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KNOWLEDGE
ALLOCA
TIO
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B U I L D I N G W E A L T H · 53
BUILD OR BUY EQUITY IN A BUSINESS
If you don’t own a piece of a business, you don’t have a path 
towards financial freedom.
Why is owning equity in a business important to becoming 
rich?
It’s ownership versus wage work. If you are paid for rent-
ing out your time, even lawyers and doctors, you can make 
some money, but you’re not going to make the money that 
gives you financial freedom. You’re not going to have passive 
income where a business is earning for you while you are on 
vacation. [10]
This is probably one of the most important points. People seem 
to think you can create wealth—make money through work. 
It’s probably not going to work. There are many reasons for 
that.
Without ownership, your inputs are very closely tied to your 
outputs. In almost any salaried job, even one paying a lot per 
hour like a lawyer or a doctor, you’re still putting in the hours, 
and every hour you get paid.
Without ownership, when you’re sleeping, you’re not earn-
ing. When you’re retired, you’re not earning. When you’re on 
vacation, you’re not earning. And you can’t earn nonlinearly.
If you look at even doctors who get rich (like really rich), it’s 
because they open a business. They open a private practice. 
The private practice builds a brand, and the brand attracts 

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54 · T H E A L M A N A C K O F N A V A L R A V I K A N T
people. Or they build some kind of a medical device, a proce-
dure, or a process with an intellectual property.
Essentially, you’re working for somebody else, and that person 
is taking on the risk and has the accountability, the intellectual 
property, and the brand. They’re not going to pay you enough. 
They’re going to pay you the bare minimum they have to, to 
get you to do their job. That can be a high bare minimum, but 
it’s still not going to be true wealth where you’re retired but 
still earning. [78]
Owning equity in a company basically means you own the 
upside. When you own debt, you own guaranteed revenue 
streams and you own the downside. You want to own equity. 
If you don’t own equity in a business, your odds of making 
money are very slim.
You have to work up to the point where you can own equity in 
a business. You could own equity as a small shareholder where 
you bought stock. You could also own it as an owner where 
you started the company. Ownership is really important. [10]
Everybody who really makes money at some point owns a piece 
of a product, a business, or some IP. That can be through stock 
options if you work at a tech company. That’s a fine way to start.
But usually, the real wealth is created by starting your own 
companies or even by investing. In an investment firm, they’re 
buying equity. These are the routes to wealth. It doesn’t come 
through the hours. [78]

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B U I L D I N G W E A L T H · 55