I was reading Forbes magazines list of the richest people in the world to learn how each individual amassed great sums of wealth. I discovered that most of the billionaires listed fit into one of five categories. I call these categories the 5 I’s. Below is a list of the most common categories that have lead to wealth.
1) Innovators – These are the people that develop a new way of doing things. You don’t have to come up with the next great idea, just improve upon an existing one. Steve Jobs of Apple is one of the great innovators. From the ipod to the iphone to the imac, Apple is always on the cutting edge of innovation.
2) Inventors – These are the creators of a new good or service. You just have to see a need for a product that others do not see. James Dyson became a billionaire by developing the bagless vacuum cleaner. His idea was initially rejected because it was seen as hurting vacuum bag sales. Today the dyson vacuum is an international best seller.
3) Inheritors – This is the easiest path to wealth. You need rich relatives for this one though! Ask Jim Walton, S Robson Walton, Alice Walton and Christy Walton who are the 4th, 5th, 6th and 7th richest Americans. They are the heirs of the Walmart fortune.
4) Investors – Investors commit money to an endeavor with the expectation of profit. This can be through saving or purchasing an asset for capital gains. Warren Buffett has built his fortune through stock investing. Donald Trump made his billions by investing in real estate. Jerry Jones got rich in oil and gas exploration.
5) Entrepreneurs – Entrepreneurs are the risk takers that start and manage a business. Entrepreneurship can take many forms from purchasing a franchise to creating a start up. Bill Gates of Microsoft and Larry Ellison of Oracle grew small technology firms into the world’s largest software companies. Oprah Winfrey began her career in local news and is now the CEO of a media empire.
I know. I know. Entrepreneurship doesn’t start with the letter I. But the 5 I’s sound a lot better than 4 I’s and an E.
Mark is the founder and president of New Horizons Financial Management. New Horizons is an independent investment advisory firm that provides personalized consulting services in investment and asset management. Mark has a degree in finance and has worked in investment management for the past 5 years. Mark has written a personal finance column for Baltimore and Washington metropolitan newspapers. Mark writes a financial blog at BuylikeBuffett.com.
