Many people dream of becoming rich and watching their financial troubles disappear. This is just as true now as it was 100 years ago — even if the way people go about it has changed.
In the 21st century, there are new ways of becoming affluent that didn’t exist a hundred years ago. As for the methods that have carried over into the present day, modern technology and innovation have made some of them easier to use to build wealth than ever before.
So, what are the ways in which it’s easier to become rich now versus 100 years ago? Here are some of the big ones.
Long before the 21st century, people became rich through business ownership. But with the digital age, it’s easier to build wealth this way than before.
“Regarding building wealth, we’ve come a long way with modern technology, entrepreneurship and, most notably, the internet,” said Britta Ferguson, CFP, CDFA, CEPA, vice president and financial advisor at Wealth Enhancement Group. “The internet and the speed at which we can share information have dramatically impacted how we build wealth in today’s world. It has created many e-commerce and digital entrepreneurship opportunities due to the ease of online business creation.”
Along with this, the popularity of e-commerce and entrepreneurship via the gig economy also provide new opportunities for people to increase their income and monetize their skills, added Ferguson.
“Small businesses traditionally were brick and mortar and advertised by word of mouth or newspapers,” Ferguson said. “With e-commerce and digital marketing, creating a business that can reach a wider audience requires less overhead and time.”
Jeff Rose, CFP and founder of Good Financial Cents, also weighed in, saying: “Starting a global business is significantly streamlined, thanks to e-commerce platforms like Amazon and Shopify, which facilitate international sales with ease.”
The U.S. stock market has been around since the 1790s, and it has provided many investors with wealth-building opportunities. Today, however, it’s easier for even the average investor to increase their wealth via stock market investing.
“While stock markets have existed for quite some time, the ease of accessibility and the variety of investment options available today are far more extensive,” said Maya Sudhakaran, head of growth and acquisition at Plynk. “Digital apps are designed to simplify investing and help you grow your knowledge — making it a refreshingly easy way to invest. It’s empowering, welcoming and uncomplicated.”
Ferguson added, “Investing in the stock market historically was more complicated and lacked transparency. With online brokerage platforms and accessibility to information, you’re able to be more strategic with what and how you invest. Also, a broader investment universe today provides more options to diversify and create wealth.”
Like business ownership, real estate was a way for people to build wealth long before the 21st century. But as with many things, the landscape of real estate investing has changed.
“Also, although real estate has always been a path to wealth, modern tools like REITs (Real Estate Investment Trusts) and crowdfunding platforms allow individuals to invest in property with smaller amounts of capital,” said Taylor Kovar, CFP, CEO at The Money Couple and Kovar Wealth Management. “Despite franchising beginning in the 1900s, it has become more accessible and widespread today, with a broader range of industries and investment levels available.”
Modern technology — like valuation software and property management tools — have also made it easier to invest in real estate. The process of obtaining financing is also much less complicated than it once was.
“Historically, lending typically came from a bank through a traditional application process. This posed challenges for the start-up entrepreneur or real estate investor,” said Ferguson. “Nowadays, we have peer-to-peer lending, angel investing and real estate crowd-funding. These avenues have helped grow the private markets and made investing in real estate… much more accessible to individuals.”
Although the term itself is relatively new, alternative investments as a whole have been around for the past couple hundred years. However, there are new alternative investments that either didn’t exist or weren’t as readily available to those looking to become rich.
“Of course, there are very new asset classes such as cryptocurrency, but now many more investors — not just the very rich — can buy into a wide variety of alternative investments, such as private real estate, private equity, venture capital and private debt,” said Scott Bishop, CPA/PFS, CFP, partner and managing director at Presidio Wealth Partners. “Although they have much higher costs than traditional investments, they give you excellent diversification and, in many cases, more upside than traditional stocks and bonds.”
Index funds are another newer way to build wealth — one that’s easier to get started with than it was in the 20th century.
“The index fund is undoubtedly one of the most important financial innovations in the past 100 years. Vanguard created the first index fund for individual investors in 1976, but its growth has dramatically accelerated since the early 2000s,” said John Longo, PhD, CFA, Beacon Trust’s chief investment officer and Rutgers distinguished professor of professional practice in finance and economics. “An investment in an index fund requires minimal time and effort, charges an exceptionally low fee and outperforms roughly 90% of active managers over the long run.”
One particular type of index fund, the exchange-traded fund (ETF), came into existence in the 1990s. Since the early 2000s, however, it’s also experienced accelerated growth.
“Today, there are thousands of ETFs that investors may choose from, in contrast to the few dozen ETFs that existed in the 1990s,” said Longo. “Most ETFs are passive, but an increasingly large number are actively managed. Many investors choose ETFs to invest in specific themes, such as clean energy or artificial intelligence.”
Another way in which it’s easier to become rich today is through retirement accounts — and it’s all thanks to modern innovations and technology.
“Retirement accounts, such as 401(k)s and IRAs, have been around for decades,” said Sudhakaran. “However, the tax advantages and online management tools have made them more user-friendly. Self-managed accounts empower investors to prepare for long-term wealth-building and retirement planning.”
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