Is savings the key to the top when most Billionaires didn’t get to the top by savings?

Recently someone asked a question on Quora that went like this “Why do people think saving is the key to wealth when the most wealthy people didn’t get to the top by saving?” and there was an answer by Kenneth Ko that caught our attention.

Here it goes:

I’ll just say it slightly more directly:

  • Zuckerberg didn’t save money because either his parents or grandparents did the saving. The saving by spending less every month and having discipline with putting away 10% or more of their salary and reinvesting it carefully, one small bit at a time.


  • Almost all billionaires take hundreds of thousands from their parents/families to get their companies off the ground. That’s the only way to maintain enough control of the company to become a billionaire when it IPOs. Zuckerberg’s dad loaned enough money to Facebook early on to have his debt convert to 2,000,000 shares by the time of IPO.


  • If you’re starting from 0, the only way to get the ball rolling is to save, spend less each month, and reinvest all those savings to maximize your income coming in. That’s the only way to build wealth from scratch.


  • Zuckerberg didn’t build wealth from scratch. He and his family were already well-off enough for his parents to afford Philips Exeter (one of the most exclusive private high schools in the U.S., $46,000/yr tuition) and Harvard (one of the most exclusive private colleges in the U.S., $63,000/yr tuition) long before he ever thought of starting Facebook.


  • At some point in the Zuckerberg family tree, either his parents or grandparents did the tough work of building up from little to nothing by being budget conscious and making small investments to get themselves and their family into the millions they had by the time that Zuckerberg was in high school.


  • Almost all billionaires are like this, from Elon Musk (Dad owned a large regional engineering firm) to Warren Buffett (Dad was U.S. Congressman, owned a large regional stock brokerage) to Donald Trump (Dad owned and managed thousands of apartments in Queens and Brooklyn) to Bill Gates (Dad was a partner at a major law firm, grandfather was a president of a national bank) to Jeff Bezos (grandfather was a very successful scientist, businessman, landowner).


  • Very few are pure something from nothings like Steve Jobs. Guys that are something from nothing have to walk over people and openly take advantage of/manipulate people like Steve Wozniak to get there. It takes a certain grit to build up from near nothing to billions. Jay-Z has hundreds of millions now, from essentially nothing. But I’m fairly sure at some point very early on, he broke the law to make ends meet. He dealt drugs to people that may have got addicted or something along those lines (made deals/collaborated with people that committed crimes for profit).


  • The others that do it without the grit and grind just use the natural law of exponential growth.


  • Back to the case of normal people like you and I, I’d say, just focus on how to optimize the rate of return on your equity/wealth based upon where you start.
    • You and your family may start in the millions like Zuckerberg and Buffett and Gates and Bezos and go the startup route into billions for an effective 25% return on equity. Or you may start in the thousands, starting with nothing but the value of your car, your clothes, and a simple job that has no signing bonus, go with the extreme budget saving & cautious small, safe investment route, and end up with 3 or 4 million for the same effective 25% return on equity.
    • In my opinion, you’ve been equally successful as a Zuckerberg and all the other billionaires if you return 25% on your family’s wealth and go from having a $5,000 net worth to having a 3 or 4 million dollar one by the time you retire. You’ve opened up the opportunity for your kids to have a legitimate shot at becoming a billionaire.
    • It takes several generations of doing well economically to create wealth. Realistically, as a rule of thumb: you’re doing well if you add one “zero” to your family’s net worth each generation. You’re doing amazing if you add two “zeros” to your family’s net worth. The Mark Zuckerberg’s out there that are adding three “zeros” to your family’s net worth are essentially doing everything right and making the most of every break they come across.
    • Think long, that’s what it takes to create wealth. Whether you’re Mark Zuckerberg or you’re the millionaire next door as described by all those books by Robert Kiyosaki and others, that’s the mindset it’ll take.


  • It isn’t easy. If it were, everyone would add 3 zeros to their family’s wealth each generation.

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So true

It is not easy