If your goal is to be rich / powerful then here's a ranking of career types.
- working with your body (clerk, construction, farming)
- supervising people who work with their body
- working with your brain (engineer, marketing) (college degree)
- managing people who work with their brain
- investing your own money (real estate, stocks)
- investing the money of others
Calling this a ranking is overly simplistic. It would be more like a ranking of probabilities. For example, pro athlete makes money with their body but the probability of becoming rich is low.
A simple bullet list doesn't show the ease of movement between careers. It is common to move one step and become a supervisor or manager. However, becoming a manager or supervisor in a particular field is generally a dead end.
Investing doesn't necessarily have prerequisites of education or experience. However, intelligence is necessary and can be gained by education or experience.
One significant benefit of investing your own money is that you can be your own boss and not report to anyone. Consciously or not, I think that's why we're here investing in real estate.
This probably isn't original but I can't think of where I saw it.
Very interesting Raj. I'll point out some counterarguments to your rankings and see what you think:
You point to "investing the money of others" as the highest ranking career. I think that this is not true - it's just as hard in many instances of this to get started, and to be a superstar, as it is to be a professional athlete. Try applying to be an investment banker at a top firm in New York, or to work at a Hedge Fund. Then try being the absolute best. It's hard and its not that common. It's also a dog's life - many of the really good money managers started with those infamous 100 hour + weeks, and I know firsthand from friends in the industry how demanding it can be. It's not a career - its your life.
"Investing your own money" only works if you have a sizable portfolio to invest. If you earn an incredible 25% return on your $100,000 portfolio, you barely have enough to live on.
"Managing" Is in my opinion the best way to true long term success. If you can manage others effectively, then you should be able to get them to produce more value than they cost you. This is infinitely repeatable, assuming that you are as good at managing managers and executives as you are direct reports.
Working with your brain (which I'd use interchangeably with "White Collar") requires a college degree, and may not necessarily be the best way to get started. Look at the millions of college graduates with substantial student debt, and the millions more who will be stuck in the white collar world for 40-50 years.
Working with your body, or supervising ("Blue Collar") work would be something that I would not necessarily underestimate. A carpenter or plumber, for example, would develop a valuable, in-demand skill-set that is not only applicable to employed work, but can easily be freelanced, contracted out, and can be applied to the Real Estate industry for returns that will beat yours every time if you try to do all the work yourself.
Look forward to hearing your counterpoints!
@Raj Gandhi interesting points. I would add that the most successful people (in purely monetary terms) are a blend of your last two points - investors own money and others. Think about the richest people in the world - they are business owners, primarily of public companies. So Warren Buffet for example has sizable wealth that he invests for himself, but he isn't the sole owner of Berkshire Hathaway. He also is responsible for investing shareholders money. Same goes for Bill Gates (at least when he was still day to day with Microsoft) - retains sizable equity in company but still majority controlled by public shares.
In terms of brain<money, I would categorize money as risk instead. So an engineer is using his brain, but he/she could use their money to start their own company (essentially managing their own money through a business), thereby taking on risk that they didn't have as an employee.
Interesting post! @Scott Trench hit the nail on the head.
Thanks for the replies to the post. I like the discussion (even more than the outcome).
Working with your body is generally time-limited to a few decades because your body wears-out. Injuries can be career ending.
Working with your brain is also generally time-limited. Mental acuity declines and skill sets age. I'm actually in this category. I'm an M.S. electrical engineer with 15 years experience. I'm either peak or past peak. I'm currently employable but less so every year.
The thing I don't like about management is that it invariably doubles interpersonal relationship issues. Everyone has a boss but not everyone has employees.
The one I'm least confident about is that investing money of others is the pinnacle. Investing my own money, can be in a passive investment and my finances would simply be on autopilot. Investing money of others requires constant dilligence to monitor and report returns.
Rich / wealthy to me means no need to work being paid by the hour.
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