17 Sep Why it is nearly impossible for doctors to amass ultra wealth
I’ve been relatively quiet on the online frontier as of late, owing mostly to work-related insanity and also helping out family affected by the recent hurricanes. Fortunately, everyone is safe and recuperating from mother nature. It is also eye-opening to be reminded how dependent we are to electricity and modern amenities.
The online financial community tends to be a unique bunch. Very resourceful. Innovative. Self-sufficient, to say the least. Most of the modern world isn’t. Mr. Money Mustache is able to construct a fancy rental property out of materials harvested out of craigslist. The average American probably wouldn’t even think to own a generator (myself included) let alone know how to operate one. Case in point. What happens when you lose electricity for two days? All of your food spoils. What happens when your local supermarket also loses electricity for two days? All of their perishables perish. Boy is it challenging to rebuild that infrastructure. Best of luck to those affected by the recent hurricanes…
Back to the finance world.
The curse of high income earners
High earning families can consider themselves blessed and cursed simultaneously. High earners, by default, have a good velocity of income. Income is a good—it helps pay the mortgage, bills, vacations, and food. Doctors, for instance, are the quintessential white-collared service worker. In exchange for a decade of subpar wages and long hours, we all will typically enjoy very comfortable wages and long hours. I guess that this is a formula that isn’t necessarily a bad trade-off. However, having a stable income and long hours actually prevents you from becoming wildly financially successful.
I know that we all have different ways to define success. My view of success is more of a balance between being financially comfortable and having the health to enjoy it. Fortunately most people in my profession will be able to achieve this. However, we will never be able to buy this home in Malibu:
That’s right. How many Whipple surgeries would you have to do in order to afford this house? Answer: Not enough.
And that is the sad truth. Our level of ability ensures that we can enjoy a good living, but it also prevents us from reaching the extreme levels of wealth. No amount of hustle where your hustle translates into direct income will allow you to achieve this.
Let me reiterate.
If you have to exchange your time or expertise for money, you will never have the time or energy to amass insane amounts of wealth.
How to overcome the curse of high income earners.
There truly aren’t many secrets to success. If you want to own that chateau in Malibu, you have to come up with a plan and keep executing until you achieve it. You must also have luck (lots of it), but it’s all about creating opportunities.
- Motivation — You have to be motivated. The problem with motivation is that other aspects of your life will be sacrificed the more motivated you are, and the higher the goal that you wish to achieve. We’ve sacrificed a lot to become physicians, but that sacrifice actually had a clear cut timeline (medical school, residency, and fellowship). Most of us make this sacrifice in our twenties. This is a time in our lives where we might have the energy and ability to sacrifice family, friends, and health to reach those goals. Our goals may change as we get older. It’s a whole lot harder to come up with a plan to own a $22 million home in your thirties with a family to support when you earn $200,000 a year than if you were 22 years old with only a smile to your name. Think about it. The stakes are different, even though the challenges are the same. The blogger who earns over a $1 million a year probably started out with no career path. Where you start out can dictate how much motivation you can funnel into your goals.
- Realistic Income strategy — You have to come up with a plausible plan to hit that goal. If you want to afford an $8 million home, you won’t get there selling lemonade. You need to own a franchise of lemonade stands. Likewise, you need to develop a means for your income to be generated passively and reliably. What’s the secret to a reliable strategy? That, of course, is the million dollar question.
- Luck — You’ve got to have some luck. The beauty of luck is that the more frequently you put yourself out to risk, the more chances you’ll have to get that break. It all boils back down to how motivated you are to do it, and how much potential there is in your game plan.
What are your thoughts on amassing ultra wealth?