The Billionaire Lie Nobody Notices. They Got Rich Doing the Opposite.
āJust buy index funds." They say...
Hereās something that bothered me for a long time.
Many billionaires, millionaires, financial celebrities and people with a net worth that ends in 7 or more zeros, they all often say the same thing when someone points a camera at them.
āJust buy index funds.ā
Warren Buffett, one of the wealthiest people in the world says it, Former NBA owner Mark Cuban says it, and many guests on most financial podcasts eventually gets there.
I used to take that at face value until I started paying attention to what they actually did, not what they said.
The Billionaire Lie
āBuy index fundsā is the most repeated piece of investment advice in the world.
Hereās what none of them lead with.
Jeremy Schneider is the guy behind Personal Finance Club, the account with 400,000+ followers preaching index funds, yet he didnāt get rich from index funds.
He built a company called RentLinx in his twenties, paid himself a modest $36,000 salary while he grew it, and sold it for $5 million at 34.
The index fund investing was happening quietly in the background the entire time. The real wealth event was owning and selling a business he built.
Matt Kaplan, founder of ACE Entertainment which is the production company behind Netflix hits like To All the Boys Iāve Loved Before, didnāt build his wealth investing in index funds. He built it producing films and owning equity in the company that made them.
Even the founder in Moneywiseās anonymous interview series who sold his business for $80 million put it plainly
Iād always had a little bit of money in index funds, but I never would put a big chunk in there, because the risk part is my business.
They built wealth through ownership, a company, equity, real assets they controlled and understood. Once the money existed, they moved a portion into index funds to protect it while still receiving dividend/interest payouts. This strategy is considered preservation.
The Two-Phase Playbook Nobody Talks About
Thereās a framework investors actually use, even if they donāt describe it this way publicly. Researchers call it the core-satellite strategy.
The ācoreā is passive: low-cost index funds that track the market and will more than likely hold value steadily over time. The āsatellitesā are high-conviction positions in individual stocks, real estate, or sector-specific plays designed to outperform the market.
The data backs this up plainly. Concentrated, conviction-based investments create fortunes. Index funds preserve them. So when you are working your way up as a small business owner itās smart to split your savings with these two styles of investments.
What the S&P 500 Actually Does
Index funds are genuinely good. Iām not here to trash them. The S&P 500 has delivered an average annual return of roughly 10% since inception. Over the last 10 years, that number climbs to about 15.6%. Thatās real, compounding wealth.
But hereās what the averages hide.
Year S&P Index Return
The āaverageā of around 15% almost never actually happens in a given year. Youāre either up big or dealing with a real drawdown.
When you buy an index fund today, youāre not buying the diversified product your parents invested in. Youāre buying a product heavily weighted toward mega-cap tech.
If youāre going to have concentration risk anyway, the question becomes whose concentrated bets do you want to ride?
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