Why do the rich get richer and the poor get poorer? What is the wealth accumulation secret of the rich? Here are 19 untold reasons the rich keeps getting richer.
Sometimes it just might seem that the world is partial especially when you see people who are extremely poor and can’t eke out a living for themselves. Yet, their situation keeps plummeting from bad to worse despite their magnitude of labour.
On the other hand you wouldn’t fail to notice some rich folks that are comfortable in all ramification of life, yet with little or no effort on their paths, their wealth keeps increasing. This sure looks like an irony, doesn’t it?
Have you ever paused to wonder why lottery winners become suddenly broke? The reason might not be farfetched; they aren’t prepared for that kind of wealth and as such they don’t have what it takes to keep such wealth, let alone multiplying it.
Forget all the secrets of the rich you read on popular blogs and magazines, as the writers of most of those articles don’t know jack about what they are saying; as they are simply doing their job as journalists / freelance writers and getting paid for it. Forget about the talk of self discipline, delayed gratification and having the right mindset; as these are common traits needed for financial success in life.
However, in the article, i will be revealing some insider secret that makes the rich rich and keeps them rich. After having a heart-to-heart discussion with my rich mentors, rich family friends and their associates; i was able to understand how the rich play their money game. I am talking of tactics that most people don’t even know about.
Sometimes it just might seem that the world is partial especially when you see people who are extremely poor and can’t eke out a living for themselves. Yet, their situation keeps plummeting from bad to worse despite their magnitude of labour.
On the other hand you wouldn’t fail to notice some rich folks that are comfortable in all ramification of life, yet with little or no effort on their paths, their wealth keeps increasing. This sure looks like an irony, doesn’t it?
Have you ever paused to wonder why lottery winners become suddenly broke? The reason might not be farfetched; they aren’t prepared for that kind of wealth and as such they don’t have what it takes to keep such wealth, let alone multiplying it.
The truth is that, there are certain principles that you must obey for you to be able to first break out of poverty and then consolidate in building your wealth. If you study rich people around you, you might realize that they are deliberate about making and multiplying their wealth. The principles or reasons to be highlighted in this article apply to all of them irrespective of the part of the Continent they live in.
Secrets of the Rich – 10+ Reasons Why the Rich Keeps Getting Richer
1. Positive Mental Attitude
“What we think, we become.” – Anonymous
For you to make wealth and keep increasing the wealth, you must have a positive mental attitude. You must believe in yourself. There is hardly any rich person that you see around you that doesn’t believe in themselves. Every rich person around you is equipped with positive mental attitude because that is the foundation upon which success and wealth is built.
“To be successful, you must act big, think big and talk big.” – Aristotle Onassis
“Getting rich begins with the right mindset, the right words and the right plan.” – Rich Dad
2. Saving Culture
Most rich folks you see around imbibe effective saving culture! They have a portion of the amount they realize from any business deals that goes straight into their savings account. Some rich people even go all the way to save over 40% of all their incomes and place a standing order that stops even them from drawing from the account when the amount they are saving hasn’t gotten to their set target.
3. Risk Takers
“Uncertainty is the friend of the buyer of long term values.” – Warren Buffett
“Without the element of uncertainty, the bringing off of even, the greatest business triumph would be dull, routine and eminently unsatisfying.” – J. Paul Getty
The rich would continue to get richer because they are good at taking risks and it is in risky ventures that one makes great profits. Little wonder accredited investors keep leveraging on opportunities that an average investor wouldn’t dare stake their money in.
“In today’s rapidly changing world, the people who are not taking risk are the risk takers.” – Rich Dad
“You must take risks, both with your own money or with borrowed money. Risk taking is essential to business growth.” – J. Paul Getty
“Seek advice on risk from the wealthy who still take risks, not friends who dare nothing more than a football bet.” – J. Paul Getty
4. Spend Less Than They Earn
“The philosophy of the rich and the poor is this: the rich invest their money and spend what is left. The poor spend their money and invest what is left.” – Rich Dad
Most often you might think that most rich people are stingy because they aren’t spending the way you might expect them to. The truth is that people who become poor are the people who spend more than they earn in the bid of trying to impress people. On the other hand, the rich folks spend less than they earn so that they can save up to have enough cash to invest when the opportunity arrives.
