Author Topic: Entrepreneurship and wealth building  (Read 1014 times)

SeattleCPA

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Entrepreneurship and wealth building
« on: December 12, 2017, 06:39:36 PM »
Every three years (supposedly), the IRS publishes a study of personal wealth statistics based on a mashup of estate tax returns and individual tax returns.

It's pretty interesting stuff for small business folks because what it shows is small business ownership is a route to financial independence.

The study samples about 600,000 of the wealthiest individuals in country. This represents about the top quarter percent. The first bracket in the top quarter percent (of about 100,000 individuals) shows a mean net worth of roughly $3,057,895.

About 30% of these folks hold closely held corporate stock with a mean value of $930,352.45

About 45% of these folks hold an interest in an unincorporated business with mean value of $912,146.31

About 16% of these folks hold an interest in a farm with mean value of  $2,477,547.41

One can download the Excel spreadsheet with the data here: https://www.irs.gov/statistics/soi-tax-stats-all-top-wealthholders-by-size-of-net-worth

P.S. The rest of these people's net worth is basically a house, often some real estate, some cash, and then a little of retirement savings.

My blog Evergreen Small Business
My free downloadable ebook: Thirteen Word Retirement Plan

GreenEggs

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Re: Entrepreneurship and wealth building
« Reply #1 on: December 12, 2017, 06:59:52 PM »
That's not surprising, but it is interesting to see the stats. 

Owning a business means that you get paid what you're worth, and you can't get fired or laid off.  ;)




SC93

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Re: Entrepreneurship and wealth building
« Reply #2 on: December 12, 2017, 08:47:21 PM »
Not really, I made a lot of money and after the first few years I did nothing.

I used to get fired daily by atleast 1 customer. If you don't continue to add to your client base, eventually you will get fired by them all. Not to mention, I used to fire myself daily... but I always showed up the next morning. :)

Nowadays all I do is paint a washer and dryer and get paid $100-$200 to do it (15 minutes work).

GreenEggs

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Re: Entrepreneurship and wealth building
« Reply #3 on: December 12, 2017, 09:01:42 PM »


Nowadays all I do is paint a washer and dryer and get paid $100-$200 to do it (15 minutes work).


What colors? 

SC93

  • Bristles
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Re: Entrepreneurship and wealth building
« Reply #4 on: December 12, 2017, 09:20:45 PM »
It don't matter to me, I'll paint it what ever color the customer wants it. But I usually paint them white.

SeattleCPA

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Re: Entrepreneurship and wealth building
« Reply #5 on: December 13, 2017, 06:59:48 AM »
That's not surprising, but it is interesting to see the stats. 

Owning a business means that you get paid what you're worth, and you can't get fired or laid off.  ;)

We've been talking about the statistics at a CPA forum on linked in... and people observe three other things, too...

1. Equity in a small business or real estate is illiquid so the business owner or investor has to stay the course...

2. If someone does this right--and that's a big if--they maybe get real bump in the returns or extra return due to an amplified version of the small cap stock premium or positive financial leverage.

3. Lots of risk and sometimes that risk is upside risk.
My blog Evergreen Small Business
My free downloadable ebook: Thirteen Word Retirement Plan

bwall

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Re: Entrepreneurship and wealth building
« Reply #6 on: December 13, 2017, 12:00:58 PM »
SeattleCPA: The link was interesting, but I'm not sure if I'm reading the information correctly. It appears as if those with a large amount of assets don't necessarily have a high net worth. Is that right?

Also: are there any official stats about the percentage of the population and net worth? Meaning, something like 'if you have a net worth of $X, then you are in the Y % of the population.'

SeattleCPA

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Re: Entrepreneurship and wealth building
« Reply #7 on: December 13, 2017, 07:16:01 PM »
SeattleCPA: The link was interesting, but I'm not sure if I'm reading the information correctly. It appears as if those with a large amount of assets don't necessarily have a high net worth. Is that right?

Also: are there any official stats about the percentage of the population and net worth? Meaning, something like 'if you have a net worth of $X, then you are in the Y % of the population.'

Here's my blog post on this... if someone is interested, I'll also figure out a way to post my massaged version of the IRS spreadsheet that supplies these numbers:

IRS wealth statistics paint fascinating picture of the top one percent
My blog Evergreen Small Business
My free downloadable ebook: Thirteen Word Retirement Plan

retirementnestegg

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Re: Entrepreneurship and wealth building
« Reply #8 on: December 21, 2017, 11:10:16 AM »
Thanks for sharing SeattleCPA!

SeattleCPA

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Re: Entrepreneurship and wealth building
« Reply #9 on: December 21, 2017, 09:37:48 PM »
My blog Evergreen Small Business
My free downloadable ebook: Thirteen Word Retirement Plan