I believe that the easiest way to become a ultra-high-net-worth-individual ($30M USD+) is to start an investment fund of any sort (private equity/venture capiral, real estate) and leverage the power of other people’s/institution’s money. Let the compensation structure be 2 & 20 and your average annual returns be at 15%. Also, let us say that you managed to make your limited partners commit $50 million (it’s a pretty small fund). This is the tricky part. You need enough trust factors (Harvard/Stanford/Wharton MBA may help). 2% management fee makes you $1 million a year (increasingly more after the fund value increases) to cover ongoing costs and your ~2employees as well as your base salary of $400k or so. If you run the fund for 10 years with a 15% increase in value a year, you’ll end up at 50M * 1.15^10 ≈ $200M Of these $200M, $50M have to be paid back to end up with an upside of $150M. Of these 150M, you’ll end up with $30M (20%). Here we are, you are a UHNWI after 10 years.
How can you easily make 15% per year?
It’s pretty doable as the SP500 has 100-year average returns of 10%. As an active investor you should do 15% minimum ... as a VC even more!
Most private investment firms do not beat the market over the long run.
Who's going to give mba graduate 50 mil??? They can barely break 200-300k out of school...
Having some PE/VC experience and the right network helps a lot. Look into the background of some PE billionaires.
Yeah they all had prior experiences and not just top 3 mba. You're logic is that they will become "uhnwi" in 10 years out of mba? Good luck!
The Plan: Have someone give you 50M upfront so that 10 years later you get 30M out of it and can pay back the 50M, 10 years later.
Yeah, that’s the short version without the specifics. Pretty easy and doesn’t involve a lot of risk. You only need the right network and credentials.
The real question is. What's the easiest way too raise 50M as a mid 20-30 year old?
lol@Making 15 percent a year. Beating the market consistently is very, very, very hard. If you can average 15 percent returns with reasonable volatility, you don't need any "trust factors", you'll be a billionaire easy. Which is why it isn't easy.
No one will give money for management to someone who doesn’t know that the 2% annual management fee gets deducted from the return 😉.
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A good salary for Seattle
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Are tech workers as rich as they think we are?
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How can my idiot brother who does real estate afford this
Wrong. The easiest way is to marry rich.
That’s true of course. But let’s be honest ... it’s boring to do that. The strategy I laid out was also used by rather low IQ guys such as Grant Cardone to make a ton of money.
It's a fallacy to think raising money is low IQ. Programming computers is easy, programming humans is not. For those who were born into wealth, that was the outcome of someone before them, but doesn't negate the above