17.3 How to Accumulate Personal Wealth

LEARNING OBJECTIVES

By the end of this section, you will be able to:

• Explain the random walk theory

• Calculate simple and compound interest

• Evaluate how capital markets transform financial capital

Getting rich may seem straightforward enough. Figure out what companies are going to grow and earn high
profits in the future, or figure out what companies are going to become popular for everyone else to buy. Those

companies are the ones that will pay high dividends or whose stock price will climb in the future. Then, buy

stock in those companies. Presto! Multiply your money!

Why is this path to riches not as easy as it sounds? This module first discusses the problems with picking

stocks, and then discusses a more reliable but undeniably duller method of accumulating personal wealth.

Why It Is Hard to Get Rich Quick: The Random Walk Theory
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