Is Entrepreneurship the only way?

[a83]

Hey folks - some great discussions going on here and wanted to branch off into another topic that was brought about by a prior conversation

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When it comes to income classes (lower / middle / high) - many people have stated that the difference between middle class and high class is that middle class (even upper middle class) has to work for their money, and if the job stops, their life stops.

Whereas high class people may often live off investments / own companies that are often ran by a team day-to-day versus themselves being directly involved etc - effectively more passive income then direct time-for-labor income

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With that in mind… if you DONT become an entrepreneur, or get lucky doing investments etc, are you forever doomed to be middle class ?

If the gateway to upper class is passive income or owning things, then it’s nearly impossible to get there WITHOUT doing that, right ?

I mean think of very high income earners, like heart surgeons, they may make 800,000 a year, but when they retire, so does the income. The only way to get residual passive income is to own things and put a team in place to operate the day to day for you

So ultimately if you wake up one day with a desire to break out of the middle class, it’s time to start looking into ownership opportunities and quitting your 9-5…. Are we all forever trapped in this bracket unless we do something drastic ?

 

[lauds]

@a83 Hold up, what's wrong with being middle class? I don't feel trapped, per se. Unless you consider the "golden handcuffs" of a stable, secure career as being trapped

I dunno, to me this thread hinges on the premise of what kind of lifestyle you're trying to attain exactly. Sure, I have days where I fucking hate working but I'm not about to switch gears entirely to become an entrepreneur for the chance of "striking it rich". Way too risky. I can already afford what I want and need.

 

[mjes]

@a83 No, because the gateway to upper class is not passive income. Passive income is what you get ONCE YOU BECOME UPPER CLASS.

You cannot start a business with no experience, no network, and no expertise, and you cannot invest your $10k or $20k well enough to grow you into upper class.

Slow and steady is the most likely way to get there. Build a credentialed resume that can demand a higher salary, and save using tax advantaged accounts, coupled with compound interest, for decades.

The most reliable way to start a successful business is to master a trade, or gain deep market knowledge via working for a big company, and then taking that knowledge with you to start a business in your 30s/40s/50s.

This is one of the most destructive BS myths out there right now, that many people can be 22, “start a business,” invest into high risk investments, and become rich by 30. That is a path to being broke by 30 for the vast majority of adults.

Build a credentialed career- the credential protects your career as much as anything can. Absolutely work for a salary. Save a large percentage and work on growing that salary.

If you’re 35-45, have a good chunk of change in the bank, and have enough experience to identify an opportunity in the market, absolutely start a business.

DO NOT be that 22yo watching YouYube looking to build “passive income.” You will most likely fail.

 

[black_square]

@mjes Everything you said was spot on but I feel like alot of people have to learn the hard way. Young entrepreneurs are extremely rare and sometimes exaggerated for social media/YouTube. Real success is slow and steady and takes skill.

The real issue is that everyone thinks they’re the one to break the mold. Theyre over confident in their mostly average potential and not realistic with themselves. This is how you end up chasing entrepreneurial avenues for decades with little success. From there they become desperate and try to pivot into whatever industry (usually tech) to gain some stability but they’re already behind the curve and have inflated expectations on what salary theyll have as a beginner.

As im approaching 30 i see exactly how 99% of these people turned out. They’re way behind while everyone that simply did the boring thing of getting a degree in a stable field are doing very well and actually have the funds and experience to try their hand at starting a business.

 

[wesmurray]

@black_square A lot of the "young entrepreneurs" are grifters and scammers living a fake lifestyle for the 'gram'.

 

[routa]

@wesmurray *and have mom and dad money to help

 

[mb74]

@wesmurray
Most of them have no money (or only have parental money, as someone else mentioned) until they start getting views. And then they want to sell you a course to learn how they did it.

 

[black_square]

@wesmurray This is true. What impressionable young folks dont realize is that making influencer lifestyle kind of money isnt easy. If it was we’d all be rich as hell. It reminds me of how alot of young people find themselves caught up in a pyramid scheme at some point. But like I said.. many of us have to learn the hard way for some reason

 

[gagaermac]

@wesmurray Accurate

 

[earp]

@black_square Best recipe for entrepreneurship is to get a degree, get 5-10 years of experience and use that time to identify problems you can solve. Bonus is sometimes you can get your prior employers to be your first clients

 

[routa]

@mjes I wish I could upvote this more, specifically the part where you mention that you can not start a business without a network and experience. Also, I’m not sure people understand how freaking hard you have to work to get those things if you’re not born into the right circle. It’s not impossible but the cost is tremendous, and personally, I’m happy to work my 40 hours and check out the other hours of my week and collect my boring middle class paycheck that covers my needs and hobbies and retirement.

