As you may have noticed, it is hard to get rich. Only 6% of the US are millionaires by net worth, and the average age for this to occur is in your late 50s. As Charlie Munger would say, average person with average effort will achieve average results. Extraordinary person who puts in extraordinary effort will achieve extraordinary results. Despite what your parents and friends may tell you, most likely, on a Gaussian bell curve, you are probably not an extraordinary person. The effort put in to looking and projecting yourself as extraordinary, unfortunately, does not lead to that either. So, considering that you are probably the former type of person instead of the latter, how do you intend to get above average results? We’re all greedy and want the best for ourselves, some more so than others. For the average person to become rich or moderately well off, there are only a few ways to do so, and even then, most of those ways are not going to be feasible. Let’s take a look at those ways, and show you why the best path forward is angel investing, betting on small startups. If you have the appetite for risk, this could be an avenue to allocate some funds towards.

Start your own business

Entrepreneurship has become glamorized in this day and age. Everyone wants the high flashy life that is constantly being shown on media and social media outlets. However, these images do not paint the true statistics. Every year, tons of businesses fail. Over a 10-year period, 2/3 of businesses go under. Look to your left and then right with your buddies, for 2 of you are going under if you ran your own business. The average income of US entrepreneurs is effectively comparable to an average full-time salary, ~60k depending on where you live. Not to mention the extra time and stress associated with working over. What this suggests is for the vast majority, you are not likely to make it, and had you worked full-time, you would have outperformed on a pure dollars/actual hours worked. Only a small % of entrepreneurs actually outperform, and they usually had outlier individual traits as well as a better surrounding support to succeed. I’m not suggesting you never do side hustles in hope of turning them into something greater. I am only painting the entire picture to you.

Invest in Real Estate

Widely viewed as the safest investment option out there, investing in real estate is highly likely to return slow to steady gains over a long period of time. The only issue with real estate is that it takes a lot of money to be able to do so. Even taking advantage of leverage, coming up with a down payment is not easy. Consider that the average age of first home purchases in the US is 33, and in Canada it is 36. Then you end up with a 25 or 30 year mortgage, that effectively acts as liability, in addition to home insurance, home maintenance, utilities, renovations, and other costs. That home locks you in until your late 50s/early 60s, and represents a level of financial expenses that limits you and ties you to that one home. If you have a high paid job and are able to come up with a down payment for a 2nd home, it’s likely by then that your age is already pretty high. So the most likely result is you end up a millionaire around your late 50s. You end up living poor, and dying rich. The payback time is far too long. Patience is a virtue, but not infinite patience.

Day trading

So maybe you decide to go into something with no requirements, checks, or barriers, and decide to try day trading. Maybe that’s crypto, stocks, forex, commodities, or something else. Unfortunately, again the statistics do not back up day trading. On a long-term basis, just 3% of day traders are consistently profitable. With 97% not profitable, inconsistently profitable, or just straight up losing money. Putting in all that time and effort just to have only a 3% chance of making money, does not sound like a good proposition to me. If you’ve already tried, and aren’t a consistent winner, it may not be for you.

Investing in the stock market

Despite indexes returning roughly 8–9% per year, the average individual investor only makes 3% per year! So how does this happen? Overconfidence and greed. Individual retail investors, aka “dumb money”, often invest in the wrong companies and at the wrong time. Buying with no knowledge because they read a 5 minute article, or because there neighbor is getting rich buying something and the lemmings join, and no one knows anything about what they are buying. Even if you were a good investor, the lack of funds prohibits you from making large returns. The average savings for an American under 40 is just a few thousand dollars. Let’s say you had $10,000 invested, and were able to get 10% per year. Congratulations, you made $1,000. That doesn’t take into account taxes or inflation. With indexes, it’s going to lead you to living poor, penny pinching, and dying comfortable, similar to housing.

Climbing the corporate ladder

Less than 10% are in management, and even less are in senior executive positions. If it’s any consideration to you, you also sell your soul kissing up to people, playing office politics, engaging in other behavior that you would not do in your personal life. So uh, good luck to you I guess, assuming you aren’t laid off before you get there and face older age discrimination.

Working for a startup

This one is a little better since you get potential stock compensation as a added kicker to your salary, which could potentially be worth millions, in exchange for the extreme amount of overtime that you will be doing. While this could also yield the possibility of riches, you only have one essentially lottery ticket to work with. If the startup goes under (see above odds of business failure), it’s likely that the equity component doesn’t amount to much, if anything at all. But, if you could have the possibility of having multiple low cost lottery tickets, with much better odds than the lottery, would that be interesting?

Angel investing in startups

Now, you can have multiple low cost lottery tickets with legitimate odds of striking it rich. Every year, 600 new unicorn companies are formed, companies with 1 billion market capitalization or higher. You only need one to make it, and you could invest in as many as you want, limited to your funds and restrictions of course. That $1,000 put into a blue chip stock in 10 years at best be worth $10,000, at worst lagging inflation. However that $1,000 could be $100,000 or even $1,000,000 in 10 years in a startup that you believe in, where you like the founder, and can see the product or service offered being something you would actually use.

Considering if you have average smarts, work ethic, and have measly savings, most of the above listed options are not even a consideration for you. So why not get going on looking at startups, on a part time basis? At a small % of your wealth, it could be life changing!