How do I build wealth?
Another possibility is that a lot of it is bought using borrowed money. Especially if much of your own money is in the stock market, it may be beneficial to take out a loan to buy something compared to selling other assets to raise the same amount of cash. Even going by the likely relatively conservative £200K/year before taxes, you are looking at a very nice house going for perhaps around 3-5 years' worth of pre-tax income. Let's say you have good contacts at the bank and can secure a loan for £500K at 3.5% interest (not at all unreasonable if you make half that before taxes in a single year and purchase something that can be used as collateral for the money borrowed; with a bit of negotiating, I wouldn't be surprised if one could push the interest rate even lower, and stock in a publicly traded company can also trivially be used as collateral). That's less than £1500/month in interest, before any applicable tax effects -- less than 10% of the before-tax income. And like @Victor wrote, I think it's reasonable to say that especially if the company is publicly traded, the CEO makes more than £200K/year. Given an income of £200K/year and assuming 30% taxes on that amount (the marginal tax would likely be higher, and this includes e.g. interest expense deductions), the money left over after taxes and interest payments on a £500K 3.5% debt is still about £10K/month. Even with a pretty rapid amortization schedule and even if the actual tax rate is higher, that leaves quite a bit of money to be socked away in savings and other investments. Share options. If you get options on £200,000-worth of a company and then its share price increases five-fold then you make £800,000, which is often taxed more favourably than salary. "As others have stated, CEO's often make more than 200K, and when they do, they're compensated with stock options and other lucrative bonuses and deals that allow them to build wealth above and beyond the face value of their salary. However, remember that having wealth makes it easier to build further wealth. As Victor pointed out, having wealth allows you to increase your wealth in different kinds of investments. Also, it gives you access to more human capital, e.g. wealth management services at firms like Northern Trust, a greater ability to diversify into investments like hedge funds, more abilities to invest abroad through foreign trusts, etc. Also, you have to realize that wealthier people often pay a lower percentage in taxes than people who earn a salary. In the US, long-term capital gains are taxed at a much lower rate than income, so wealthy individuals who earn much of their money from long-term investments won't pay nearly as high a rate. In my case, my current salary places me at the top of the 25% tax bracket (in the US), but if I earned all of my income through long-term capital gains instead of salary, I would only pay around 15-20% in taxes. Plus, I could afford numerous tax accounting firms to help me find ways to pay fewer taxes. It's not altruism that causes CEOs like Steve Jobs and Mark Zuckerberg to take a $1 salary.  This isn't directly related to CEOs, and I'm not leveling accusations of corruption against high net worth individuals, but I remember spending a few months in a small town in a country known for its corruption. The mayor had recently purchased a home worth the equivalent of several million dollars, on his annual civil servant salary of approximately $20K. One of the students asked him how he managed to afford such a sizable property, and he replied ""I live very frugally."" This is probably a relatively rare case (I'm sure it depends on the country), but nevertheless, it illustrates another way that some people build wealth." Many CEOs I have heard of earn a lot more than 200k. In fact a lot earn more than 1M and then get bonuses as well. Many wealthy people increase there wealth by investing in property, the stock market, businesses and other assets that will produce them good capital growth. Oh yeh, and luck usually has very little to do with their success. "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." CEOs are compensated with stocks and options on top of their salary. Most is in the form of stocks and options. You may see them with a fancy car, but they don't necessarily possess the car, house, etc. They merely control it, which is nearly as good. You may lease it, or time share it. It might be owned by the company and provided as a perk.  To earn a million, there are 4 ways: a job, self-employed, own a business, and invest. The fastest way is to own a business. The slowest way is a job or self-employed. Investing is medium. To learn more, read Rich Dad's Cashflow Quadrants.
