Is there a correlation between self-employment and wealth?
In a well-managed company, employees bring more dollars to their employers than the employers pay the employees (salary and benefits).  Employees trade potential reward for security (a regular paycheck).  Employers take on the risk of needing to meet payroll and profit from the company's income, minus expenses. The potential rewards are much higher as an employer (self or otherwise), so the ones that do make it do quite well.  But this is also consistent with your other statement that the reverse is not true; the risk of self-employment is high, and many self-employed people don't become millionaires. If you could find a breakdown, I suspect that it would show not just that they are self employed but own their own company. There are many people that are self employed, many of them make a good living at it, but are not millionaires.  My neighbour the plumber is a perfect example of this sort of self-employed and comfortable but not rich person. The key to wealth growth is to own (a significant part of) a company.  It one way to leverage a smaller amount of money to something much larger.  Plough your profits back in to the company to grow it, pay yourself reasonably for some time as the company grows.  After it is some size, you can afford to pay yourself more of the profits, if not sell it as a going concern to someone else. One last thought - I am assuming that your book is claiming that they made their money through self-employment, instead of choosing to become self employed  after striking rich somewhere.  If I were to win the lottery, I might then become a self-employed something, but in that case it was not my self-employment that got me there. The key to becoming wealthy as a self-employed person is the drive to be successful. A driven person, who starts their own company (or companies, should they fail), will find success. Assuming that you define success as the accumulation of wealth, then yes, self-employment is correlated with wealth. But as matt mentions in the comments, there is no casual (in the statistical sense) relationship between self-employment and wealth. While I can't say for sure, I would argue that drive is more important that the employment situation. Many studies show that the wealthiest households are self employed and small business owners. But there is significant risk associated, and so the wealth cannot really be enjoyed.
"The fundamental flaw here is conflating net worth with utility, at least failing to recognize that there's a nonlinear relationship between the two.  In the extreme example imagine taking a bet that will either make you twice as rich or completely broke. Your expected return is zero, but it would be pretty dumb to take it since being flat broke could ruin your life while being twice as rich may only improve it marginally. In more realistic cases most of your income is tied up in fixed costs, which magnifies relatively small perturbations to your net worth. Losing something essential (like your house or car), even if it's only 20% of your net worth, renders you effectively broke until you scrape together enough cash to get another one. That situation robs you of much more utility than you'd gain from a 20% increase in net worth. In either case, avoiding the risk is completely rational as long as you believe in nonlinear utility as a function of net worth, it's not just an issue of humans being ""risk averse""." "It doesn't generally matter, and I'm not sure if it is in fact in use by the IRS other than for general statistics (like ""this year 20% of MFJ returns were with one spouse being a 'homemaker'""). They may be able to try and match the occupation and the general levels and types of income, but for self-employed there's a more precise and reliable field on Schedule C and for employees they don't really need to do this since everything is reported on W2 anyway. So I don't think they even bother or give a lot of value to such a metric. So yes, I'm joining the non-authoritative ""doesn't matter"" crowd." "that's one way to look at it.  The point is that the ""wealth gap"" is a LOT less interesting to me than the ""income gap"".  https://www.glassdoor.com/research/ceo-pay-ratio/  I've got all kinds of respect for people who save their pennies, make wise investments, and derive benefit from those actions.  I've got MUCH less respect for a guy/gal who HONESTLY thinks they deserve to make ~$78k / hr." "?  You quoted an oft cited oft disproven false factoid. It's extremely biased. Like you seem to be.   Most of those ""self made"", notice those quotes, people came from money. Their business is ""self made"", with family money. Like the article implies." "Well, as they state ""the decreases in median net worth appear to have been driven most strongly by a broad collapse in house prices"".  When you're caught holding an overvalued asset, was your previous worth really a true estimate? A better headline might be ""median family wealth corrected to true value after previous accounting errors found.""" "You got some answers that essentially inform you that CEOs that have £200k written on their paysheet may in fact get much more. I'll take the opposite point of view and talk about people who (according to whatever definition) have a £200k/year income.  