How Billionaires Really Make Their Money

Did you know that owning or starting a business is a favoured strategy among the world’s richest? That’s because businesses, particularly in sectors like e-commerce, can yield returns ranging from 10% to 30% (or more) —far surpassing many other types of investments.

A Quick Look at Different Investment Returns:

  • Stocks: The stock market typically delivers average annual returns of about 7% to 10% after adjusting for inflation.
  • Bonds: Returns on bonds can vary from 1% to 6% per year, with corporate bonds generally offering better returns than government bonds.
  • Real Estate: Depending on the location and type of property, returns on real estate investments usually range from 8% to 12% per year.
  • Mutual Funds and ETFs: Both of these investment types see returns that reflect the performance of the underlying assets, which can vary widely.
  • CDs: Certificates of Deposit generally provide lower returns, around 1% to 3%, depending on how long you commit your money.
  • Businesses: Returns from businesses can vary greatly but often range from 10% to 30%, with some even exceeding 50% in profits/returns.

The Importance of Diversification: Diversifying your investments is crucial. It balances the risk because while some investments may decline, others could be rising, stabilising your overall portfolio performance.

Leveraging Debt: Billionaires often use debt strategically to amplify their investment capacity without using much of their own money. This allows them to expand their assets and potentially increase returns.

Long-Term Focus: Unlike average investors who might seek quick profits, millionaires & billionaires usually invest with a long-term perspective. They choose businesses and assets that provide returns over many years, helping them to navigate market volatility and benefit from the power of compounding.

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