“Many folks think they aren’t good at earning money, when what they don’t know is how to use it.” (Frank A. Clark)
Getting rich isn’t as hard as it sounds. Years of consistent, calculated investing are almost guaranteed to fill up your coffers. For many, the trickier challenge is maintaining their wealth. Luckily, it’s not rocket science – all it takes is self-discipline and the ability to see the big picture.
Here are the eight mistakes our most successful clients just don’t seem to make. Read on to find out how to incorporate the same kind of thinking into your investment strategy.
The wealthy don’t buy depreciating assets (like cars) on credit and they never go into overdraft for the wrong reasons. Instead, they pay their credit cards off every month and enjoy the benefits of loyalty miles and free travel insurance. Which is not to say they’re completely credit averse: wealthy people are only too happy to borrow if it’s the only way of making an investment that’s likely to appreciate in value.
Genuinely wealthy people don’t spend more than they earn, and they don’t tend to be fussed with outward appearances. For example, Warren Buffet has lived in the same modest home for 60 years, Jeff Bezos drives a Honda Accord, and Elon Musk lives in a $45,000, three-bedroom house.
Successful wealth accumulators aren’t gamblers. They don’t kid themselves that they can “time” the market by buying just before prices surge and selling before they drop. They accept that not even professional financial analysts can predict what’s going to happen with the markets and opt instead to sit it out through the ups and downs.
Truly wealthy people don’t deny their emotional biases, they work around them. They’re not afraid of investing outside of their comfort zones and they’re not naïve enough to expect similar situations to always pan out the same way.
The wealthy really get the importance of diversification. They spread their risk by investing in a wide range of industries, asset classes and geographic locations. What’s more, successful entrepreneurs have multiple revenue streams, and they don’t plough all their profits back into their own businesses.
The rich understand that risk and reward are joined at the hip. They always have plenty of equity in their portfolios, to ensure that their investments grow well beyond inflation.
The bottom line
Regardless of whether you’re just embarking on your wealth journey, or you’ve already enjoyed considerable financial success it always pays to have a trusted financial advisor on your team. Let us help you to avoid these eight mistakes.
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