How can they afford it Guess no 1: not all of them can (in the sense that it is quite possible to end up with negative net worth at £200k/year income - particularly if you immediately want to show off with brand new luxury cars, luxury holidays and a large house in a very representative region).  Guess no 2: not all of the £200k/year CEOs are equally visible. There is a trade-off between going for wealth, large house, and luxury car. I deliberately ordered the three points according to increased display of ""wealth"". However, display of wealth usually comes at a cost (in a very monetary sense). And there are ways to get much display without having much wealth (see below: lease the car, also the mortgage on the house usually isn't displayed on the outside).   You also need to take into account how long they are already building up wealth. I guess the typical CEO with £200k/year you're asking about did not just finish school and enter his work life in this position. It would be very interesting to see how income, accumulating wealth (and possibly ""displayed wealth"") correlate. My guess is that the correlation between income and accumulated wealth isn't that high, and the correlation between displayed and actual wealth is probably even lower. they possess luxury cars, large house and huge savings Are you sure these are the same managers? E.g. the ones with the huge savings  are and the ones with the luxury cars? I'm asking particularly about the luxury cars, because such cars loose value very quickly and/or are often not owned by the driver but rather by the bank or leasing company. Which on the other hand offers the more savings-oriented CEO who is not that much interested in having a brand new luxury car the possibility to go for a one-year-old and save the rest. Knowing that, your CEO should be able to buy a one-year-old Mercedes SL 350 / year. Or a new one every 1 1/2 years (without building up savings or buying a house). However, building up wealth will be much faster with the CEO going for the one-year-old as the brand-new car option amounts to loosing ca. £20 - 30k within a year. An even-more-savings-oriented CEO who keeps his existing Mercedes 300 TD for another few years, thinking that this conservative choice of car will be trust-inspiring to the customers. Or goes for the SLK thinking that most people anyways don't know that the K between SL and SLK halves the price...  However, if you just want to be seen with the car: after an initial payment of say £8-10k, you can get a decent SLK 350 (not the base model, either) at a monthly rate of ca. 600£/month or less than £7k/year. Note however, that this money does not count towards any kind of wealth, it's just renting a nice car.  In other words: If driving the SLK 350 is your absolute goal, you could in theory have that with a net salary of £25k/year (according to your tax calculation, that should be somewhere around £35k / year gross), if you have the savings for the initial payment (being able to make the initial payment may also help convincin the leasing company that you're serious about it and able to pay your rates).   There are also huge differences in value between large houses, compare e.g. these 2: And, last but not least, there is a decided one-way component in the timing of priorities here: it is much easier to go and get a luxury car when you have savings than first going for the luxury car and then trying to make up with the savings...    I forgot to answer the question in the caption of your question: How do I build wealth By going on to live as if your income were only £50k (as far as that is compatible with your job) - I gather the median gross income in the UK is about £30k, so aiming at £50k leaves you a very comfortable budget for luxury spending.  If you want to build up wealth faster, adjust that. In general, if you can manage to withhold much of any income increase from spending, that will help (trivial but powerful truth). From the leasing calculation you can conclude that you basically have no chance to show off your wealth by luxury cars. That is, you'd need to go for luxury cars that are completely incompatible with with building if you want to show your built up wealth by the car: there are too many people who even destroy their existing wealth in order to display luxury.  At least if anyone is around who has either a correct idea what luxury cars cost (or don't cost) or will look that up in the internet. Also, people who know such things may also have the idea that the probability that such a car was downright paid (wealth) is small compared to the probability of meeting a  leased or (mortgaged) car. Which means, the plan to show off doesn't work out that well with the people you'd want to impress. As for the other people: just a bit of display you can get far cheaper: If you really want to drive the SLK, rent it for an occasion (weekend) rather than for years. I met a sales manager who told me which rental cars they get when important customers from far east are visiting. The rest of the year they drive normal business cars. You may want to choose a rental company that doesn't write their name on the license plate. Apply the same ideas to the decision of buying a house. Think about what you want for yourself, and then look where you can get how much of that for how much money. Oh, and by the way: if I understand correctly, the average UK CEO wage is  £120k, not £200k." The Chinese corporate sector doesn't really have a crazy amount of debt compared to developed countries. And households even less. What people are concerned about is how quickly it is rising, not the actual amount. And also the structure of the debt. (And how much of it isn't captured and reported.)  