148. (4. Building Finance Intuition) Levers of Wealth Creation

Rama Nimmagadda
6 min readJan 26, 2024
Photo taken by Prateek Kumar Rohatgi in 2022 near Bighwan Lake, India

“Give me a lever long enough and a fulcrum on which to place it, and I shall move the world.” — Archimedes

For simplicity’s sake, by wealth I loosely mean growing capital above inflation rate to a point where it can make meaningful difference to one’s financial condition. I am deliberately keeping it a little open-ended with the hope that a more specific meaning will be obvious in and from the context it is used in.

“Wealth is the ability to fully experience life.” — Henry David Thoreau

Although dated and reflecting demographics of one specific country only, I think the book “A Millionaire Next Door” by Thomas Stanley can be very instructive to anyone wanting to create wealth. I read this book over two decades ago. As I remember it, the book was full of stories of everyday people who created handsome wealth for themselves. These are people who one would not easily guess as wealthy. To a casual eye, their lives look ordinary, certainly not “rich”. But many of them, despite their diverse backgrounds, seem to share certain common traits — like “living within means”, “not concerned with the Jones’s”, “focusing on long term value”, “being frugal” etc.

In my own journey, I have personally and vicariously experienced the power of some of these traits. In this blog, I intend to share what I believe to be the main levers in creating wealth. I have first come across the word “lever” in science subject at school. In school, we learnt that levers are powerful because of their ability to multiply power or force. One can move a heavy enough object using a lever which otherwise would have been beyond one’s ability. The essential function of a lever is to amplify one’s effort and its effect. Here, I use “lever” in the same sense with respect to wealth creation.

Here are what I believe to be the three most powerful levers for wealth creation:

  • Earnings: increase and preferably diversify
  • Asset Allocation: reduce and preferably eliminate fragility
  • Time horizon: all good things take time

Keeping with my usual length for a blog (about six minutes reading time or under), I will cover the first of these levers in this blog: Earnings.

“It is not the economy that determines your income, it is your own personal development.” ― Mac Duke

For most people, certainly the salaried class, professionals and the free lancers, earnings are the biggest lever to create wealth. This may seem like a straightforward thing to fathom. However, in practice, it is not given as much attention as it deserves. Ultimately what matters is the volume of earnings that matters, not the rate of earnings. Of course, the higher the rate of earnings, the better but it is rarely sustainable. Sustainability of growth in income is crucial. Various factors affect earnings sustainability like work stress, workload, family matters, personal life, golden carriages, salary level compared to value created etc. Most people typically work for thirty years or more and it is only natural that over such a long period, they will face many headwinds to keep their jobs or professions in a healthy state. There will inevitably be (versions of) job losses, being passed over for promotions, losing clients, economic meltdowns and slowdowns etc. Such setbacks could have serious implications for the amount of earnings. Given these inherent certainties, blindly jumping onto the bandwagons of the latest hype is generally not a good strategy. For example jumping from the field of block chain to robotic process automation to big data to machine learning to Gen AI etc may not work for most. However, what may work is developing a solutions mindset, focusing on creating real value to the clients, keeping up with the latest and the greatest in your field but making sweeping changes only when sweeping results can be reasonably expected.

“Investing is for wealth preservation, not wealth creation, so first you have to make wealth.” — James Altucher

One reason I explicitly call out the value of focusing on earnings is that I have seen many spend their energy instead on finding great investment products to invest in. In most cases, all other things being constant, you either have time to adequately focus on your profession or on the minutiae of investments. So, by spending disproportionate time on due diligence of investment products, you may start to compromise on your professional development. Even so, discovering and staying with fantastic investment opportunities is a round-the-clock affair. Unless one is able to dedicate full time or near full time focus on investments, one is better off taking professional help for investments. To be clear, DIY (Do it Yourself) investing could be a very practical choice for many, provided they are clear on what aspects of investing they consciously control and what aspects they outsource (I will address this point when I talk about the next lever — “asset allocation”).

“Opportunity is missed by most people because it is dressed in overalls and looks like work.” — Thomas Edison

Drawing parallel with running marathons (aside: training for and running a full marathon makes for an excellent metaphor for life), the following three categories (more categories exist but not relevant for this blog) can be illustrative:

· Ones wanting to run a number of marathons a year and also always wanting to better the previous best timing by a serious margin. This is very, very hard to sustain and typically, such runners get injured often, eventually burn out and quit running altogether. This is similar to those people who constantly take on high critical (and high stress) projects without rest and recovery and/or change jobs often.

· Ones who marvel at others running marathons but do not want to run themselves. This is like people who do not venture beyond their comfort zone. They end up far lower than their potential.

· Ones wanting to run one or two well-spaced marathons a year and trying to better their performance every time — performance reflecting not just timing but also the quality of the run, recovery from the run, meaningful balance with rest of life while maintaining quality of training etc. An important point to note is that overall performance may improve even while timing did not. This category is akin to folks who manage to dynamically achieve balance in their lives while realizing their full potential.


“Your income can grow only to the extent that you do.” — T. Harv Eker

Sustainability of good earnings is the key. Sustainability comes from constantly focusing on improving core capability and competence while ensuring that other important priorities of life do not suffer unduly. I think many will be best served on their path to create wealth by focusing on building a great career/profession than on determining the next greatest investment idea. Sustaining and growing income is necessary but almost always not sufficient to create wealth. Meaningfully investing the earnings (after expenses) is the next critical lever which I will cover in my next blog on Financial Intuition.


Thanks for taking time to read this. In this newsletter, I share my learnings that could help you improve your decisions and make meaningful progress on your goals. I try to share stuff that I have personally experienced or experimented with. If you find this newsletter worthwhile and if you do not mind it, please do consider sharing it with others.

A bit on my background

I help people make better decisions.

I coach people on “Making Better Decisions”, “Financial Intuition” and “Building Great Careers”. I’m open to run sessions on these topics in institutions — this will help me create larger impact.

I’m also an Investment Advisor (RIA) registered with the Securities and the Exchange Board of India (SEBI). As an RIA, I analyze and prepare financial plans to help people achieve their financial goals.

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