Many people want to know what the key to success and wealth is. Is it money, drive, motivation, luck, networking, smarts, talent, or just plain hard work? The truth is it’s a combination of it all. The more of anyone of these aspects that an individual possesses, the more of a chance he or she will achieve financial success. Sometimes talent is something that causes someone who otherwise knows nothing about financial stewardship to run into a great deal of money. This is seen very often in successful sport figures, celebrities, and pop icons of the day. Even these people who might make millions of dollars for potentially a short period of time in many cases go about losing it because of poor decisions and a lack of vision.

What is the real difference between celebrities that make $10-50 million dollars and the ones that go on to make hundreds of millions of dollars? There is a threshold that many of them never break because they don’t take what they’ve earned and invest it the right way. According to Celebrity Net Worth, Kelly Clarkson has a net work of $24 million dollars. This is a huge chunk of change, but only a fraction of Jay-Z’s total $500 million estimated. Jay-Z started his career as a rapper but when on to use his name to build a business empire for himself that grew because he saw that there was much more that he could exploit that took just a bit more drive and ambition.

Below is a very interesting read by Marc Lichtenfeld, Chief Income Strategist of The Oxford Club. It discusses 3 Steps to Wealth and points out the mistakes and pitfalls that people make to fall through the cracks and never get on top. 
Three Steps to Wealth

Here are three things you can do to follow in the footsteps of several wealthy celebrities… and you won’t need a platinum record to do it.
Start a side business. Many celebrities now have lucrative side businesses. For example, the rap artist Jay-Z is worth an estimated $500 million and has his hands in several side businesses that generate substantial income. He started a record label and clothing line and is now representing athletes as an agent.

Actress Jessica Simpson is worth a cool $100 million. She used to be known for wearing Daisy Duke shorts. Today, she’s just as well-known for her line of shoes that are sold in Macy’s, Zappos, Dillard’s and many other stores. Her company also designs and sells apparel, handbags and jeans.

You can do the same. If you love designing clothes, start selling a few items online or out of your garage. If you’re interested in real estate, get your license and sell houses. You don’t have to be the biggest producer in the office. If you sell a couple of houses a year, you’ll make an extra few thousand dollars that can then be invested and turned into even more money.
Trust the right person.

When you hear about celebrities who went broke, it’s usually not because they spent too much (although that is part of the problem). The real issue is that they lost a ton of money in speculative investments. Typically, they trusted someone they shouldn’t have.
Years ago, when boxing champion Sugar Ray Leonard was in his prime, his attorney told the media that Ray couldn’t even spend the interest his investments were making for him because it was so much. Unlike many professional athletes, Ray trusted the right person. Today, despite overcoming a drug problem, Ray is worth an estimated $120 million.

So who should you trust to manage your money? As Alexander Green is fond of saying, “No one cares more about your money than you.”

If you’re reading this column, it’s because you have an interest in investing. Even if you’re a new investor and believe you don’t yet have the skills, you can manage your own money. Read. Learn as much as you can about investing. It’s not rocket science, especially if you…
Invest conservatively. Many bankrupt celebrities, particularly the athletes, invested in very speculative schemes that didn’t work out. Why someone making $10 million a year would take unnecessary risks is beyond me. But they do.

To make money – even a lot of money – you don’t have to take on significant risk, as long as you’re patient.
For example, someone who invests in Perpetual Dividend Raisers (companies that raise the dividend every year) can expect to average 12% annual returns over the long term. If you earn 12% per year, your money triples in 10 years and goes up nearly 10 times in 20 years.

The kinds of stocks I’m talking about do not come with excessive risk. In fact, quite the opposite. The Kimberly-Clarks (NYSE: KMB) and Genuine Parts (NYSE: GPC) of the world tend to be much less volatile than the overall market. They go down less when the market sinks, and because of their rising dividend every year, they outperform the market over the long term.

For example, Kimberly-Clark, the boring diapers and toilet paper maker, outperformed the S&P 500 by 43 percentage points over the past 10 years. Genuine Parts beat the market by 102 percentage points. Reinvesting all dividends, Kimberly-Clark outpaced the S&P by 64 percentage points and Genuine Parts beat it by 139.

Be Smart, Patient

A friend of mine knew the money manager of a ballplayer who would have been a sure thing for the Hall of Fame if his career hadn’t been tainted by steroids. But the guy made a ton of money during his playing days. His money manager had him in conservative income-generating investments. Today, he collects seven figures a year in income just from his investments.

You may not have the nest egg that he did (unless you happened to hit 400+ home runs). But you can still generate significant income from your investments, while lowering your risk.

The key to this is understanding the power of compound interest and what the combination of time and this philosophy have when put together!

To your investing!