Why do the rich get richer? You can get grumpy about this fact, or you can learn to understand it and join them.
Now if you follow the Profolio way you will be investing at least 10% of your income at any time. If you are not, you need to go back and complete our 4 part budget program to nail the basics.
Lets look at 8 reasons the rich get richer, and ways you too can join the ranks of the ‘financial high achiever.’
At the top of this list needs to be compounding, because when you understand this you will understand it all. Compounding is the term for investment income earning income. To put that simply, its money you haven’t had to do anything to earn (investment income), that is reinvested, and earns more money that you again, haven’t had to earn. Isn’t that a nice philosophy? The rich understand this, and know, if they give a little bit now they can have a whole lot later.
2. They own it
The rich realise it is not up to anyone else to make them rich, they own it. They don’t rely on the government, they work for their money, and they work hard. But more importantly, they work smart. They understand where their money is going and they ensure they know where how it is invested, and they own the decisions they make with investing; the good, the bad, and the ugly.
3. Multiple income streams
The rich know that having multiple income streams is a great way to not only earn more but protect and maximise what you do have, they’ll invest in shares, property, businesses, and most importantly themselves.
4. Self investment
Which leads us to self-investment. The rich understand how important personal development is and they spend real money on training up their number one asset; themselves. The rich attend personal development days religiously, are constantly studying to better themselves, and never settle for just good enough. They know that you never stop learning, and the day that you do, you have given up. There is no real excuse why someone can’t be studying and working a full time job at the same time. However, it doesn’t need to be study in the traditional sense, you can get an MBA degree out of a pile of good business books, or if you are like my brother, from YouTube tutorials. Study can be done in many ways.
5. They take risks
The rich understand you need to take risks to see returns, but for the rich they are calculated risks. They understand what they are doing, and they understand the potential outcomes. Reward is not given because its easy, but gee it’s worth it.
6. Surround themselves with positive influences
As Jim Rohn says, “You are the average of the five people you spend the most time with.” One of my favourite quotes, well the rich just get this. Choose the people you surround yourself with wisely, understand their views, their aspirations, and their weaknesses and really think about if that’s what you want to become.