 

[hannahmae26]

@mjes 99% agree with one caveat - you don't get to success without failure first, so if you wait too long to dip your toes in, you don't get to learn until other riskier kids have already gotten their head start.

For example I'm an industrial/mechanical designer, have been learning and doing it since I was 12. I started multiple businesses trying to leverage the skillset, the first made barely enough to buy a car leaving college, the second made $200k+ revenue per year but also burned up more than that in R&D/marketing, and now the third one at age 33 costs me almost no capital (just design labor) and the IP continues printing money as long as people are still ordering. It's almost passive income which is great because I'm about to start another full-time software job to keep earning more while I can.

Is doing business painful - yes. Is it worth the money - no if your skills can land you a lucrative job instead. But if you can afford to think long-term it's much like investing, the more time you have to build up independent income streams, they can scale (almost) infinitely while your salary will only ever go so high in a certain industry. One day everyone gets too old and tired to work within the system, having the fallback already prepared is a godsend.

 

[mjes]

@hannahmae26 Good call, totally fair

I do know one person who did quite well as a young entrepreneur, but nothing about this guy is typical. 10/10 charisma, 10/10 intelligence, 10/10 motor, 10/10 tenacity. He got knocked down 4 times and got up 5, and ultimately won.

I guess I see it as- it’s okay for me to acknowledge that that guy has what it takes to do that, and I do not. And most people do not.

“Be an entrepreneur” as general advice can be pretty bad- but that doesn’t mean that certain people cannot succeed and be the exception.

Congrats to you on what you built, that’s damn impressive and super cool!

 

[jamaicanrose]

@a83 I retired into the middle class, in my early 40s, via entrepreneurship, after a life of poverty and homelessness. I would have gotten to FIRE faster and easier if I had just gone the regular college-job career path.

 

[dobsonsdogs]

@a83 Why do you assume investing involves luck? When you're young, it involves resolve. Resolve to always buy VOO/VTI even if the market is down or tanking. Resolve to never sell at the all time highs or when it's down. Resolve to only sell near retirement when you're building your US Treasuries expense buffer.

Long term returns not including inflation are around 9% with a 14% variance. This compounds every year along with additional contributions.

Stocking picking involves both luck and skill. If people want a set and forget, they VOO/VTI and chill.

Buying a known franchise is a thing (McDonald's or Chick-fil-A). But you need capital to fund it.

 

[smultronst%C3%A4llet]

@a83 Is being middle class, whether low or high, something to be considered doomed to? That’s a sad outlook.

Is looking into passive income drastic? If you are making high 6 figures and aren’t looking into doing this you are a dimwitted dumb dumb.

 

[refugeandstrength23jk]

@a83 Entrepreneurship is a terrible path to upper incomes. It fails 8-9 times out of 10, and has negative expected value vs a stable career.

The easy path is a professional or executive job, save 25%, and own real estate.

 

[a83]

@refugeandstrength23jk I guess I have the general notion that “working for the man” and just getting 3% yearly raises for the rest of your life isn’t going to make you financially independent

We bring in roughly 230k household income a year and very very much live what I would consider middle class lives while following the 50/30/20 rule - however make no mistake that if we lost our jobs tomorrow we would be up shits creek within a couple months if nothing changed, that’s just how it goes

A couple weeks back I was invited to the local “private country club” by a wealthy friend of mine to have dinner and drinks - upon arrival I quickly realized that the country club vibe is really just a ton of rich dudes rubbing elbows and networking

However the morale of the story is nearly everyone I met at this place of wealth was an owner in some capacity, it was never a regular working stiff, it was the owners of companies not the staff of them. I believe the only “regular guy” I ran into was an SVP at a bank.

It got me thinking that a lot of these people Probobly make my entire years salary in a month , and that the variance is so extreme I don’t know how it’s even possible to also get their aside from the common denominator that most were owners of something

 

[kereena]

@a83 You bring in $230k a year and in a few months without work would be financially ruined? Lets over assume taxes and health benefits so that your net annual pay is 60% of that 230k, leaving you with $138k or $11.5k per month. If you aren’t saving at least $2-3k per month then you have a serious budget/spending problem.

 

[black_square]

@kereena Yea my household makes a similar income to this guy (less gross but more net because of tax advantaged salary) and we save so much money its ridiculous. Between 5k a month for our forever home fund, monthly roth iras, bitcoin and 1k to our vacation fund we still cant spend all of our money.

I really want to see how some of these 200k families live. I mean 200k+ is nice and really comfortable but im thinking some people think that 200k makes them near rich and spend that way. Depending on where OP lives, living off of 90-120k a year should be very manageable. Theres absolutely no reason to be spending the entire 200k+ salary a year