Most of the worlds wealthiest people have built their fortunes by betting on themselves or by inheriting money from someone who once did. For instance, tech billionaires like Larry Page and Sergey Brin (Google), Jeff Bezos (Amazon) and Mark Zukerberg (Facebook) took risks by creating businesses that opened up new frontiers and have dominated society in a way that we’ve never quite seen before. Their hard work paid off spectacularly, allowing them to build the kind of historic generational wealth that most of us can only dream of.
Of course, being an entrepreneur is not for everyone. It typically means working very long hours, taking life altering risks, adding debt and reinvesting in the business rather than taking significant cash out. It takes discipline and some luck, as most new businesses are a concentrated bet on one industry. In other words, it’s putting all your eggs in one basket while the odds are against you. According to the U.S. Bureau of Labor Statistics, typically 20% of new businesses don’t make it past the first year while almost half don’t survive year five (current data is harder to come by in Canada). As tantalizing as the success stories above are, they are also huge anomalies.
For most people, wealth generation means investing in securities like stocks and bonds, rather than entrepreneurship. As shareholders we don’t have a meaningful say in how a company operates or truly know the day-to-day interworking of a firm like a founder would. This is why we’re taught to diversify away our risk by investing in many baskets rather than just one.
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Sincerely,
National Bank Financial
Rob Hunter Campbell Hunter
Senior Wealth Advisor Wealth Advisor & Portfolio Manager CIM®
National Bank Financial – Wealth Management (NBFWM) is a division of National Bank Financial Inc. (NBF), as well as a trademark owned by National Bank of Canada (NBC) that is used under license by NBF. NBF is a member of the Canadian Investment Regulatory Organization (CIRO) and the Canadian Investor Protection Fund (CIPF), and is a wholly-owned subsidiary of NBC, a public company listed on the Toronto Stock Exchange (TSX: NA).