Ben Woodhead Deputy editor - digital

Ben Woodhead is deputy editor - digital at the Financial Review Group. He writes on business, technology, politics and the economy and can be found on BRW, The Australian Financial Review and Smart Investor.

View more articles from Ben Woodhead

How rich people make their money

Published 11 July 2012 08:05, Updated 12 July 2012 04:15

+font -font print
How rich people make their money

If you think the wealthy make their money slaving over a desk like ordinary folk you’ll never be rich.

Website Inc.com took time out last month to comb through the US Internal Revenue Service’s latest annual report into big earners – 400 Individual Tax Returns Reporting the Largest Adjusted Gross Incomes – to come up with a list of how these folk make their money.

The list covers 2009, which Inc.com points out is very timely by US government standards, and features only people with adjust gross income of more than $US77.4 million that year. Average earnings for the list were $US202.4 million.

As for the breakdown of how these people earned their keep:

  • Wages and salaries – 8.6 per cent
  • Interest – 6.6 per cent
  • Dividends – 13 per cent
  • Partnerships and corporations – 19.9 per cent
  • Capital gains – 45.8 per cent

The clear message from the list appears to be, if you want to get rich, invest. It’s an experience not all that different to the findings of BRW’sRich 200, where canny investments – either in their own businesses, property or sharemarkets – tend to power the wealth of Australia’s richest.

When it comes to investments, BRWresearch released with the Rich 200 in May shows:

  • By far the biggest investments of the Rich 200 are made privately, often in businesses they own.
  • 29 per cent of the Rich 200’s overall wealth is in listed shares.
  • 14 per cent is in cash and managed funds.
  • 9 per cent is in property.
  • 2 per cent is in other assets, such as automobiles and race horses.

READ NEXT:

Comments