So You Want To Make The Big Bucks?

Make a lot of money

“How to build wealth” is one of the top search strings that lands readers on this blog.

Now, wealth is a fluid term.

As I’ve written about before, the same number can represent wildly different things to different people.

But let’s say you are gunning for the conventional definition of wealth, which means a seven-figure plus net worth.

In today’s post, let’s explore a framework that can get you there in a reasonable period of time.

By reasonable, I mean ten years or so, though the exact timing will depend on your specific circumstances and starting point.

Off we go.

Challenge The Status Quo

Sounds cliché?

Well, the real cliché is the fact that the vast majority of people simply fall into pre-determined life trajectories and don’t try to break out.

Of course, the one exception to challenging the status quo is if you are already “from” money… but then you wouldn’t be reading this, would you?

In addition, wealthy people (or people from wealthy backgrounds) rarely say things like:

“Coming out of college, I got a job with Unilever and ended up working there for 10 years.”

“My uncle gave me a job in his trucking company.”

“Many of my friends did [x] and so I followed suit.”

Now, no one is an idiot.

Most people need a job to survive, and there’s no shame in using whatever opportunity presents itself to make an honest buck.

The trick, however, is to stay focused on the longer-term objective of building real wealth.

And the brutal truth is that there are industries, sectors, and careers where it’s much easier to build wealth versus others (more on that below).

Want to make some real money? You better find a way to make the switch.

Ride The Secular Themes

I think it was Scott Galloway who said something like:

“An average performer at Amazon has done far better over the past 20 years than a top one at General Motors.”

(You can find the exact quote in his Algebra of Wealth – it’s a good read).

It’s worthwhile pausing and reflecting on this.

When I graduated from college back in the noughties, no one in their sane mind wanted to go work in the auto or airline industry.

Hardly a month would go by without another bankruptcy or strike in the industry. You don’t have to be a genius to understand these are hardly signs of a healthy, thriving sector.

Sectors like finance and technology, on the other hand, were probably amongst the most contested amongst my graduating class.

Fast forward fifteen years and guess who made out better?

You could argue that landing a job in a sought-after industry may be more challenging.

I beg to differ. When sectors are growing by leaps and bounds, there’s always a shortage of people.

Yes, for many people it involves taking a temporary step back in the form of retraining.

But even if it takes a couple of years to make the switch, the advantages of operating with powerful, secular winds at your back far outweigh the initial investment required to “break into” a fast-growing, profitable industry.

Double-click Relentlessly

Landing a job in your desired sector is just the first step in a long, long journey.

Once you’ve cleared that initial bar, you then need to relentlessly follow the money.

Let me give you a couple of examples:

In finance, an M&A job in a mid-cap investment bank will ALWAYS trump a back-office processing role at Goldman.

In accounting, bookkeepers at large corporates will always lag the auditors at Big 4 in terms of pay (if not the lifestyle).

Those same auditors, however, will struggle to make anywhere close to what their counterparts in transaction advisory are making.

In technology roles, there’s a massive difference between a software engineer at Google and a systems administrator at British Airways (I know, the airlines are getting no love from me here).

The bottom line is that it’s not as simple as just “breaking into” finance / tech / [insert your preferred sector].

If you want to make serious money, you’ve got to keep peeling back the proverbial onion to find the place where you’ll get the most buck for your bang.

For example, in investment banking, it means trying to land a job at the most successful bank that will hire you.

You then try to maneuver your way into the most productive (in terms of revenue generation) group.

And in those groups, you want to align yourself with the most successful individuals who will make sure you get paid and promoted.

It’s a simple playbook, but very few people actually follow through on it.

Tick The Saving – And Focus On Earning

If the above isn’t clear enough, let me reiterate:

Saving money will not make you rich.

Now, I’ll be the first one to tell you that saving money is important.

No one ever gets wealthy by spending everything they make (and then some).

But guess what? The person who makes $200k can always dial back their spending, even if that entails the painful process of stepping off the hedonic treadmill.

However, if you are making $30k a year, even an 80% savings rate won’t make you rich. Not in a decade, and probably not in two decades either.

