There are many ways to amass a significant personal fortune. For example, Pablo Escobar, the infamous drug cartel kingpin, earned a place of the Forbes’ list of billionaires for seven years in a row from 1987 to 1993. By 1989, he was the seventh-richest person in the world with an estimated net worth of US$30 billion. His organization generated approximately US$420 million per week (almost US$22 billion annually).
Although there are numerous illegal ways to strike it rich, even very, very rich, creating wealth through illicit means usually doesn’t end well. For Escobar, it meant being killed the day after his 44th birthday. Not a good exit strategy.
According to John Bowen, founder of AESNation and author of Becoming Seriously Wealthy, “Generally speaking, having a successful business is the most effective way to amass significant wealth. When we look at investable assets of U.S. households – one of the very best indicators of affluence – we see that one-third of those with investable assets between $1 million and $5 million are business owners, three-quarters of people in the $5 million to $25 million range own businesses, and among the truly wealthy – those with $25 million or more – nine out of ten are business owners.”
“Even today, millions of people are regularly creating significant wealth by starting businesses that solve problems in the marketplace,” says Lewis Schiff, executive director of Birthing of Giants Fellowship Week. “Not everyone is going to be Mark Zuckerberg and not everyone gets rich by going public. In every town, in every corporate/industrial park, there are individuals who have built incredibly profitable small businesses and have great lives because of it.”
While it is evident that the most likely way to build significant personal wealth is having an equity stake in a business, maximizing your personal wealth may require additional steps.
“Once you’ve created a profit-making machine, you probably want to take steps to protect that cash and reducing taxes is the most obvious way to do that. You can work harder to earn 20% more money but if you’re like most people and pay about half your wealth out in taxes, it’s probably easier to find a way to pay 10% less in taxes. That will make you the same amount of money without any additional work,” says Schiff.
“Using wealth management strategies and products to enhance and protect personal wealth is often critical,” says Bowen. “By employing super-rich solutions, successful business owners can potentially dramatically increase their wealth and often make sure it isn’t taken from them by unfounded lawsuits.”
"Even though the old saying from Willie Sutton, when asked why he robs banks, is 'that’s where the money is,' I imagine his tax advisor would have added that there is no requirement to pay taxes when the money is gained from illegal activities. While most of us aren't prepared to go the path of Willie Sutton or Pablo Escobar, taxes remain one of the challenges to wealth accumulation and advanced planning techniques are your best (and safest) answer," says Schiff.
