How wealth is created: Rainer Zitelmann’s vision

What does it take to be rich? This is the key question Rainer Zitelmann seeks to answer in his book Financial Freedom: How to Create Wealth and Maintain It. One thing becomes clear from the start: most people who have amassed great wealth have done so through entrepreneurship and investments. But how did these people start, and what character traits did they have?

Does money bring happiness?

At the beginning of the book, Rainer Zitelmann cites examples of lottery winners who quickly acquired a large sum of money, only to lose it just as quickly. These cases might lead us to think that money is not a cause of happiness but rather of misfortune, as these individuals wouldn’t have had to face misery, debt, or insolvency if they had never amassed a fortune.

In this regard, the author examines various studies, which suggest that wealth does indeed influence happiness. These studies have found that “people with higher income levels are more satisfied with their lives. Interestingly, even at annual income levels above $120,000, this positive correlation still applies.”

Again, the key message here isn’t how to get the money but how to keep it: “It’s important to emphasize that the amount of money a person has at a given time is far less important than what that person does with their money.” At the same time, Zitelmann is skeptical of those who downplay money’s importance. “There are many people who pretend not to care about money… because they don’t have any.”

How the wealthy got rich

Zitelmann then examines the number of millionaires in different countries. While noting the difficulty of measuring this precisely and the variability of numbers across sources, he provides an approximate ranking. Unsurprisingly, the top country on the list is the United States, with 6.6 million millionaires, followed by Japan (3.5 million), Germany (1.5 million), and China (1.5 million). But how did they become rich?

The book’s first major conclusion is that there are no shortcuts to building wealth. “Most wealthy people build their wealth through entrepreneurship,” Zitelmann claims. It may seem obvious, but it’s worth remembering that “people who work independently, self-employed, with their own companies or business projects, have a much higher chance of earning significant income than those working as employees.”

And just as there are no shortcuts, there is no fixed path. The examples speak for themselves. Elon Musk became rich as an entrepreneur with Tesla—though he’d already had success with PayPal. Bernard Arnault built his fortune in luxury brands with LVMH. Jeff Bezos achieved his with Amazon. The only investor in the top ten is Warren Buffett, whose career also seems difficult to replicate.

For those who feel inspired, Zitelmann offers an encouraging insight: a university education does not seem to be a determining factor for success. Examples of Michael Dell (Dell), Richard Branson (Virgin), Steve Jobs (Apple), and Reinhold Würth (Würth Group) show that it is possible to build a fortune without completing a college degree.

How to be a good entrepreneur

It’s tempting to imagine the trajectory of someone who conceives a promising idea, dives into its development, and, after various phases and stages, ends up creating great wealth. Here, Zitelmann offers one of his most valuable pieces of advice, based on his own experience: before taking the plunge and leaving everything behind, test your idea as a side job. In other words, combine your budding business with your current job.

“The quality of the idea is the key factor for success.” Additionally, the author presents some characteristics of a good entrepreneur as outlined by Professor Günter Faltin, a professor of Entrepreneurship at the Free University of Berlin:

• Develop a competitive advantage that’s immediately evident to potential customers.
• Stay at least one step ahead of potential imitators.
• Safeguard the business idea against economic or technological obsolescence.
• Minimize financial costs.
• Make marketing an integral part of the design process.

What the wealthy are like

Another interesting conclusion in Financial Freedom is that if you want to be rich, you need to be a good salesperson. It’s no secret that in any company, those working in sales are often the highest earners. High salaries, Zitelmann says, compensate for the many rejections they face, but their higher pay also “reflects the relative lack of ‘security’ inherent in this activity (…) No one cares about ‘yesterday’s’ sales numbers; only today’s performance counts.”

Good salespeople generally have a set of traits worth “developing to a high degree.”

• Pleasant personality
• Exceptional networking skills
• High tolerance for frustration
• High levels of empathy
• Strong self-confidence
• Technical expertise

Additionally, Zitelmann references a 2018 study conducted by six German economists and psychologists, which interviewed 130 wealthy individuals. They identified five common traits:

• Openness to new experiences;
• Conscientiousness, in the sense of being meticulous;
• Extraversion;
• Neuroticism, meaning nervousness and a constant worry about what might go wrong; and
• Agreeableness.

The importance of setting goals

As expected, the path to wealth is far from simple. Besides the insights discussed so far, Zitelmann offers a key recommendation for beginning this journey: set clear goals and write them down. The first step is to define a general goal for the next ten years—for example, earning €100,000—and then break it down “into smaller milestones to achieve year by year.”

The challenge comes next. The author advises “programming your subconscious” to reach these goals. “It’s important to convince your own subconscious that your financial goals are both desirable and achievable (…) You don’t need to know exactly how to reach them; you only need to know where you want to go. This will give you an inner compass that guides you in the right direction.”

Zitelmann then addresses the expected skepticism toward these suggestions. He argues that most people don’t set ambitious goals or use mental techniques to achieve them. He references a study by American author Thomas Corley on rich and poor individuals: “62% of wealthy people said they focused on achieving their goals every day, compared to just 6% of poor people who said they did the same.” Two out of three wealthy people also said they had written down their goals.

Without changing our mindset, it’s nearly impossible to change our trajectory, let alone achieve a future of wealth. So, Zitelmann argues, why not give it a try?