The stock market will quickly make you rich. Why is this a myth?
This is a myth because wealth in the stock market is largely caused by the benefits of compounding. Compounding is the process of an investment’s earnings and your original investment to grow over time. The types of stocks that help people “get rich quick” or have astronomical growth during short periods of time are typically very volatile with swings to the negative as well. That could be seen in the Bitcoin market year to date. The volatility of a stock makes it more difficult to benefit from the power of compounding because of the wild swings in the negative that would require an even larger swing to the positive to recover your losses and end positive. That is why good quality stocks and a diversified portfolio with stocks that have consistent revenues, good financials, valuations, and several other factors are important to form the foundation of your stock portfolio. You will likely not see astronomical rates of return that will get you rich quick, but a steady growth in its stock price with less volatility that will allow your investments to grow and compound steadily over time.
Starting your own business is the path to quick riches. Why is this a myth?
Starting a successful business takes a unique combination of financial investment, labor, timing, and competitive landscape. All these factors need to have reached an intersection that work in your favor to be successful and that may not be “quick.” Most entrepreneurs will tell you they have had several business failures before all these factors came together to produce a successful business.
Hard work alone will make you rich quickly. Why is this a myth?
I heard a story the other day of a customer bringing his car to the mechanic because of a broken taillight. After the mechanic assessed the broken light, he found the lightbulb needed to be replaced and charged the customer $500. The customer scoffed and said, “A lightbulb for $500!” The mechanic then gave him an itemized invoice, that read: Lightbulb - $5. Knowledge to figure out the lightbulb was the issue - $495. This is an example that the value of a service is not just determined by the amount of hard work and time you put into it, but the unique skills and knowledge that you are able to provide. In addition to a strong work ethic, you need to have a unique knowledge that people are willing to pay for and be able to efficiently leverage resources, technology, and staff to be able to monetize your hard work and knowledge on a larger scale.
You need an ivy league education to become wealthy fast. Why is this a myth?
Forget going to an ivy league, it’s been proven by Bill Gates, Michael Dell and Russell Simmons that you become successful in business without even graduating college! There are many people who obtain an ivy league education who lack the grit, innovative thinking and emotional intelligence needed to be successful. It really takes much more than an ivy league education to be successful and there have been many successful businesspeople in the world who have proven that.
People who get rich quick are lucky. Why is this a myth?
I think this statement comes from the prevalence of social media in our lives. Most people only share their “wins” on social media and so we don’t see the hours of hard work, failures, and sacrifices that most wealthy people endure on the path to success. I love the quote attributed to Roman philosopher Seneca, “Luck is what happens when preparation meets opportunity.” Unless someone inherits their wealth, it takes someone who has adequately prepared to take advantage of an opportunity that is able to effectively take advantage of luck.
Disclosures:
Sathya Chey is a registered representative with, and securities and advisory services are offered through LPL Financial, a registered investment advisor. Member FINRA/SIPC.
Investing involves risk including loss of principal.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.
