How did the millionaires of the world make a fortune? Is it an investment in stocks or real estate, or inheritance? Or as an entrepreneur? When reading financial newspapers, it may seem that the best way to make a fortune is to invest in stocks. However, if you look at the World’s Billionaires, you can see that few of the world’s leading millionaires have made a fortune by investing in stocks.
Most wealthy people make a fortune as entrepreneurs as follows.
- Elon Musk: Entrepreneur. Tesla co-founder
- Jeff Bezos: Entrepreneur. Amazon Co-Founder
- Bill Gates: Entrepreneur. Microsoft Co-Founder
- Bernard Arnault: Entrepreneur. LVMH Chairman
- Mark Zuckerberg: Entrepreneur. Meta Platforms (formerly Facebook) Co-founder
- Warren Buffett: Investor
- Larry Ellison: Entrepreneur. Oracle Co-Founder
- Steve Ballmer: Entrepreneur. Former Microsoft CEO
- Larry Page: Entrepreneur. Google Co-Founder
- Sergey Brin: Entrepreneur. Google Co-Founder
- Amancio Ortega: Entrepreneur. ZARA co-founder
Independent entrepreneurs make a fortune
Of the 10 millionaires in the world listed above, Warren Buffett is the only one who has made a fortune by investing in stocks. However, he is not a typical equity investor either. For Buffett, stocks are just a way to make a solid investment in companies.
Looking at the list above, we can see that everyone except Arnaud is not a heir to a wealthy man, but an entrepreneur who has built his own wealth. The same is true for the rest of the people who name their names in the Banzuke. Most of them are independent entrepreneurs, even if you look at the Forbes 400, which is the American leader’s ranking released every year. In the past, it was easier for people to start a business and make a fortune than it is now, and many of today’s millionaires think that most of them inherit the assets of their parents. But actually, the opposite holds true.
In the 1984 American billionaire ranking “Forbes 400,” less than half of the people became millionaires on their own. In 2018, that increased to 67 percent. The scoring system used to pop this number gives each millionaire a score of 1 to 10. All assets are inherited from parents, with 1 point for those who are not trying to increase it, and 10 points for those who start from scratch and who have gained wealth in an apparently unfavorable battle. People with a score of 6 to 10 are considered to be independent millionaires.
Only a handful of people have made a fortune by investing in stocks
In 2012, the results of a scientific survey of 472 millionaires in Germany were published. According to the report, only 2.4% of the 472 people made a fortune by investing in stocks, and 1 in 10 made an asset by investing in real estate. On the other hand, like Forbes’ chief ranking, most were entrepreneurs.
Looking at this result, one might think that the culture of equity investment is still developing in Germany. But the situation remains the same in the United States, where equity investment is far more common than in Germany.
When Thomas Stanley interviewed 733 American millionaires, only 12 percent said “stocks” played an important role in his financial success. Stanley conducted a survey in the late 1990s, when stock markets in the United States and around the world were more booming than ever. Nevertheless, he was only 12 percent.
Stanley concludes that while many millionaires invest in stocks, they made their fortunes as entrepreneurs, self-employed professionals, and corporate executives.
The author, Rainer Zitelmann, wrote his book, The Wealth Elite (Psychology of the Millionaire Elite, published by LID Publishing, untranslated in Japan), in Germany, which has a net worth of 100 million to billions of dollars. We conducted a thorough interview with 45 millionaires. As a result, most of the 45 were entrepreneurs who made a fortune in their lifetime, and none of them gained the status of a millionaire in stocks.
Within the asset class, equities, along with real estate, are an extremely effective means of “maintaining” wealth and are undoubtedly a major component of the investment portfolio. But what is the best way to “develop” wealth? It’s about becoming an entrepreneur.