The Ten Roads to Riches is a simple and interesting book written by Ken Fisher, Founder of Fisher Investments. When I got my hands on the book, I was looking for investment advice and assumed that the book would be talking a lot about S&P 500, other investment avenues, and more. However, this is not a finance book. It talks about the ten roads one could take to be financially successful (wealthy).
As Ken mentions in the book, you do not have to read chapter by chapter and you can pick and choose which of the ten roads to riches (chapters) you want to read first. We may not agree with everything Ken says and one may not like all the roads, however, you will be able to choose one or more of the ten roads.
A Hero CEO
The first road Ken talks about is starting a company. How big your company is will determine how successful you get.
The second road is to become a CEO of a company, turn it around and create wealth. You also end up doing a lot of social good. He also talks about the qualities of a CEO. A CEO should spend time with the bottom chain of employees and low-level customers every month. This will help employees and customers adore the CEO. To be a hero CEO spend time with your smallest customers and lowest employees. Keep seeing prospects and customers and that keeps you close to the market. The CEO should also be a quitter (quit doing things and delegate), but never quit clients.
The third road Ken talks about is partnering with the right leader (or CEO) or the right people/company. He calls it the Ride Along (Charlie Munger rode along with Warren Buffet) – He may not be as successful as Warren, however still up there.
The Artistic and Controversial Roads
The fourth road is being Rich and Famous Road (read: Taylor Swift, Justin Bieber) or likes, and the fifth road is marrying someone rich. A lot of what is being discussed in the marrying rich road is also cultural and will not work across the world.
The sixth road is suing someone legally (you can ignore it if you do not like it). The seventh road is starting a Hedge fund. Though it sounds like an easy read – it ain’t that easy. One of the roads to riches could be to manage other people’s money and get a commission for the money management.
The eighth road to riches is inventing new revenue streams or incomes. JK Rowling – (Harry Potter) did a great job here inventing revenue streams from her book and continues to monetize it. George Lucas through his movies – more like a recurring rental income/income on patents. However, you need to invent income here.
Real Estate & Stocks (Investing)
The ninth road Ken talks about is Investing in real estate / rental property income. You do not pay all up-front and you operate on leverage. Ken also says California is no longer the place to invest in real estate. If you consider a place to live, the greatest value of a home is the roof over your head and the value it gives you. The Last Road (10th) is the investing road. Passive investing could be on S&P 500 (again reinforced in the book).
To live on $100,000 in today’s dollars – figure out how much it will be in 30 years with inflation averaging at 3% : FV (Future Value) = PV (Present Value) X (1+R)n
that is : $100,000 * (1+3)30 = $242,726.25
The next question is How much should you save to get to $243,000 a year? A recommendation from the book is for your portfolio to last as long as you do. You generally shouldn't take more than 4% in cash flow every year Click To Tweet
How much should you save to hit $6M in savings?: (i X FV) / ( [1+i]n -1 = PMT
PMT is the payment.
Assuming the money is compounding at 10% every year: (10% X $6 million ) / ( [1+10%]30 -1) = $36,475.49
PMT X ( [1+i]n -1)/i = FV
Suppose you save $2000 a year : $2000 * (1+10%)3 -1) /10% = $328,988.05
The mathematical calculations towards the end of the book was very helpful. Thank you Ken for sharing with the world- The Ten Roads to Riches.