When you hear the words “high net worth,” what comes to mind? Rockstars? Hollywood actors? CEOs of major international companies? The term high net worth was initially developed by the financial services industry to describe somebody with a lot of money in the bank. Inflation continues to change the precise definition, but it’s come to mean somebody with more than $1 million in assets (besides their home). It’s a lot of money, but, interestingly, not out of the reach of people with average jobs.
The banking industry also reserves the term “affluent” for those with less than $1 million but more than $100,000 tied up in liquid assets, like stocks and shares. These people, in the bank’s opinion, are doing quite well for themselves and can afford to splash out occasionally. But high net worth is about more than just money. It’s also about living the lifestyle that you want to have. When you’ve got a lot of money invested in various assets, those assets generate an income all by themselves. A large pile of cash can, under the right circumstances, sustain and build on itself. It’s quite remarkable.
Can You Really Become High Net Worth?
Becoming high net worth is, arguably possible for the majority of people (though not all) with the right approach. For some, it could take as long as twenty or thirty years, but with the right strategy, it can happen.
So how do people do it?
One way is through property management. A lot of people who end up becoming very wealthy get their start in real estate. They live as cheaply as they can while at the same time approaching banks for loans to buy residences that they will then later let out to tenants. While the net income from any individual property is usually quite small, add multiple properties to the mix, and you can soon find yourself making a good return. You can then use that money to rent out more real estate in your area or diversify.
The second way that people do it is by embracing minimalism. Not everyone is in a position to become an entrepreneur or a company boss, but most people can live well within their means with a significant amount of effort.
Minimalism can be harsh at times. You’re scaling back your life to the bare essentials while working hard at the same time. Every month, you have a surplus pile of cash that you’re then able to plow into other investments, like stocks and bonds. Over time, these assets pay dividends, helping you build your net worth passively, without having to work for pay.
The third way to do it is to strike out by yourself and create something on the side that blossoms into a profitable business. While finding genuine opportunities is challenging, the rewards can be enormous. You can leave your company ticking over, and it’ll generate income for you for the rest of your life, so long as it remains relevant, customer-focused, and competitive.