https://www.quora.com/I-am-an-18-year-old-girl-How-do-I-become-rich
First, let me address the “Marry a rich guy” answers. What a bunch of sexist melon farmers. Please. It’s 2014. Let’s have some respect. Would you tell an 18 year old guy who asked the same question “Marry a rich woman”?
Now, to the heart of the matter. I will give you the very best advice that I know how to.
First, let’s assume that you have enough money to make it through university, and that you graduate with little or no debt (hey, that’s what the National Bank of Mom & Dad is for).
Next, you want to think long and hard about just how much money you want to make. And I’m not joking here, this is a choice that you can and should make. When you say “rich”, do you mean “I can afford a house of my own”, “I can affordseveral houses of my own”, or “I sometimes forget that I have that place in London“?
This matters because all financial success is a trade-off between risk and reward. What I mean by this is that if you want to, say, afford to buy a house, you can aim for well-paid 9 to 5 job. There are numerous careers that will deliver that level of success. Medical (go for radiology), law (Mergers & Acquisitions, not criminal), property development (not an architect though).
If you want to be worth $100 million by 40, that’s a whole different story. It’s going be very risky. It’s risky because you need to understand and use leverage.
Let me explain what I mean by leverage. When you work at one of the careers I mentioned above, your earnings will be directly related to the number of hours you work. Want to make more money? Work more hours. Obviously, this will limit the maximum amount of money you can make, because there are a finite number of hours you can work. What’s not so obvious is that this also limits your private life. If you are junior lawyer aiming for partner at a mid-size firm, you need to be billing 2500 hours per year, that means working 3000 hours. That’s 6 days a week, 10 hours a day, from age 25 to 40. Is that what you really want?
So. Leverage. Leverage is all about combining your efforts & capital with the efforts & capital of others in order to make more money. So, for example, if you start a company you will pay your employees a fixed amount. But you can potentially make much more based on what they produce.
Of course the classic method of leverage is to use Other People’s Money (OPM). For example, let’s suppose you see a house and you know you could buy it for $500K, put $100K into renovations, and in two years sell it for $1 million. But… you only have $300K. No problem. Borrow another $300K, buy and renovate the house, sell it for a million, and even after paying interest on the $300K loan you are ahead by $250K. You have just used your $300K to make a profit of $250K, through leverage.
But, there’s a downside. What if you can’t sell the house for $1 million? And you only get $700K? You’re screwed. Because you can lose not only the money you started with, but also the money you leveraged. You really can end up with lessthan you started with.
Remember this: risk means that if you fail, you will lose everything. So, in aiming for the $100 million, you are giving up the low-risk 9 to 5 job that will get you the house and a guaranteed income. There is no way around this fact.
So, let’s assume that you do indeed want to get very rich. The next step is to look around and figure out what industries going to produce the sort of free cash flows that are going to result in valuations that will in turn make the sort of money that you want. There are a finite number of possibilities:
- The financial services markets
- The technology markets
- The natural resource extraction markets
You will need to decide fairly early on (say in the next 2 or 3 years) which area to focus on. Now, if I were you, I would focus on either financial services or technology. In fact, I’d work on both, and here’s why.
The big/fast growing areas that are making money right now are technology-related, but they are also very sophisticated from a financial point of view. A FaceBook or a Google has been through multiple rounds of funding, and the finance team, while largely invisible, will be almost as powerful as the technology team.
The problem is that most technical people do not really understand the finance side, and most finance people do not really understand the tech side.
So, if I were you, here’s what I’d do:
- Get a good, solid undergrad degree in computer science. During these four years, try and do at least one tech startup on the side.
- After you have graduated, try and get hired, in a technical role, at a brand-name tech organization (Google, FaceBook, etc.). This will put money in the bank, and give you some technical chops.
- After 2 years or so, do everything in your power to get into either law or business at Stanford or Harvard. You’re here for the connections. Work it, baby. You want to leave with at least a few dozen classmates thinking “She’d be my perfect cofounder”. (This might help Ellen Vrana’s answer to I’ve been invited to a Round 1 interview at the Stanford Graduate School of Business. How big a deal is this?)
- After graduating, join either a mid-tier M&A or mid-tier VC firm. This will be a brutal job, harder than anything you have ever done before, and the pay will not be very good. You don’t care. This is where you shop for your next gig.
- By 34 or so, you will have been part of 20 or 30 transactions, and you will be getting a good idea of what (and who) works and what doesn’t. You will also be a smart, tech-savvy connected junior partner, who can add real value to either a new startup or a company looking to go big or go home.
- When you see the right opportunity, jump. Forget salary, bet the farm on the company doing well. Offer to take 100% stock-based compensation.This is key. You need substantial equity.
- Work like your life depends on it. Make that puppy the next FaceBook.
- Once you have your $100M in the bank (you did sell 50% of your stake after the IPO, didn’t you?), you could retire. But you know, those two women you met at Demo seemed to have a pretty cool idea… and it would be fun to be CEO.
- Repeat steps 6 through 8.
That’s it! Well, except for 8a. That’s the part where the startup tanks and you are left with nothing. Remember the little lecture about risk?
Have fun!