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I don’t have any secrets about getting rich

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At one of my recent talks, something interesting happened. Before I started the talk, we were all sitting around, just BSing and getting to know each other. All of a sudden, one of the guys started asking me very direct questions (almost antagonizingly so):

  • “What are your credentials?”
  • “Are you really rich?”
  • “So is this class basically just ‘save more than you spend, and invest?'”

Now I’m happy to answer the questions, and I did, but the last one made me smile. “Is this basically just save and invest” was said almost scornfully, as if it were completely obvious.

My answer: “Yes!”

Let’s be honest. Look at my course syllabus. There’s nothing revolutionary on it. The key isn’t shocking you with some new strategy I discovered. It’s about getting people to get started.

Some people seem to be looking for the secret bullet to making money–the most exotic investment, the sexiest strategy. This is why there are tons of books on making money with different angles (“All debt is bad!” “Buy gold!” etc).

But I think we have to decide between being sexy and being rich. Here’s what I said before:

“When you invest, there’s a difference between being sexy and being rich. When I hear people talking about the stocks they bought/sold/shorted last week, I realize that my investment style sounds pretty boring: ‘Well, I bought a few good stocks 5 years ago and I haven’t done anything. All I did was buy more when the price went down.’ But investment isn’t about being sexy–it’s about making money, and when you look at the investment literature, buy-and-hold investing wins over the long term, every time. Forget what CNBC or the magazines say about the stock-of-the-month. Do a rigorous analysis, make the right decisions up front, and then re-evaluate your investment every 6 months or so. It’s not as cool as those guys in red coats shouting and waving their hands on CNBC, but as an individual investor, you’ll get far greater returns.”

The guy at my class seemed to summarily dismiss the “save and invest” strategy–even though it’s worked for a very, very long time. I guess it’s just not sexy enough.

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25 Comments on "I don’t have any secrets about getting rich"

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Ramit Sethi
10 years 1 month ago

Hahaha, my brother just IMd me:

My brother: did you really quote yourself on iwillteach

Hermann Klinke
Hermann Klinke
10 years 1 month ago

I guess that’s the same thing with loosing weight. People don’t get that you just have to eat healthy and do sports. That’s it. No whiz-bang-loose-a-million-pounds in-a-millisecond diet. Somehow people do not want to accept simple things, but instead look for some silver-bullet.

M
M
10 years 1 month ago
BS! This is not a way to be rich, it’s a way to save money for retirement. You will never be rich with those technics. Let’s say you start with 1000$ (not much but even that is something almost impossible for many people) And add (save additional) 500 per month. Let’s invest that money into something that will give us 10% return and compound it annually. After 30 years you will have just over a 1 000 000. During that time you would have to contribute 181 000! So the net profit is more less – 800k Divide that by… Read more »
K
10 years 1 month ago

Personally I stay away from sexy stocks.
Anything that hits the news is usually at the least fully priced.
Guess I’m a bargain hunter at heart.
Gotta find the good deals.
And those are often situated, hidden out of view, at the back of the store.

John
10 years 1 month ago

Commenter #3 makes a fantastic point: In order to become rich, we must discard foolish strategies such as “save money” and “start investing early” in favor of whatever he’s doing.

Now, from reading that comment I can’t be exactly sure what he’s doing, but I have a feeling he must really be in a hurry to do it because he didn’t have time to type the “cks” at the end of “sucks” and opted instead for a labor-saving “x.”

You are a visionary, Commenter #3.

John
John
10 years 1 month ago
What about earning? Save and invest is great. Earn well, save well, and invest well entails the whole picture. I can kinda tell that you’re creating a web presence, a mystique, a persona. Many people are “rich” and some of them want to talk about it. I also give people financial advice. In fact someone just called to ask which mortgage to buy. Mostly I counsel people who run into problems with serious debt. My “credentials” are just success stories. If they don’t want my advice, I won’t give it, but I also don’t have a “I can get you… Read more »
Ramit Sethi
10 years 1 month ago

John, that is a good comment–thanks. I agree that earning is a huge part of it. I’ve written before how you really get rich in 2 ways: Earning more money or cutting costs. So I think you’re right on.

