Changing Strategies to Reach Various Levels of Wealth
Level 2 - Value Investor
Welcome Avatar! As you know, W-2 climbing is no longer the path to getting rich. Rich being defined as $3-4M and a paid off home by middle age. That said, the majority do start with a W-2 since it is the rock hammer they give you to escape white collar slavery. Even if you’re making $100,000, $200,000 or even $500,000… the company is only paying you that if you’re generating a profit. If you’re not generating a profit or well below the corporate operating margin line, the axe is coming.
Part 1: Day One and Initial Traps
Assuming you’re going to start today, that means you’re likely just out of college. Something along those lines. If you’re in that camp you’re going to go straight into sales if you can. This is because it is the most transferable skill in the world. If you’re good at sales, you’ll need that specific skill to start a business. If you plan on dating attractive women? Yep sales once again. Everything is a form of sales at the base layer.
The exception is that you’re terrible at it. If you’re not built for it, then you’re going to be forced into online sales later (no face to the ads) while using your W-2 money in something different (typically Wall St or tech). All other industries should be avoided unless there is some strange exception to the rule that pays low 6-figures out of college that isn’t in the Sales, Wall Street or Tech bucket. Notice. We’re not even including doctors/lawyers since that goes directly against the goal of getting rich. 3-4 years of additional school is a ton of lost energy. Also. The people who want to go into things like medicine are not really motivated by money.
Congrats! You’ve Acquired One of These
Become Institutionalized or Smile and Nod
If you’re ahead of the curve, you’ll realize that the corporate world is largely an organized prison. Some people become institutionalized. Your life is playing the politics game, burning the candle at both ends and praying that you get a “merit increase” that barely beats inflation.
While it isn’t that terrible in the beginning, it becomes a prison cell by the time you’re in your 30s (by design). They typically give you large wage increases from 21-31 or so and then it tapers off as they realize you can’t get up and leave (mortgage, kids, car note, private school, etc.)
Start Making Something Online
Over the years we’ve gotten a bit softer on this. Before we used to say “make sure it is scalable”. Then we got a bit wiser. A lot of people have some sort of limiting belief/psychological issue with internet money. There are still people out there that think it is not possible. Similar to the people who think “Wall Street” is a bunch of guys yelling on a trading floor.
Anyway.
If you are about 6-9 months into your W-2 and have successfully become well liked (smile and nod, play office politics), this is the opportune time to start earning money online.
Anything goes in this case. If you need to start with some sort of time for money exchange with a niche skill? Completely fine. The rationale is that you’ll learn the basics for building an audience/reputation. In addition, you’ll get over the most annoying hurdle: realizing it is possible to earn money on the internet.
Common Trap: In general, most people just get too comfortable. You want to relax after getting the higher paying seat and get sucked into the standard nightlife/partying loop. Drinking more than you should, going out more than you should. While you can certainly have fun (Thursday and Saturday), going beyond 2x a week becomes detrimental to your future.
Instead of thinking of ways to make more money, most people end up trying to either: 1) cheap their way to the top by becoming frugal boring weirdos or 2) by taking all their money and dumping it into straight up gambling - sports betting, “prediction markets” on one minute crypto candles, all in on one stock over and over again.
You get the idea.
In this band the best investment you can make is in your own potential. The chances of being less skilled at 30 vs. 20 is basically zero. You’ll improve in every single life category. Since money follows value over the long-term, it’s a home run to reinvest into your own equity/future.
Objective: By the end of this phase you should be able to expand earnings with some small online venture. You’re getting pay raises since you’re young and politically savvy. The key is avoiding the doom loop of over partying and thinking the wage increases last forever. You have some time but not forever. It gets bleak quickly. If you need proof just look at the stress levels of the people in the office who are middle aged.
How This Plays Out Conceptually
People who figure this all out early are going to crush. While you can start your online venture later, the returns will likely be lower. This shouldn’t be surprising. If you learn golf today or started 5-years earlier the gap is going to be enormous. The talent is there, it is just behind schedule.
Generally speaking, this is the ideal time to “figure things out”. It’s a lot easier to get into WiFi money when you’re not making much. If you make $1,000 a month online, it is actually pretty significant if you’re generating $10,000 a month from the W-2. It’s a 10% increase in your earnings + a big confidence boost as well.
Part 2: Starting to Change the Timeline and Strategies
Surprise Surprise! Only 0.1% of people are going to start making money online in their early 20s. Within the jungle we do have an example, BowTiedVampDeer, who is running Pre-Sleep (source)
You know the guy is busy when he starts doing two things: 1) clowning on people his age who are still talking about missing College days and 2) his personal account is slowly becoming abandoned for the Pre-Sleep official account.
If you’re ultra sharp you’ll realize we pulled the post/tweet out for a reason. Chances are high he ran another store and figured out that there is another E-com angle to run (beyond Pre-Sleep).
