Why the Rich Get Richer — and How You Can Too

Jim Woods

Jim Woods has over 20 years of experience in the markets from working as a stockbroker, financial journalist, and money manager.

A few years ago, building wealth in America was all about getting a good education, a good job and diligently saving money through your 401(k) and investing in real estate. That formula worked through the 1990s and through most of the 2000s.

Then in 2008, the housing market crashed, the banking and financial system nearly imploded and the value of stock portfolios, including most retirement accounts, got slapped upside the head by a vicious bear. If you’re like most investors, you probably were counting on a consistent rise in your stock holdings to get you to the next level of wealth — and maybe into the echelons of the so-called rich.

A big part of that plan also was likely the increased value of your home and/or other real estate holdings. Well, we all know what happened to real estate prices when the bubble burst, and that put many investors in a seemingly inescapable hole.

We also know that many investors threw their hands up in frustration and sold their equity holdings at the very bottom of the market in late-2008 and early 2009. To make matters worse, many have still stayed out of stocks since 2009, thereby missing out on the longest and most-powerful bull run in market history.

Yet the meltdown in both the real estate and equity markets in 2007-2008, along with the pessimism about the future of the economy and the markets, were reflected in a 2012 poll commissioned by the Washington publication The Hill that revealed nearly half, or 47%, of likely voters surveyed now believe it is impossible for them to become wealthy in the course of their lifetime.

Exclusive  Why Isn’t Tesla in the S&P 500?! Better to Invest in My Favorite Active Mutual Fund

Even more disturbing to an advocate of smart investing like me is the survey’s finding that fewer than two-in-five likely voters that year, or 37%, thought they can ever become rich.

These findings certainly highlight the lack of confidence many Americans feel about their economic future. However, the way I see it, you don’t have to buy into the pessimism.

Getting rich and achieving success is possible, but to get rich and stay rich, you need to emulate the investing behavior of the rich.

And what do the rich do to get and stay rich? The answer is actually quite simple — they invest in stocks.

According to a June 2012 article at CNBC.com, “Why the Rich Recovered and the Rest Didn’t,” the reason why the wealthy have managed to recover from the ravages of the worst economic downturn since the Great Depression is because they have a greater proportion of their wealth in stocks, and less of their overall net worth in their homes.

The article points out that according to the then-latest data from the Federal Reserve, the wealth of the middle class declined by more than a third between 2007 and 2010, but the wealth of the top 10% actually grew by 2%.

Yes, this is a case of the rich getting richer, but how did they get that way?

According to Fed data from 2009, the top 1% of income earners had just 10% of their overall wealth attributed to real estate. This group had much more of its wealth, or 38%, in financial investments, including 9% of their wealth in stocks.

Exclusive  Burning Down the House, Volume II

By comparison, the Fed data showed that both middle class and upper-middle class, i.e., those in the 50% to 90% range, counted more than half of their wealth in their homes. This group only had one third of their wealth in financial investments, and perhaps most revealing, they only had 1.6% of their wealth in stocks.

The conclusion you may draw here is that the reason why the rich have more money to invest in stocks is simply because they have more money. Yet looking at things through this simplified lens obscures the deeper image to be gleaned from the data.

The real insight here is that if you want to be rich, and if you want to stay rich, you simply must invest in stocks.

Now, there are many ways to invest in stocks, and there are myriad services and people out there to help you do just that. Yet even before you start investing with the help of any person or advisory service, the first step is realizing that to get rich, stay rich, or get even richer, you need to invest in stocks.

No other asset class can give you the kind of upside appreciation, liquidity and flexibility that stocks offer — and no other asset class can help you get where you want to be.

So, let me repeat: if you want to be rich, do as the rich do — and get invested in stocks.

If you want to know how my subscribers get invested in stocks according to a proven plan that’s been delivering for investors for more than four decades, I invite you to check out Successful Investing, right now.

Like This Article?
Now Get Jim's FREE Special Report:
The Top 11 Dividend ETFs to
Buy Right Now

Get up to 5X the yields of traditional income plays.

Get Access to the Report, 100% FREE

previous article

Paul Dykewicz explains factors influencing Verizon's stock price.


Dr. Mark Skousen

Named one of the "Top 20 Living Economists," Dr. Skousen is a professional economist, investment expert, university professor, and author of more than 25 books.

Product Details


Bryan Perry

A former Wall Street financial advisor with three decades' experience, Bryan Perry focuses his efforts on high-yield income investing and quick-hitting options plays.

Product Details


Jim Woods

Jim Woods has over 20 years of experience in the markets from working as a stockbroker,
financial journalist, and money manager. As well as a book author and regular contributor to
numerous investment websites, Jim is the editor of:

Product Details


Bob Carlson

Bob Carlson provides independent, objective research covering all the financial issues of retirement and retirement planning. In addition, Bob serves as Chairman of the Board of Trustees of the Fairfax County (VA) Employees’ Retirement System, which has over $2.8 billion in assets.

Product Details


Hilary Kramer

Hilary Kramer is an investment analyst and portfolio manager with 30 years of experience on Wall Street. Since 2010, Hilary's financial publications have provided stock analysis and investment advice to her subscribers:

Product Details


Jon Johnson

Jon Johnson's philosophy in investing and trading is to take what the market gives you regardless if that is to the upside or downside. For the past 21 years, Jon has helped thousands of clients gain success in the financial markets through his newsletters and education services:

Product Details



Used by financial advisors and individual investors all over the world, DividendInvestor.com is the premier provider and one-stop shop for dividend information and research.

Product Details

Popular tools include our proprietary Dividend Calendar, Dividend Calculator, Dividend Score Card, and many more.