75% of others put in your situation would be able to cope and reach success.

In the U.S. is it not impossible for any one person to come from a disadvantaged background to move up in the world, we have no shortage of anecdotal observations of posters here coming from disadvantaged backgrounds making it to the millionaire class. However social mobility here in general is much harder based on statistics like intergenerational earnings. There is less of a correlation in many other OECD countries than the U.S. It helps a lot to have rich parents here if you want to get ahead in life.