How do people earn money?

At the most fundamental level, you can earn money through labor or through ownership of capital. Most people do some of both at different points in their lives, although there is a key distinction between who becomes wealthy, on average, and who does not. Typically, those that become wealthy understand how to use capital to their advantage, as capital has the potential to work for its owner all the time. Labor, on the other hand, is limited - you can only work 24 hours a day at most, and likely no more than 16 hours per day in any sustainable fashion.

To illustrate the above with an example, let's say that I have been working for 10 years earning an income of $100,000. If I have saved 50% of my income and earned no return on it, I will have saved $500,000 by this point. If I can then employ this capital at a 10% rate of return, I can generate an extra $50,000 in income regardless of whether or not I work and receive any labor income. If I further reinvest my capital income, my capital will eventually grow to the point at which my capital income exceeds my labor income. This is the basic dynamic that leads to wealth.

Note also that capital encompasses not just financial and physical capital, but also intellectual capital, political capital, social capital, etc. You can earn returns on all of these, but the example above is easiest to understand with the example of financial capital.


How to keep my energy levels while sleeping little

I wrote a similar answer here: Why do I still need around 7-8 hours of sleep even when I'm 21-years-old?In a nutshell, you are essentially asking "How can I keep my car running while only filling up the

If you are doing 5 exercises in a workout routine does it matter how long you rest between exercises?

Why you should not rest for too longRest between sets and exercises has as large an impact on your fitness as the number of sets and reps do. If your breaks are too short, you rob yourself of their benefits, or worse, increase