Wall Street salaries are rather exorbitant but its influence is far from insignificant.  Do you know where pensions come from? The money that veterans and retirees rely on to survive. Hedge funds.  How do the firms and companies that employ all those workers listed in greater numbers? Institutional money management AKA hedge funds as a small subset.   A company in distress and is in threat of laying off thousands of employees. What can help it? A private equity firm that will actively work to save and restore the company, for it's own profit, but the employees will still have jobs.   NO large company with tens of thousands of employees can exist right now without the capital raising and transaction advisory services of an investment bank. Stock trading as a means to grow personal wealth would not exist.   While true these institutions make a disproportionate amount money, you must consider why. Nearly all front office jobs on Wall Street have 6am-8pm hours. Investment banking analysts have up to 100 hours a week, that's sweatshop salary per hour. Hedge fund managers wake up at night sweating to check Asia markets to see if they'll still have a job. These are not the suburban 9-5 jobs where you can actually have weekends. The high salary comes from an extremely rare skillset that's taught only from experience not in schools, high stress and commitment, and the highest quality of labor (mostly ivy leaguers on Wall Street, they've worked their asses off for these jobs).   Salary has to do with supply and demand. I have the upmost respect for janitorial workers because they do what we don't want to do, but their pay isn't great because anyone can be a janitor. If most people in the country could build a portfolio with a sharpe ratio higher than 2 that billions of pension dollars would rely on, then we won't have such high hedge fund salaries, for example "This is proof that the people running the world are all insane. They are interested only in their personal gain and they are throwing the entire planet full of people under the proverbial bus in the effort to increase their bank accounts during their short lives.  The practice of banks ""inventing"" money by lending more than they actually have in their vaults should be stopped, or at the very least reigned in. During the housing collapse it was revealed that CHASE was lending money at a 50:1 ratio. That's madness. CHASE should have gone bankrupt as a result, but they received massive bailouts. A company which operates like that is literally poison in the bloodstream.  Everyone knows that financial health is the result of making rational decisions. So it leads one to wonder how it is that all of the richest people get that way by being as irrational as possible. It's no surprise that most of them lose their fortunes in disastrous catastrophes which serve as entertainment for the masses.  When it comes to building wealth I think the story of the Tortoise and the Hare offers the most wisdom of any anecdotes." There isn't any place you can put $300 and turn it into significant passive income. What you need to do instead is manage the active (work) income that you have so that your money goes farther, freeing income up for reducing debt and investing.  Investing $300 one time won't add up to much, but investing $100 a month will turn into wealth over time. Making a monthly budget is the key to managing your income.  In the process, you'll find out where your income is going, and you can be intentional about how much you want to spend on different things in your life.  You can allocate some of your income to paying down debt and investing, which is what you need to do to get ahead. For some general guidelines on what to do with your money first, read this question: Oversimplify it for me: the correct order of investing.  For more specifics on creating a budget, eliminating debt, and building wealth, I recommend the book The Total Money Makeover by Dave Ramsey. I don't think that's the case.   I mean, of course some of the new money supply is making it into the stock market, but I think it's because of the factors I listed. The money supply isn't growing faster now than it has in the past.   Here is M2 since 1980 on a log scale (because a percent change is more relevant than a change in raw dollars, just like stock market returns).  https://fred.stlouisfed.org/graph/?g=fxeb  (I am using M2 because it's a more complete measure of liquidity)  Here is the percent change over time in M2, just to show that the QE isn't really doing anything out of the ordinary.  https://fred.stlouisfed.org/graph/?g=fxek  Here you can see the inflation rate:   https://fred.stlouisfed.org/graph/?g=fxes  What quantitative easing has done is drive bond prices lower, which I already mentioned. It can also be argued that QE has expanded wealth inequality, but I already mentioned that as well. https://www.forbes.com/sites/jonhartley/2015/06/25/how-federal-reserve-quantitative-easing-expanded-wealth-inequality/#1f7528a321eb You need wealth in order to have a sovereign wealth fund. The countries that do it are usually petro states such as Norway and Saudi Arabia. Since petrol is in dollars, they sell oil and get dollars.   They need a way to then spend this money, hence the wealth fund. I'd be interested to hear your justification for this belief rather than dumb image macros...  The only way I've ever been able to accrue wealth is by participating in an economy with rules enforced by the government. I can go to work because of roads, I can get hired at a job because of my education, and the money I earn doesn't get taken from me by thieves and crooks due to law enforcement.  With taxes, I'm well off. Without taxes, I have nothing. Seems like the opposite of theft to me. "practice using excel more  read more books on investing, practice making investing thesis, practice remaining ""nice"" while getting good and bad critique, expand your knowledge (it is impossible to be the best at everything in investing due to the multiple forms of investing that have contradicting principles), and think economics.  Finance will be useless if you have a very limited understanding of ""scarcity""" The simplest way is to invest in a few ETFs, depending on your tolerance for risk; assuming you're very short-term risk tolerant you can invest almost all in a stock ETF like VOO or VTI.  Stock market ETFs return close to 10% (unadjusted) over long periods of time, which will out-earn almost any other option and are very easy for a non-finance person to invest in (You don't trade actively - you leave the money there for years).  If you want to hedge some of your risk, you can also invest in Bond funds, which tend to move up in stock market downturns - but if you're looking for the long term, you don't need to put much there. Otherwise, try to make sure you take advantage of tax breaks when you can - IRAs, 401Ks, etc.; most of those will have ETFs (whether Vanguard or similar) available to invest in.  Look for funds that have low expense ratios and are fairly diversified (ie, don't just invest in one small sector of the economy); as long as the economy continues to grow, the ETFs will grow.