CHAPTER 1
The Savage Truth on Getting Rich
Financial Security Demands Smart Choices

Everyone wants to know the secret of getting rich. And lately, people are wondering if it’s even possible to get rich—or at least to live well and then retire confidently. The perceived wide differences between the ordinary American and the very wealthy have created not only financial but political divisions that seem to threaten our future. But those divisions mask the opportunities that are still very much in existence and will be the foundation of our next wave of prosperity.

America faces real challenges, given our country’s burden of debt and our political extremes. It’s tempting to give up, to forget that this is not the first time America has surmounted challenges and gone on to prosperity.

So here’s the Savage Truth: The American Dream is still within reach.

Achieving financial security will require personal traits that have always worked: optimism, persistence, and self-discipline. If you’re willing to try, or try again, you can succeed. You need only to understand the basic Truths, which have not changed despite market volatility, economic uncertainty, and divisive politicians on both sides of the aisle.

It’s a tribute to America that over time there have been many roads to wealth in this country, and they are open to all. It may seem as if barriers and inequities have increased in recent years, but in fact, quite the opposite is true. Technology has given access to new ways of educating our younger generations, who are no longer subject to the limitations of neighborhood schools to find knowledge.

Access to higher education (despite the burden of student debt) has given opportunity to build careers and fortunes in areas incomprehensible to the baby boom generation. (Okay, how many of you boomers know that participants in eSports gaming earn six figures and are sponsored by major corporations?)

Forget the Forbes 400 list of wealthy Americans. There are 183 tech billionaires on the Forbes most recent list—and they control more than $1 trillion of wealth. Nearly half are Americans, but the Chinese are catching up. Most have been minted in the past 30 years of our technology revolution, and very few started with inherited wealth.

Youth seems an asset, not a barrier to creation of great wealth. Bill Gates was in his early 20s when he and Paul Allen founded Microsoft, and he was a billionaire by age 30. Michael Dell founded his computer company at the age of 19, and by age 34 was worth $16 billion. Jeff Bezos quit his job at age 30 to found Amazon. And Mark Zuckerberg famously started Facebook in his Harvard dorm room.

Today, all are deeply involved in giving their fortunes away to good causes, as well as continuing to grow their businesses and seed others with venture capital. All had those three basic characteristics: optimism, persistence, and self-discipline.

But the path wasn’t easy. They started in a slow-growth economy, weathered booms and busts (think dot-com in 2001 and global financial crisis in 2008), but they never gave up.

The Savage Truth: Even in tough economic times, entrepreneurs with good ideas can build companies that defy the most pessimistic mood of the nation.

There is no one template for success in America, but building a business does require an entrepreneurial spirit born of optimism. In America, age, race, and gender do not stand in the way of success—nor does the economic climate.

As entrepreneurs build businesses, they create opportunities for others—either by creating jobs or by selling shares to public investors. Even as jobs in more traditional manufacturing have disappeared, millions more jobs have been created by today’s new technology entrepreneurs and the businesses that develop around their technology. That’s how success spreads and an economy grows.

And that growth opens the door to your own personal opportunity to create wealth. While you may not start a billion-dollar company, you can invest in those who do. And, you may find a career path that suits your own talents and enthusiasm.

Technology has truly leveled the playing field by illuminating the opportunities for individuals to profit while providing services and cutting costs for those they touch. Progress is painful for those who cannot change—but it’s empowering for those willing to embrace the future. Whether it’s blockchain or a cure for dread disease or simply a safer way to drive a car, technology is changing our lives, quickly. And it’s impacting financial services dramatically, spreading knowledge, creating cost efficiencies, and saving money for investors.

So whether you’re a retiree wondering if your investments will carry you through your life expectancy or a college graduate looking for the best way to pay off your student loans, an employee trying to choose appropriate funds in your 40l(k) account or a young parent trying to save for college for your children, technology will help you achieve your goals.

Yet, while technology is changing the game of wealth creation, it cannot overrule the human element. It can provide tools to structure your future, but only you can provide the human ingredients that are the basis of the Savage Truth.

First, though, you need the capital to invest. That’s a matter of simple mathematics.

You Can Get Rich on a Paycheck If You Don’t Spend It All

There are two simple rules for amassing investment wealth:

1. Spend less than you make.
2. Invest the difference—both money and time—to maximum advantage.

Here are two stories that illustrate these truths:

Retired Secretary Leaves $18 Million To Hospital

Chicago Sun-Times—A secretary who made her fortune investing bonuses from her salary, which hit an estimated high of $15,000 a year before she retired in 1969, left her fortune to Children’s Memorial Hospital. Few friends suspected that Gladys Holm, who lived in a modest two-bedroom apartment, was wealthy.

Holm’s boss, the company’s founder, had advised her to invest her yearly bonuses in the stock market, a longtime friend said. “If he bought a thousand shares of some company, Gladys would buy ten shares of the same thing. Nobody gave her that money; she earned it.”

New York University to Get One-Fourth of Couple’s $800 Million Estate

Associated Press—Professor Donald Othmer and his wife, Mildred, lived modestly in a Brooklyn townhouse and rode the subway. In the 1960s, they each invested $25,000 with an old friend from Nebraska, Warren Buffett. In the early 1970s, they received shares in Berkshire Hathaway, then valued at $42 a share. When the couple died at ages 90 and 91, the stock was worth $77,200 a share—making their fortune worth an estimated $800 million.

All of these successful investors lived modestly all their lives. At no point did they decide it was time for an expensive vacation, an impressive vacation home, or even a new car. Thus, they were able to accumulate, invest, and leave behind a huge fortune. Surely, there must be a happy medium between living daily on credit card debt and dying with a huge fortune. Most people I know would like to live in that middle ground.

There is one other similarity to note: Neither Gladys Holm nor the Othmers had children. Children may be nature’s way of making sure that we can’t possibly die with a fortune!

Most important—neither Gladys Holm nor Professor and Mrs. Othmer ever sold any of their stock. Think of the temptations. As their fortunes grew, there was surely the temptation to spend just a little of their profits. And at times of stock market crisis, surely there was a temptation to sell and cut their losses. But they stuck to their long-term plan.

Don’t doubt that this kind of investment success can happen again in the coming decades. Think what a great leap of faith it was for these ordinary people to invest in an uncertain future. Their profits were built slowly, but were accelerated by the fact that they were investing when others were skeptical.

Today’s true headline success stories are the current generation of technology entrepreneurs. They built businesses, and their wealth is scored by the value of the stock they sold to the investing public and the shares they still hold. But behind each “overnight” success story is the truth that they followed the two principles at the top of this chapter. They lived frugally—primarily because they were too involved in their businesses to spend time on recreation and consumption. They also invested their resources, mostly their time, in building their businesses.

Steve Jobs, who founded (and later rescued) Apple, was renowned for starting the business in his garage. Only after his company proved itself did he share in the rewards. Bill Gates built his mansion after he built Microsoft. And then he started giving his money away through strategic philanthropy. Mark Zuckerberg and his wife Dr. Priscilla Chan have vowed to give away 99 percent of their Facebook stock to a charitable foundation they started. And Jeff Bezos is giving $2 billion to homeless charities and not-for-profit preschools, while...