The Math Ain’t Mathing - Realization
The general zone where most people realize corporate isn’t going to make them rich is age 25-34. There is a distinct tell. The group that is starting to crawl out? They are more withdrawn and are known as the “quirky” guy. This is because he has figured out the way to optimize his W-2 performance metrics while working less and less hours with less and less face time.
The second group? Usually in perpetual self pity. They say things like “I coulda/shoulda” or “good luck with that hobby thing of yours”. While you might be annoyed at their comments initially, realize that self pity and satire isn’t profitable. Lady luck despises people with “woe is me” personalities. She hands them worse luck over and over and over again. The more negative comments you get? Higher chances of them shifting more luck to you (yes seriously). Being disliked by NPCs is a right of passage for the successful.
Dial Into Group One
Since group two will never figure it out, it’s best to just give them the old “smile, nod and agree” treatment. Be optimistic and nice to them (no downside) and never give them a whiff of what you’re doing under any circumstances. They’ll know you made it when you hand in your resignation notice anyway. “OMG BRO YOU QUIT” which you’ll leave on read.
Most Likely Case: It has been 5-8 years of corporate slog. You’re looking at your accounts and realize you have something around $300,000-$400,000. This is from your boring 401K match + some stocks + some crypto + some other investments you’ve made. The problem? You are growing out of the constant partying phase and realize that if you want to buy a place in a nice area you’ll be zero’ing out your entire liquid net worth to come up with the down payment.
The below is likely fiction but is a good example of what happens. You save up feel rich on paper then realize if you want the good school district you’ll be back to being house rich and cash poor.
Hit the Gas Pedal Hard
At this point you have to do the calculation for yourself. What do you actually want out of life. You’re not middle age but you’re not a kid who just graduated college either. Decision time.
Path 1: Just stay in corporate, work 30 more years where you’ll likely get cut/fired/laid off at least a few times. Settle for a life of constant grind and minimal changes to quality of life.
Path 2: Realize this isn’t going to work and immediately start putting money away for your small business venture. We have too many to count listed on the paid side and how to find good ideas. That said, you still need to come up with $5,000 to $10,000 to test your product/idea. If you already have $300,000 to $500,000 you’re either too cheap or too risk averse to consider $5-10K to be meaningful
Path 3: Go completely off the walls with a career change and the cope of doing something “you love” because the quality of life won’t be that different. You’d be surprised at how many people have this mental breakdown. Trust us when we say that the 10-15 year outlook is never pretty. South East Asia will give you a good glimpse into what that looks like!
Click on Path 2
The beautiful part about Path 2 is that you will know a few people who already made it. That’s right. If you are actually grinding and moderately successful, your contact list will have at least one or two of them. Mentally you know it’s doable and you just need to catch up on the learning curve.
Cut Into Lifestyle: The usual structure that functions well? Vast majority in this camp traveled too much, partied too much and got sucked into lifestyle inflation a bit early. Just how it goes.
Carve out a reduced socialization schedule, if you’re really far behind you only go out one day a week until the online income can cover some expenses
Take your contact list and make the energy focus on building/money. This sounds simple but it is powerful. If you spend more time thinking about it and being surrounded by people who talk about it, the results come faster. No different than how you learned your own job via osmosis by being in the industry for years
Take it a step further all your social media, general media, reading, etc. Should be focused on people who are money focused. What grabs your attention is what the world will slowly give back to you (staring at Lambos would be the exact opposite as that’s envy vs. action)
At this point you’ve created a lot of free time and acknowledge that priorities were messed up. The time was always there, you just weren’t taking it seriously
Don’t Bother With Chasing Billions: The billionaires you see today didn’t go out there with a goal of becoming a billionaire. Instead, they started their company and focused on growing that. One thing leads to another it expands and expands and expands again. Next thing you know they have 9 different businesses but the name of the Company is still singular.
Chase Demand and Your Talents: You don’t have the luxury of renting out your time for $40/hour anymore. At this point you’re going straight into something scalable. This can be E-com (our recommendation), affiliate marketing, software, etc. Anything that can get sales while you are asleep.
If you are only earning money when the clock is running that is a job. If you are only earning money due to performance that is a career. If you are earning money while fully asleep, that is a business.
Before getting overly married to this concept, we do realize that many businesses run hybrid models. You might do some time for money exchange that leads to your main business of selling a SaaS. Who knows. The big picture is the same. Over 2, 4, 6, 8 and 10 years, you want your income derived from the sales unrelated to your presence.
The line in the sand? You need to have a clear product that does not require you to be on the clock. Otherwise you have fake entrepreneurship where you’ve just created another job for yourself. If you can’t sell it, you are simply trading time for money.
Click Fast Forward
There is a reason why we say around late 30s/early 40s a cliff appears. By this general age band, you know who is going to take the leap and who isn’t. The results start pouring in and you basically know who is going to be in corporate forever and who isn’t. There are always exceptions but this is a good guideline. We’re aware of all the cope people throw out.