Of course, there’s nothing wrong with a $30k job.

It’s just that if that’s how much money you make, there’s far greater upside in repositioning your career (even if it takes a few years and some real effort) than trying to dial up your savings rate by yet another percent or two.

It’s an unpleasant reality. Equally, I’m not the one who makes up the rules here.

Filter The Advice

Life is short. No one has time to waste. But most people do – by taking advice from people who have absolutely no business giving it.

Would you ever take dieting or fitness advice from someone who can’t get into shape themselves?

Hire a math tutor for your kids who flunked out of high school?

Or put a journalist on your payroll who can’t string two words together?

In real life, there’s something called credentials.

Sadly, that concept seems to have gone out the window online.

It doesn’t cease to amaze me how many unqualified, inexperienced “influencers” are out there peddling advice on how to “fast track” your life.

Really?

If you want advice on climbing the greasy pole, take it from someone who has a track record of surviving – and winning – the office politics game.

Ditto for everything else in life – and yes, that does include investing, entrepreneurship, financial independence, and whatever else it is you are trying to achieve.

To state the blindingly obvious: no, someone in their early twenties is unlikely to have the skills and experience to help you succeed in life, no matter what they claim on social media.

Take Progressively Bigger Bets

There’s an old saying that goes: “What got you here won’t get you there”.

Clearing the first 100k is tough and easy at the same time.

Tough – because you are just getting started and it takes a while to get into the proper mindset and gain some momentum.

Easy – because it’s your savings that really move the needle at this level. Market returns don’t matter that much when you are just getting started.

Compounding then takes over, making for a much smoother ride after that first 100k.

And yes, becoming a millionaire is well within reach over your working career – as I’ve laid out in this step-by-step plan.

But if you are gunning for seven-figures in ten years and have your sights on an eight-figure net worth at some point before you retire, compounding alone won’t achieve your goal.

Instead, you’ve got to:

  • Continue growing your earnings (and maintain or increase your savings rate, which is much easier to do on a higher income)
  • Angle for a role with an asymmetric payoff structure (i.e., performance-linked bonuses or stock options)
  • Diversify beyond index funds into higher-return investments such as direct real estate or venture capital/angel investing
  • Start some kind of a business on the side

There’s a good reason so many people are leaving their well-paid jobs these days to try and get into the SPAC game.

It’s not that they don’t realize how good they have it with those $1m+ comp packages.

Rather, they are painfully cognizant that saving $300k a year (which represents a 50% savings rate in a 40% tax bracket) simply won’t generate the kind of wealth they are looking to amass.

Bring on the SPAC, where you can literally 10x your money in a span of 24 months (if you want to understand how this works, have a look here or here).

Now, this could be a nice segway into the juicy topic of “enough” – but that’s not why you clicked on the “big bucks” in the post title, did you?

Figuring out your “number”, and the best trajectory towards that number, is a question only you can answer.  There are no right or wrong answers here.

However, if your number is well into seven figures – and the timeline you’ve set out for yourself is an accelerated one, the “slow and steady” approach simply won’t get you there.

It’s the playbook above that will.

Happy wealth-building!

About Banker On FIRE

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Banker On FIRE is a London-based M&A (mergers and acquisitions) investment banker.  I am passionate about capital markets, behavioural economics, financial independence and living the best life possible.

Find out more about me and this blog here.

If you are new to investing, this is a good place to start.

18 Comments

  1. I am very, very good at ‘slow and steady’, so this is now the kind of encouragement I need. With a 50-60% savings rate (while living on my own in London), I don’t think optimising my expenses any more will move the needle much, so I’ve started to focus on increasing my income, although being a freelancer, I have to use slightly different strategies. Not sure why this is so much harder for me to do than increasing savings.

    I really loved the part about the ‘fast track influencers’ as I see a lot of that both in my work and on social media. I’m sure you can learn things from younger people as well, but finding someone who’s already done what you want to do is key to progressing in my opinion.

    • Definitely. And don’t get me wrong – I think there’s a ton you can learn from young people, as long as they have a track record of accomplishment.

