It's a simple investment. You only have to invest almost all of your money. On the upside, after a year you might earn 3 percent more. The downside? Any day you could lose it all, for reasons usually outside your control and that you will almost never see coming.
Would you make that investment? Of course not.
Yet millions of people do — every day they go to work for someone else.
Of course the analogy isn't perfect. Until you're laid off or fired you do earn a salary. But when you work for someone else, your upside is always capped — sure, you might occasionally get a raise, but in most cases 3 to 4 percent is the best you can expect.
Yet your downside is always unlimited because getting fired or laid off can make your income disappear overnight — and with it the considerable investments you've made in time, effort, dedication, and sacrifice.
Extremely limited upside. Unlimited downside.
That's a terrible investment.
Rich in Wealth
So if you hope to get really rich, working for someone else will never get you there. But don't just take my word for it, the government agrees.
The IRS Statistics of Income Division, a place where fun surely goes to die, has published "400 Individual Tax Returns Reporting the Largest Adjusted Gross Incomes Each Year, 1992-2009," or in non government-speak, "400 People Who Earned a Freaking Boatload of Money."
In 2009, it took $77.4 million in adjusted gross income to crack the top 400. (That just barely got you in; the average income of everyone on the list was $202.4 million.)
Where it gets interesting is how the top 400 made their money:
Wages and salaries: 8.6 percent
Interest: 6.6 percent
Dividends: 13 percent
Partnerships and corporations: 19.9 percent
Capital gains: 45.8 percent
A few conclusions are obvious:
Working for a salary won't make you really rich.
Making only safe "income" investments won't make you really rich.
Investing only in stock of large companies won't make you really rich.
Owning a business or businesses could not only build a solid foundation of wealth but could someday...
Generate a huge financial windfall — and make you really rich.
Don't trust the IRS? Fine. Check out the top 10 on the Forbes billionaires list. Gates. Buffett. Ellison. Koch. Walton. Adelson. All entrepreneurs. (I worked my way down into the 200s and still couldn't find an employee, so I got bored and stopped looking.)
Clearly getting really rich in financial terms is the result of investing in yourself and others, of taking risks, of doing hundreds of small things right...and then doing one or two big things really right.
But what if you don't get one or two big things really right? There's another way to get really rich.
Rich in Life
I've spoken to hundreds of entrepreneurs, and each and every one does the same thing. When we talk about the financial side of being an entrepreneur — exit strategies, revenues, IPOs, cashing out — they're interested but far from animated.
But when we talk about the life of an entrepreneur, about how it feels to be an entrepreneur, they all light up. They start to gush about the challenges, the responsibility, the sense of mission, the sense of purpose, the sense of fulfillment and excitement of working with and for a real team, the amazing feelings of empowerment and the control over their own destinies....
It happens every time.
The bootstrappers with infinite dreams and negligible revenues light up.
The successful entrepreneurs such as Joel Gascoigne, who helped expand Buffer from a personal project into a business with a talented team with real revenues, light up.
The hugely successful entrepreneurs such as Scott Dorsey, who helped steer ExactTarget out of a garage, into an IPO, and then into an acquisition by SalesForce.com, light up.
Every entrepreneur lights up when we talk about being an entrepreneur because they feelalive: free to chart their own courses, to make their own decisions, to make their own mistakes — to let the sky be the limit not just financially but also (and almost always more importantly) personally, too.
And in that way, regardless of financial return, they feel really rich. And they are really rich — regardless of income or wealth.
Really, Really Rich
That's why the only way to become really rich financially and really rich personally — in other words really, really rich — is to start your own business. Even if it's just on the side. Even if it's just a slightly stepped-up hobby.
There's no reason not to. You don't have to quit your job right away; in fact, you probably shouldn't. (One of the best ways to minimize your risk is to keep your full-time job while you build your foundation for success.) Plus the basics of starting a business are easy; you can do it in one day.
Here's the deal.
In return for less freedom, less control, and less fulfillment, every day you go to work for someone else your upside is always capped and your downside is always unlimited.
The downside for entrepreneurs is also unlimited — but in return, they enjoy the possibility of an unlimited financial upside and an unlimited personal upside.
Take a chance on yourself. Try to get really, really rich. Maybe you'll only become really rich.
One out of two is still awesome — and you will have achieved it on your terms.
If your friends and family think you were crazy for starting a business, show them this article. If you've been thinking about starting a business and people say you're being foolish, show them this article.
If the people around you don't understand how personally fulfilling taking a chance on yourself can be, have them check this out.
And then get started on your entrepreneurial journey, even in the smallest and safest way. Every step you take will bring you closer to becoming at the very least really rich — and maybe, just maybe, really, really rich — and will let you join a group of people who live their lives their way, on their own terms.
Who are those people?
Entrepreneurs. Be one.
It's the best investment you can make — because it means you're investing in yourself.