“Tons of business success starts at 40”.
Not really. The success stories at 40 were planted about 5 years ago. While their first successful business was started past 40, we’d bet practically everything we have they were already tinkering before that (running some sort of Ebay business, affiliate marketing, trying to flip a house, etc). Chances are slim that someone is making $400,000 in a corporate gig, quits and spins up some random website that knocks it out the park. That person has a history of tinkering in the dark before that happened.
Part 3: Another Decision Tree - Changing Gears
If you’ve made it this far you’re not a 50 year old making $350,000 with 2 mortgages and two kids. It’s unlikely. The more likely case is that you’ve got something going and need to start making serious life decisions.
For that you come to a black cartoon bull.
Jokes aside, you end up in a weird vortex. You’re making good money, you have real assets (already worth a few million) and have to start making life tradeoffs. Do you want to give up another 5 years to grind and build? Knowing that your quality of life will not be the same at 50 vs 45?
Do you want to give up 3 years? How about your personal life (kids, family, friends) so on and so forth.
We’re not here to tell you what to do, just to think long and hard about how to actually move the needle.
First congrats: You’re one of the main characters. You’ve reached the fabled paid off home and ~$4,000,000 liquid. You’re only missing out on private jets, super cars and yachts. Everything else is within reach.
Decision time.
Option 1: call it good enough, run business at baseline and hang out with family/friends
Option 2: shoot for ~$8-10M. Wealth studies have shown this is the next step up in utility/happiness
Option 3: Try to go for video game money which is around $25M or the classic $1M per year of spending
Option 4: go full on money worshiper and shoot to become a billionaire
Option 1: Self explanatory. You don’t sell anything, run it as best as you can with a focus on freeing up your time. No reason to sell because if you do you’ll end up with immense depression. Look up the history of Victoria Secret
Option 2: Trying to get the cool double? The classic “anyone doing 2x me is rich” loop? Fair enough. Your likely risk adjusted solution is two fold: 1) taxes and 2) bolt on acquisitions. You can solve for a more optimal tax structure which gets you a better payout or higher net income. The second option is also doable assuming you are willing to work long hours again. Due diligence tons of terribly run companies on Empire Flippers, add them into the pile you have and run them like a PE firm.
Example Small Business Tax Rule
You have another option. You can also try to invest significant excess money into venture/early growth items. Crypto people and tech people lump into this camp. You better be a good investor though.
Option 3: Need the video game money? That $1M a year for life sounds perfect? Welcome to lady luck. In this group you need luck. Unless you were born into a family with wealth (millionaires already), you will need luck on your side + a clean strategy. Here we go from “simple taxes” like moving states and getting deductions to real tax strategies: Tax Havens.
You’ll need a combination of building out your company + selling it + investing in high growth assets at the same time. You will likely need at least two (maybe all three) to pan out to hit the elusive $25M. Why? You will be on tilt for several years. Being on tilt typically means the will power to spend like a monk declines and your decision making gets a bit blurry as those digits go up and to the right.
Option 4: Option 3 actually has a wide range of $25M to $200M. We’re just making that range up but the idea is the same.
Option 4 is much darker. If you read the actual bios of Option 4 types, they give up a significant part of life for more money. Felix Dennis admits to chasing money at expense of never having a child (says it was a mistake would have stopped at $30M or so). There are countless billionaires who talk about missing their kids birthdays, baseball games etc. Countless billionaires with all kinds of messed up health issues and perverse mental health issues.
We’re sure there are a handful of well adjusted ones, the stats suggest the outcome is severe though.
Part 4: Conclusion and Maths Test
You now have the blueprint on what it takes to make it to each general level. At a high level you can see luck increases at higher wealth levels and statistically you’re reliant first on business income/success then investment success. Ideally you’re both and you’ll be at the Video Game money level of $25M or $1M for life in spending power.
For those that are still fighting this, we suggest putting everything into excel. Take all your career expectations without a W-2. Assume you’ll be that rare exception making $1M by 35 in (insert insanely competitive industry).
Now put that through the following problems: 1) 50% tax rate since likely in NYC/California and 2) layer in inflation.
If you use home prices as the proxy for inflation, they have gone up about 2x over the past 20 years (median not even luxury/high-end/low supply spots).
This means that $1M in 20 years isn’t buying $1M of items in today’s dollars. It is buying $500K! Making $1M in 2046 would be equivalent to making $500K today in purchasing power terms. Wild to think about conceptually.
Go back to the math ain’t mathing section.
Who do you think ends up being set for life by middle age? 1) “choice is obvious get to building” or 2) “self pity”.
Disclaimer: None of this is to be deemed legal or financial advice of any kind. These are *opinions* written by an anonymous group of Ex-Wall Street Tech Bankers and software engineers who moved into affiliate marketing and e-commerce.
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