But to answer your question, the two factors you mention are positively correlated, not negatively as you postulate. The more assets you have, the higher the odds you are able to repay and the more debt lenders are willing to give you. But debt tends to be measured relative to income not wealth and this is another reason Chinese household wealth may be overstated. I mean, that self made stat has been disproven enough times to count it as laughable when people like you still tout it all about. That self made aspect doesn't mean what youd like to imply it means when you dive into the data.   Bill Gates is a perfect example of this.   So is Bezos More likely I miswrote.  Yes, we're talking about capital gains.  But who, outside of the moneyed elite, have enough capital gains to incur substantial taxes?  Many don't and never will despite how hard they work or how productive they are.  Also, doesn't taxing income more than capital gains discourage production?  I always hear how high capital gains tax discourages investment and growth. "See comment on how ""self made"" bill gates is, and he's probably legitimately one of the more self made people to make that list. ""Self"" made people come from very wealthy families. If I give you a loan of a million bucks to make a company and financially support you for two years while you wait for the business to make money you're still ""self made"". Just view how they calculate it. It's horse shit" Yes.   It is luck that person will have no debilitating accidents or illness to give them crippling medical debt.   It is luck that provides us with our family. It is skill that lets us choose trustworthy and resourceful people in our lives, but it is luck that they remain so.   It is luck that those investments provide a healthy return, that the companies hire prudent management and do look to cheat their investors.   Personal responsibility is all about choices, right? Those choices are only as good as the information and resources available. Access to resources and information is quite clearly not equal, and therefore  the choices we make are built on foundations of chance.   Too many people in America have a nasty habit asking people to tie their own shoes with one hand tied behind their back (or cut off), and blaming them when they trip. "In theory, the idea is that diversified assets will perform differently in different circumstances, spreading your risk around. Whether that still functions in practice is a decent question, as the ""truth"" of most probability based arguments for diversification rely on the different assets being at least somewhat uncorrelated. This article suggests that might not be true. Specifically: The correlations we note among industry sectors are profoundly and dysfunctionally high. and  Gold and silver traders have gotten too used to the negative correlation trade with stocks. This is, in fact, an unusual relationship for precious metals tostocks. The correlation should actually be zero." While I agree that luck has something to do with it, most of the successful business owners also put in crazy long hours and submitted themselves to huge financial risk in order to get their businesses started.  I do not say this to mean there is no luck; there is always an element of luck. But you cannot get lucky if you aren't at the right place at the right time, and sometimes arriving at that place and trying to get lucky takes much more than people realize.  Edit: some people are interpreting this to say that only successful business owners work hard. This is not what I am saying. Well, yes.  Lewis (and anybody) is presuming that you accept take advantage of good fortune.  In his own example, though, he wasn't in any way prepared to go into finance.  Having gotten there, and established himself even, he pitched it in favor of writing a book.  Neither of those examples supports everyone calling luck the result of work plus brains. Is this really a net effect of concentration of wealth? When so few people hold all the money, you need more money to keep the system running. Imagine we need 10 trillion to keep the economy running. If 1000 people hold 50%, you effectively need 5 trillion just to keep the economy running.  It is somewhat ironic that the last time we had full employment was basically the real estate bubble where tons of money was dumped into the system by liar loans with no credit check.  Not saying we want to go back there, but perhaps we need that level of money in the system to get full employment. If we want to get there safely, we need to buy back our debt, invest more in our infrastructure and provide more services. This is the only way we are going to get full employment