What The Wealthy Don’t Want You To Know About Money

When someone says they want to “strike it rich,” they often mean with a once-in-a-lifetime event. Think, a lucky investment, winning the lottery, or selling an idea on Shark Tank that catapults them into the pantheon of millionairehood.

While it’s not impossible to get wealthy off a one-shot, the truth is that most “new money” millionaires didn’t get lucky. Instead, they built their wealth with smart financial planning, expert advice, financial literacy and goal setting.

And if that’s news to you, you’re far from alone. While the rich aren’t sitting on some big, unknown money secret, they don’t often go out of their way to educate the masses.

But we do.

Without further ado, here are the 14 secrets that the wealthy don’t want you to know about money – and how you can make them work for you.

Getting Started

1. Setting goals is the secret to getting started.

“Wealth” is a subjective term. If you’re living on $25,000 a year, then $1 million and an LA mansion may seem incredibly wealthy. But if you’re living in LA on $1 million a year, then wealthy probably looks more like $100 million and a garage full of expensive cars.

This discrepancy in perception and values are part of why it’s important to determine what “wealth” means to you – and then set goals to get there. For instance, you may decide you want to change careers, start a family or become a millionaire by 35. Then, it’s about devising an action plan with annual achievements to make your to-dos been-dones.

2. Always align your spending with your goals.

As you’re building wealth (and after), keep your spending in line with your goals. Know what you care about, be it attaining a lifestyle, achieving feats or passing on wealth. Then, take care to avoid wasting resources on things and activities that have no value to you – and invest heartily in education, hobbies, passions and goals that do.

Whether that’s forgoing restaurants while you take night classes or skipping the new car to buy a rental property, spending money on the things that advance your goals pays off in the long run.

3. A solid savings strategy bolsters success.

A savings strategy buffers your finances and increases your liquidity. While the goal is to save 15-20% of your income every month, beginning with just 1% is better than nothing!

One great way to ensure consistent savings is to automate depositing a portion of each paycheck into your savings accounts. Adding extra funds when you get a bonus, raise, or even Christmas presents can help you build wealth even faster.

You’ll also want to have a smaller, separate emergency account to cover unexpected expenses. Aim to build anywhere from 6-12 months’ worth of expenses in your emergency fund – and when you use it, replace it!

4. Keeping up with the Joneses is a one-way ticket to Poorville.

You might think that a lavish lifestyle is a true reflection of wealth – and for many, it is. But plenty of “wealthy” people drown in debt to keep up appearances. Meanwhile, those with true wealth often live frugally, invest often, and spend under their means.

The reason is simple: the desire to appear wealthy sabotages your goals and puts your money to work in dead-ends. Shrugging off the desire to keep up with the Joneses and focusing on your own wealth-building, not trying to show off, is the best way to ensure you can afford all the fancy toys you want later.

5. Hire a winning team.

One of the biggest “secrets” about wealthy people is that they rarely know what they’re doing. What they do know is that they can pay someone else to handle their affairs and dispense advice.

For instance, a fee-only financial adviser can point you to new money-making strategies, which your financial lawyer can vet for legal consequences before your tax professional minimizes your burden to Uncle Sam.

While the upfront cost seems prohibitive, investing in a support system now increases your chances of success later.

Making Money Work for You – Not Someone Else

6. Using other people’s time (and money) helps you get ahead.

Two of the best ways to become wealthy are to become your own boss and use other people’s money instead of your own. As an employee, you work to enrich your boss; and using your own capital limits your success to how much you can personally front.

But starting or buying a business, often with capital raised from banks or investors, accomplishes both goals at once. And if owning a business isn’t your forte, you can still use borrowed funds to invest in real estate, the stock market, or someone else’s big idea.

7. Fees eat success for breakfast.

Every time you pay a fee to manage your money or service a debt, you’re funding someone else’s path to wealth. Whether you pay banking fees, high-interest debt, foreign transaction fees, overdraft fees, ATM fees, commissions on investments, mutual fund expense ratios…

The point is, there are a lot of fees out there, and the more you pay, the less you have. Thus, when possible, opt for no-fee accounts, low-cost index funds, and 0% APR credit cards.

8. Watch your credit card usage (or avoid them entirely).

Taking out a credit card encourages living beyond your means and paying interest to do so. As such, many financial experts advise cutting up your cards, avoiding them in the first place, or only using them to further your goals. (For instance, if you use them to cover bills and pay off the balance immediately to build your credit).

If you do use credit cards, look for rewards cards that pay out in cashback or air miles, carry fraud protection, and have extra perks like built-in travel insurance. And never, ever take out a high-interest store credit card.

9. Charity is good for the soul – and your wallet.

Donating money or supplies to charitable causes doesn’t just further noble goals; it’s also good for your finances. If you itemize your tax returns, you can deduct charitable contributions to qualified organizations. And the more you can deduct, the less you’ll have to pay come tax time.

Investing: The True Secret to Wealth

10. Your money should work for you.

One of capitalism’s unfortunate realities is that working hard doesn’t always equate success. If your only income is trading time for money, your earnings potential is capped at the number of hours you work in a week.

But the wealthy understand capitalism’s dirty secret: the true path to success lies in passive income. Whether that’s investing in stocks, buying real estate, or funding someone else’s business plan, anything that pays an “unearned” profit accelerates your earnings potential beyond the hours in a day.

11. Every minute you waste is one less minute you’re wealthy.

In investing, your most valuable asset is time. The earlier you start putting your money to work in the markets, the longer your capital can accrue compound interest. Even just $25 per week is better than nothing!

On a similar note, it’s important to distinguish between time and timing in the stock market. While one major investment can catapult you to riches, you’re far more likely to lose money than make it big betting wildly.

The wealthy understand that riding out an “unsexy” buy-and-hold strategy – making regular contributions into a diversified portfolio – is one of the most reliable ways to get rich.

12. Allocation is key.

When you invest in the stock market, how you allocate funds carries significant consequences. Typically, it’s a good idea to keep dividend-paying bonds, stocks, and mutual funds in your tax-advantaged retirement accounts, while individual securities reside in your brokerage account.

This strategy has three advantages. To start, it utilizes government-sponsored tax strategies and spreads your wealth to minimize impacts in retirement. At the same time, diversifying your holdings across accounts and assets helps ensure you’re not too heavily invested in one area.

13. Diversification gets you everywhere.

Investing in stocks, bonds, and mutual funds is a great way to kickstart your wealth, but it’s not the end of the road. As your wealth grows, expanding into illiquid or physical assets, such as real estate, gold, and even artwork, can help you secure your wealth.

Though these investments cost more upfront and are more difficult to offload, there’s a reason that being a real estate tycoon is equated with riches. And because these assets aren’t as susceptible to market swings, they can pay off even when other investments falter.

14. As your wealth and confidence grow, turn to private markets.

One of the greatest secrets of the ultra-wealthy is that the stock market gets your feet wet – but private markets hold the real wealth.

Business ownership, angel investing, and other private equity moves come with greater risk than stock market investments. But their potentially higher returns and diversification do wonders for your portfolio, especially if you’re hell-bent on generating true wealth.

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Q.ai, a Forbes Company, is powering a personal wealth movement, using artificial intelligence and advanced quantitative techniques to revolutionize

Source: What The Wealthy Don’t Want You To Know About Money


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