I recently read an interesting article at Financial Samurai – For A Better Life, Be The One Percent In Something, ANYTHING. Sam urged his readers to find something where they can be a one percenter and specialize. I completely agree with his theory, but I don’t know how applicable this is for a regular guy like me. I have never been 1% at anything and I doubt I can find that special talent at this stage in life. It takes time and ambition to become that kind of expert and I’m lacking both. On the other hand, I feel I’m doing very well in life. My early retirement lifestyle is almost perfect and I love my life. Of course, it’d be even better if I were really great at something, but my argument is that you don’t have to be the best to win big in life. Read on…
Reaching the 1%
Reaching the top 1% is not easy. The first problem is that you’d need to measure it. How do you know you’re in the top 1% at all? This is easier when you’re young. Academically, we could look at GPA and class ranking. I’m not sure if class rank is even calculated anymore, though. We can make a best guess from the GPA. If your GPA is 4.0 or higher, then you’re probably in the 1%. As for fitness, we could look at sports. If you aim to be in the top 1%, then you’re probably the star of your team. The sample size is limited so I think if you’re #1 in class, that’s pretty darn good and you’re in the 1% club.
It gets a bit trickier when you’re out of school. My old company had annual performance reviews and workers were ranked by the managers. If you performed at the 1% level consistently, then you’d rise quickly through the ranks. I’m sure you’ll rise quickly through any workplace if your performance is the best out of all your coworkers.
As for finance, we could look at the bigger picture with the Federal Reserve data.
- Top 1% household income is about $400,000 per year.
- Top 1% household net worth is about $8 million.
Whoa, it’s tough to reach 1%. We’re nowhere near that financially. The top 1% is really leaving everyone behind.
I’m not 1%
Unfortunately, I’ve never been 1% in anything. I was never that great academically and I was near the bottom of the class when I was in first grade. I think I was #52 out of 55 kids or something like that. Not quite the bottom, but pretty darn close. This was at a private school in Chiang Mai, Thailand. Fortunately, I got some help and steadily improved. By the time I graduated high school in the US, I was an honor student. I wasn’t anywhere near 1%, though. The same story applied for college. I graduated with honors and I was very satisfied with that.
As for sports, I was terrible due to a mild genetic disorder. I’m sure I was in the bottom 10% for physical fitness when I was young. Sports were very difficult for me and I was always the right fielder whenever we had a baseball game in PE. My fitness has improved somewhat since then, though. Now I know what I can do and I focus on that.
I was never the best employee either. Engineering was fun when I first started working and I did pretty well in the first few years. There were many other people smarter than me, though. I was promoted early on, but plateaued in about 8 years. Once I started to lose interest in engineering, I didn’t make much headway at work. It became just a job and I aimed for the meaty middle part of the performance curve. In retrospect, this wasn’t a very smart strategy. I should have found a different job that fit me better.
Financially, we did pretty well. I had a six-figure income for many years and we saved a good amount. Our household income never made it to 1%, though. You’d need to be in the right profession, become an executive, or have a successful business to make that much income. Dentists, doctors, lawyers, and other highly paid professionals might have a chance to get there. Engineers won’t make $400,000 per year unless they’re really lucky with stocks. Net worth is tough too. It’s possible for anyone to accumulate $1 million, but $8 million seems out of reach for regular people.
*Mrs. RB40 was #3 at her high school. Close, but no cookie. Also, she is a much better employee than I am and consistently performs at a high level at her work. I’m pretty sure she is in the top 1% at her work. Yeap, I am a very lucky guy.
Winning without being the best
So I know that I’m not 1% in anything. I’m not talented enough and I’m not ambitious enough. I suppose I could try to become 1% in some obscure niche, but I’m just not motivated to do so. Life is good and I’m already winning. I wasn’t in the 1%, but I was above average in a few things.
- Academic – graduating with honor was pretty good. That’s probably in the top 10% of my class.
- Engineering – I did very well in the first few years and got great annual reviews.
- Blogging – Retire by 40 isn’t in the top 1%, but we are doing pretty well. I’m confident that we’re in the top 10%.
- Finance – Our household is in the top 10% net worth. The 10th percentile net worth starts at around a million dollars and we’re beyond that. Our income occasionally reached 10% in the past and may do so again in 2017. That’s pretty good.
Personally, I think anyone can do very well in life if they can be in the top 10%. By definition, that’s already better than 90%. Of course, it’d be even better if you can reach higher, but I’m already very happy. You probably don’t even have to be in the top 10% to be successful in life. You just need to stick to a few guiding principles. Here is how I win big in life without being the best.
- Keep going in the right direction. Life is a journey and the key to winning is to keep going in the right direction. You just need to keep improving every year like I did in school. You can increase your knowledge every year by learning new things. Your finance should improve consistently and life should get better as time goes by. If life isn’t improving, then you’re doing something wrong. You’ve got to turn it around somehow. Everyone should be better off than 4 years ago. Having long term goals can really help you focus here.
- Avoid huge screw ups. Of course, life isn’t always going to be a smooth flight. There’s bound to be some turbulence along the way. We just have to take the bumps in stride and get back on course. There are some obvious problems in life that we can avoid, though. For example, overindulgence in alcohol and drugs can completely screw up your life. Some mistakes are okay, but we need to avoid huge screw ups. More samples – 10 easy ways to sabotage your finance.
- Be lucky. This one is a bit hard to explain. I am a lucky guy and things often go my way. I started an early retirement blog in 2010 which was a very lucky time to do so. It’s much more difficult to stand out today with so many excellent blogs on the internet. I married a very smart woman and we have a great marriage. She went off to Peace Corps for a few years after college and most people didn’t think we’d get back together. I persevered and got her back, though. Our net worth kept increasing even after I quit working full time 5 years ago. Things just seem to work out well for me and I’ve been very lucky. Luck isn’t all chance, though. A lot of it is hard work too. How to be luckier? That’s a whole another topic by itself. I’ll have to work on that post so check back next week.
Alright, those are my guiding principles. You don’t have to be 1% to win big in life. An average guy like me can also do extremely well. Lastly, I’d say don’t measure your success with other people’s yardstick. You just have to find your own definition of success and go for it. I’m sure a lot of people don’t think I’m winning in life, but I don’t really care what they say. I’m financially comfortable and I enjoy a great life with my family. What could be better? I’m definitely winning big in life.
Are you a top 1% in something? If not, how do you find success in life? What are your guiding principles?
Follow up post – How to Be Lucky in Life
Image credit Marcus Cederberg
For 2018, Joe plans to diversify his passive income by investing in US heartland real estate through RealtyShares. He has 3 rental units in Portland and he believes the local market is getting overpriced.
Joe highly recommends Personal Capital for DIY investors. He logs on to Personal Capital almost daily to check his cash flow and net worth. They have many useful tools that will help every investor analyze their portfolio and plan for retirement.