What do you suggest? Should I start writing about jobs and how to negotiate for raises, etc? How to find better jobs? Or are you thinking something else?

Victor
10 years 1 month ago
I agree with you, Ramit, but I would also have to agree with “M.” This website would be more aptly titled as “http://www.iwillteachyoutoretirecomfortably.com”. Either way, however, your advice is ideal for the average person who doesn’t have the common sense to save and invest intelligently in the first place. I work as a stock broker and whenever someone finds this out, they always ask about a good “stock pick.” By this, of course, they mean a stock that they can invest one dollar in and get a million in a few months. Heck, if I knew that I wouldn’t be… Read more »
debt-free
10 years 1 month ago
You’re right, Victor – everyone is looking for the easy way out. Everyone wants a microwave oven solution – debt consolidation, home equity loans. A crock pot solution will always taste better. That was a nice llittle jab there with the “All debt is bad!” statement, Ramit. Here’s an idea – go talk to some rich people. Real rich people. Ones that have been walking around a little longer than you and I. They will tell you time and time again, that avoiding debt is one of the keys. Or just check out the Millionaire Next Door – Dr. Tom… Read more »
Ramit Sethi
10 years 1 month ago
I agree, The Millionaire Next Door is a great book. And yes, millionaires have different habits than most people. But that doesn’t mean they don’t use debt. Reasonable debt can be used as a tool. Just because you have small amounts of debt strategically applied doesn’t mean you’re out of control. For example, I’ve said time and time again on this site that credit cards should be paid off in full every month. Too many of Dave Ramsey’s converts believe that all debt is bad, and that if someone borrows a little bit, they’ll never ever be smart enough to… Read more »
Jared Goralnick
10 years 1 month ago
Debt-free, I’m not sure what point you’re trying to make here…but I must disagree that being rich is about being debt free first. Taking risks is often about taking on debts. Money costs money. If someone is smart but doesn’t have money and needs it to accomplish some end, then s/he simply needs to borrow. For a house. For a business. Yes, even for a car. Why is that so bad? Business and success are not just about savings–they’re about CASH FLOW. And that may require some debt from time to time. When one is starting out one can’t necessarily… Read more »
Trevor
Trevor
10 years 1 month ago
Now this might sound stupid… But, I’m at the beginning of an MBA, so far in the beginning that I had to take a 1 credit module in Finance because I had no background. Now, I was taught that money today is worth more than money next year. This is because inflation generally kills the value… or so it contended… yet if properly invested.. then does that value get lost? to an extent yes, but what option do we have? there seems to be nothing unaffected by inflation that gains in value…. I think the point I’m trying to make… Read more »
Me!
Me!
10 years 1 month ago
I think one of the debatable points is a definition of ‘rich’. Rich is a sexy term because it has no concrete definition. (Hell, I even admit to being on this site b/c ‘rich’ is sexy.) I think most people just don’t want to be tied down to their job. So how can I get enough money to live my life style from sources that don’t ‘tie’ me down. Hell most people’s lifestyles would be simpler if they didn’t HAVE to work. I wouldn’t need that plasma TV to relax in front of because I wasn’t being stressed at work.… Read more »
not convinced
not convinced
10 years 1 month ago

Ramit, you never answered his first two questions. I know the answers though.

1) You don’t have any credentials. You’re not licensed to give any of this advice and that could get you in trouble. Know that.