      Most so-called influencers simply don’t. Now, that isn’t an issue for me as I’ve got enough experience to understand who really knows their stuff.

      Unfortunately, many other people don’t and end up following advice that’s wrong (and often dangerous).

      • I totally agree. For example, I can provide guidance when it comes to setting up as profitable self-employed person in the UK, doing Pilates or learning German, but outside of these narrow fields, I wouldn‘t want to give anyone specific advice.

  2. Thanks for another great post. Im afraid i have always sat on the sidelines always waiting to invest but never actually brave enough. If I have £100k in savings in ISAs already not invested how long will it take me to get to 1million?

    • Thanks Naz.

      It’s an open-ended question – kind of like how long is a piece of string?

      Really depends on what you invest in and the market performance. But assuming an 8% return and no extra contributions, you’ll get there in 30 years:

      £100k*(1.08%)^30=£1.06m

      • Increasing income is an interesting one. I can increase income in my field by earning bonuses but could your investments not come under the ‘increasing income’ heading?

        Real Estate provides an income as do (to a lesser extent) those boring index funds. If my job stays the same salary but my investments increase from 100k to 200k then my ‘income’ increases through a higher dividend yield? I hope I’ve explained that correctly

        • Yeah and I think that’s the bread and butter of any sensible, long-term wealth-building strategy.

          But if you want to grow your net worth quickly, compounding alone won’t get you there. You need to dial up the income (and by corollary, savings).

  3. “Breaking into finance”. Do I detect a bit of Mergers and Inquisitions talk there? 😉

    I like the advice of following the money. In personal finance, income and savings are both important but income just has a higher potential. There’s a limit to how much you can save but there are zero limits on how much you can earn.

    • That’s right 🙂 I love M&I, it was very helpful when I was looking for a job in IB – and now that I’m “in”, I can vouch for Brian’s advice.

  4. Starting and running my own business’ have been my path to earning the big bucks. It takes a lot of hard work, grit, and passion for what you are doing, but if you have that combo then there is really no downside.

    All of the business’ I have been involved in have some sort of Flywheel that continues to generate momentum as you grow the business. This has been an easy secret to my success and allowed me to feel confident in the early days when I was taking risks and pay cuts, that it would pay dividends one way or the other in the end.

    I also am a big advocate of bootstrapping and ensuring that you always operate at a profit. There is so much to be said for weathering storms if your business financials are sound and not overleveraged (or leveraged at all). In order to sell a business you need to show solid profit, so you might as well do so from day one to give yourself plentiful future exit options.

    • I’d also add that it takes a specific person to be an entrepreneur.

      Most people see / want the glamorous side. The reality is nothing but that, it can be incredibly rewarding but immensely challenging at the same time.

      It always cracks me up when we take a company public, the founder clears a couple hundred million in equity and all the bankers say “well, we could kinda do it”

      No you couldn’t, otherwise you’d be doing it.

  5. Interesting article, and one that I realised a few years back with my own career. I was never going to get to where I wanted to working in construction management.

    I think I’m now in a reasonable position and certainly a more lucrative sector. My old job charged me out at £110/hour, now I get charged out at £260/hour. However, the only way I can see me getting to the heady heights is to set up my own business. Watch this space.

  6. Nice article, thank you for it!
    I’m curious about the point on investing in direct real estate. Do you see platforms like “Property Partner” suitable for that? Do you use platforms like that yourself?
    I’m asking as I want to get involved in direct real estate and platforms like that make it so easy to do. But I fear that it’s not the same thing and it is still just a proxy.

    • I’ve not used platforms – all of my investments are purely direct.

      I think the only country where property crowdsourcing has enough depth is the US. However, I just don’t have the time to set up an LLC and hire an accountant to do my taxes there for the time being, hence I’m sitting this one out for now.

  7. It really comes down to making the right choices. Money is in healthcare, finance, tech, and producing content. Yes, it is possible to make really good money in other fields but the percentage is smaller.

    • Yeah. Issue is that if you are not in one of those industries, it takes a bit of time to retool and reposition yourself.

      Very much a change worth making, but many people are put off by the short-term effort (and pain) that’s usually involved.

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