How They Do It
How do rich people get rich? More importantly, how do they stay that way? Not every millionaire and billionaire began that way. In most cases it takes a lot of hard work, the discipline of saving every dollar possible and surrounding themselves with like-minded people. We’ve all heard the phrase “It takes money to make money.” Look at the founder of Facebook, Mark Zuckerberg, who began with a good idea and a minimal investment. Now Facebook is not only worth hundreds of billions of dollars, it’s also a global phenomenon.
Making a good salary is a good beginning, but even those on the highest rungs of the corporate ladder don’t depend entirely on their salary to build wealth. Income from passive, rather than active, income sources is the best way to do this. Passive income from investments include dividend-paying securities, rental properties, profits from a business you may be a silent partner in. (This means you’ve invested in a business but have no “hands on” activity with it.)
Timing isn’t always everything, more often than not, patience pays off better. Rich people understand time and compound returns are the most important factor in growing wealth. Investing long-term is a buy and hold strategy which will help you endure any major market fluctuations. One key tactic of the wealthy that keeps them that way is to use other people’s money to make money. Getting money from banks and investors, as well as having people do the work for you, is a time-tested method for building wealth.
Having a great accountant(s) and tax attorney(s) are another secret of the wealthy. You’ve all heard of terms like tax shelter, tax haven or wealthy people using offshore accounts to avoid paying taxes. As it turns out the most active tax shelters are right here in the United States! US regulations for setting up shell companies are more lenient than any country in the world.
Staying focused and on top of your investments at all times is another way the wealthy grow their fortunes. It’s a job plain and simple. While long term investments are more secure and require a little less monitoring, playing the stock market takes not only education and insight, it also requires patience and timing. Knowing what to buy, when to buy it and when to sell it, is a talent like anything else. The best thing you can do is educate yourself. There is so much information available now to help guide you with investment decisions. Research what you’re thinking of investing in before you invest. Almost everything you need to know about a seemingly worthwhile investment is only a mouse click away.
Now, when you’ve begun to see the fruits of your labors in the form of profits, don’t be in a hurry to spend them. One way the rich stay rich is by implementing a bit of frugality when it comes to spending. Even the successfully wealthy budget their money. So, what is the point of having it if you don’t spend it? A good course would be to set aside a certain amount of “fun money” to spend so you don’t feel like it’s all for naught. Just make sure whatever it is that it’s not beyond your means. The rich stay rich by keeping their debt to a minimum. Good luck!