2) You’re not rich. You just like to pretend like you’re somebody by telling everyone that you’ll be speaking at various events about stuff that you read in books.

debt-free
10 years 1 month ago
Debt is a sign of sloppy, lazy money habits. You convince yourself that a little is ok. Then the little is more and more. Millionaires got to where they are *because* they had different habit than Joe Average, not the other way around. Whats foolish is paying out all of your paycheck to people you don’t like. And Jared – if you can pay for it, then you’re not ready to own it. Plain and simple. And if you want CASH FLOW, then save up some CASH and pay for thngs in CASH (you’ll spend less by doing it that… Read more »
Ramit Sethi
10 years 1 month ago

Aww, I think I might cry. Pardon me if I don’t jump at a defensive answer about how rich I am.

You mean you aren’t satisfied with this site–which you get for free? You mean you think that my credentials aren’t up to par for motivating people to get started?

I’m ok if you don’t like the site. Nobody’s forcing you to read iwillteachyoutoberich.com, so if you’re “not convinced” I won’t be hurt.

edziel
edziel
10 years 1 month ago

ramit, i think you’re awesome. this site brings new light to my life, seriously. as a college student, i think i’ll get by just fine in the future just by reading your articles. so keep up the good work! and thank you!

luqman
luqman
10 years 1 month ago

I think this site is a great site because even though the advices may look common in the eyes of educated investors, you will be surprised about how many people on this world who would popped their eye out upon hearing about these advices.

I hope readers would aware that this site is http://www.iwillteachyoutoberich.com NOT http://www.iwillteachyoutoberichprettydamnquick.com

Keep up the good work Ramit.

Jason
Jason
10 years 1 month ago
I agree with most of what you say about starting early and taking advantage of 401k’s and Roth IRA’s. I have done that and have done reasonably well. I am not rich yet, but on my way to being comfortable in retirement. I view this as painfully obvious information, yet you are providing a service to society by educating those who are slow to learn the basics. One thing I have always had an issue with is the buy and hold strategy when it comes to investing outside of retirement accounts in individual stocks. Your average investor doesn’t have alot… Read more »
John
John
10 years 1 month ago
Hi, Ramit. Yes, I do suggest writing about income issues. I have a small business with low income but very low maintenance and overhead. Over time, it adds up! People should find ways to determine the top market rate for their labor. So many people take the rate they’re offered. I’m at a rate now where most employers walk away, but some don’t. Asking top rate can also help you find more perfect fits for your unique skills and experience. So I know my top market rate. Finally, the right training (even self-training) can be so valuable. So can interest… Read more »
hypatia
hypatia
10 years 1 month ago
What’s all this talk about stocks? No-load stock market indexes are cheaper (no fee to purchase) to buy and own, and you remove the risk of the particular company you bought having lousy management and going under. If you only have a little to invest, go for the Vanguard 500 or Schwab 1000. If you can take more risk (and hold for longer), then look for a growth mid-cap or small-cap mutual fund. These have higher annual fees, but not much higher. Dividends should be less because growth stocks reinvest in the business instead of issuing dividends, but sometimes you… Read more »
B-Rizzle-Dizzle
B-Rizzle-Dizzle
9 years 5 months ago

I like how we are obsessed with money and the idea of being “rich”. If you all have forgotten, money is a means of exchange, that, after the end of the Gold Standard, has no real value. I hate to say it, but the “richest” people I have met and, are my friends, do not have monetary wealth. They have life experiences that you can’t buy. And if you want to read some good quotes about luck and life and hard work, look up Vince Lombardi.

steven stranko
steven stranko
9 years 3 months ago

my child is 16 she has a job is it true that if i put 1000 dollars in a roth ira for her she will have a million dollars when shes 59 even we dont add or take out any of the 1000 ever

Homeloan
7 years 8 months ago

Saving is one strategy, but no-one has never saved themselves to riches. Saving is only part of wealth creation.

However, these are still excellent strategies which would work in Australia too. Keep up the good work, because if anything your helping others activate their mind. Our mind is the weapon we have to be able to grow tremendous wealth.

Usman
Usman
7 months 11 days ago

Hi guys I read through most comments that are made here and of course it all started of this great article.

I am interested in learning the basics of creating good wealth in the long term or short term. If anyone has advice for 23 years old one please.

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