OK, I've decided to become an investment guru. Here's my 10-step plan to becoming a wabillionaire by age 40.
1) Go to college. Learn whatever you want, but take an econ class and an entrepreneurship class if offered. If you don't have a passion, develop one.
2) As soon as you get out of school, get a job. Preferably a job with a pension plan. The value of a pension is often dismissed, but you should estimate its value as 25 times whatever income it provides. That's a lot.
3) Work for 8-10 years. Being an employee sucks, but you need to suck whatever you can out of your employment. Learn what makes the business tick. Vest in the pension plan if they have one, otherwise job hop to maximize your salary.
4) While you're working, save like mad. Max out all of your savings plan, and save some more. LBYM. Don't worry about where you invest. The money you save during this period will dwarf your investment returns, but try to keep it simple.
5) OK, now you are 30 years old or so. You've accumulated a nice nest egg, but you're not rich. You have lots of business experience, and perhaps a small pension to boot. You are almost wise. Time to shift into calculated risk mode.
6) Quit your job. Start a business. You have domain knowledge -- use it. You have a passion -- follow it. Allocate up to 20% of your own capital to the business and borrow or beg the rest.
7) If the business doesn't take off in 2 years, abort. Sell it if there are any assets. And start another one. Continue this cycle until your either succeed or hit the age 35.
8 ) OK, you are age 35 now. You are either well on your way to being a wabillionaire, or just have spent up to 50% of your assets as tuition for the school of hard knocks. If the latter, go back to work and stick with the pension, LBYM, and index investing. You probably won't be rich by 40, but you'll be better off than most people.
9) If you've made it in your business, time to diversify for some hypergrowth and asset protection. Buy a duplex or apartment building, live in one unit, and rent out the rest. If after a while you decide you don't like being a landlord, sell, and buy a single-family property instead. Let it simmer for 5 years.
10) OK, now you are 40. You are wise, you have a pension, you own real estate, and you might have a sucessful business. Keep at it if you want, or start selling off assets, wind things down, and head to Fiji.