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July 11, 2021

Working for someone else not how you get rich: report

In more ways than one, the pursuit of wealth is what drives the world.

It’s what many of the planet’s power brokers are after, and if we’re to believe greed amongst Wall Street and other executives are to blame for the sweeping recession of ’08, the chase for cash affects all of us, whether we obsess over it or not.

Certainly, there is family and friends and health that are more important. But then, life is also not a greeting card, and if for no other reason than having a fortune appears to make living easier, sometimes all any of us are after is money.

How do you get rich? Here’s a snapshot of how some of the wealthiest earned their fortunes, and here’s a hint: working for someone else ain’t how it’s done.

According to a new analysis of IRS tax returns by the INC’s Jeff Haden, the surest way to wealth is by stoking your own entrepreneurial spirit.

*Bing: How to start your own company

Among the 400 highest-earning Americans in 2009 (the latest year data’s available), a group of people with minimum annual earnings of $77.4 million, here’s how they brought home the bacon:

-- Wages and salaries (8.6 per cent)
-- Interest (6.6 per cent)
-- Dividends (13 per cent)
-- Partnerships and corporations (19.9 per cent)
-- Capital gains (45.8 per cent)

Of course, your average citizen earns their way by the first three entrants on that list: salary, interest and dividends. They work a job for which they’re paid, they put their money in a bank where it grows, and they try to make that money work for them, investing in large companies that pay out a stock dividend.

Simple enough, right? Well, not if you want the big bucks.

Most of the income from the U.S.’ richest comes from the bosses of companies, who earn the lion’s share of their cash from capital gains.

If we’re to make a crude observation from the data, then, you’re nearly eight times more likely to earn a large fortune by earning through your own company (partnerships and corporations, as well as capital gains) than by taking a salary from someone else’s (wages and salaries).

By Jason Buckland, MSN Money

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Gordon PowersGordon Powers

A long-time fund company executive, Gordon Powers now heads up the Affinity Group, a financial services consulting firm. Gordon was a personal finance columnist for the Globe & Mail for many years, has taught retirement planning...

Jason BucklandJason Buckland

The modern-day MC Hammer of money, Jason can often be seen spending cash that isn’t his with the efficiency of a Wilt Chamberlain first date. After cutting his teeth as a reporter for the Toronto Sun, he joined the MSN Money team with...