5. They Leverage on Investment Opportunities
“Once you have made it, you will understand that any business is limited in the challenges it offers. You will want and need other games to play, so you will look for other ventures to hold your interest.” – J. Paul Getty
The fact that rich people have enough money in their accounts makes them attract investment opportunities all around them. As a matter of facts, if a poor man has fantastic business idea, but doesn’t have money to invest in it, he or she would most likely approach a rich man to invest into the business.
When the rich gets the information on such an investment, the first step he takes is to investigate the idea to see if it is going to be a profitable one. When all steps indicate that it might be profitable, then they invest.
“We look for opportunities where we can offer something better, fresher and more valuable and we seize them. We often move areas where the customer received a poor deal and where the competition is complacent. And with our growing e-commerce activities, we also look to deliver old products in new ways. We are proactive and quick to act, often leaving bigger and more cumbersome organizations in our wake” – Richard Branson
6. They Invest in Opportunities Not Available for the Poor
“Investing in mutual funds is investing at the end of the food chain.” – Rich Dad
One of the secrets of the rich that the poor and middle class do not understand is that the rich invest in products that are out of bound for the poor. In fact, the poor often never get to hear of such investments and even if they do, they are prevented by the law to invest in such. Examples of such investment opportunities not available to the poor are:
- Private Placements
- Private Equity Investments
- Angel Investments / Venture Capital
- Corporate Buyouts / Takeovers
- Large Real Estate Syndication
- Hedge Funds
- Government Asset Privatization
7. They Buy Investments in Wholesale, Not Retail
If you are buying shares on the stock exchange or an IPO or you are investing in mutual funds with hopes to become stinking rich, then you are probably dreaming. Why do I say this? The reason I say this is because if you are buying stocks on the floor of an exchange, or you are buying mutual funds; then you are probably buying at a retail price and you can never match the rich, who buy the same stocks you buy but at a wholesale price.
Now how do the rich do this? They achieve this by buying during pre-IPOs, Private placements, Over-the-Counter trades, etc.
8. The Rich Know How to Access Low Risk Funds-: Using Nigeria as an instance, while middle class business men access bank loans locally, at an exorbitant rate; the rich access loans that come with very low interest rate and flexible repayment plan from foreign banks like Bank PNB.
“If you owe the bank $100, that’s your problem. If you owe the bank $100 million, that’s the bank’s problem.” – J. Paul Getty
“Be careful when you take on debt. If you take on debt personally, make sure it is small. If you take on large debt, make sure someone else is paying for it.” – Rich Dad
9. The Rich Invest with Other People’s Money
Okay, so you are aggressively investing; so as to build sustainable wealth for yourself and family? Well, that is good but unfortunately, you can’t match the rich. Why? The reason is because you are probably investing with money you earned or saved up; while the rich invest with other people’s money. Examples of other people’s money are loans, pooled funds, etc.
10. The Rich Maintain a Team of Smart Professionals
“It is better to hang out with people better than you. Pick out associates whose behavior is better than yours and you will drift in that direction.”
You probably invest alone. You do your own research, analysis and make your own investment decisions. Well, that is not how the rich invest. The rich invest with input from their profession team of bankers, accountants, investment advisors, tax strategists, etc.
“If you pick the right people and give them the opportunity to spread their wings and put compensation as a carrier behind it, you almost don’t have to manage them.” – Jack Welch
11. The Rich Know How to Use the Law to their Advantage-: Most people believe that the rich are above the law, because it seems they are. Well, the truth is that the rich are not above the law; but they sure do know how to legally circumvent the law because they maintain a payroll of legal advisers.
In order to be a player on the fast track, you will need to have a plan on how to gain more and more control. On the fast track, it is control more than money that counts.” – Rich Dad
12. The Rich Pays Less in Tax By Legally Avoiding it-: The rich make more money, yet; they pay less in tax than the middle class and also pay at a later time. Why? The reason is because they defer their tax payment for as long as; as advised by their legal team/tax strategists. The rich also seek out tax havens, to protect their money
13. They Know How to Get and Leverage Political Goodwill
It is often said that “To whom much is given, much is expected.” This is a saying or principle that the rich adhere to and that is why they keep getting richer. The rich know how to use their money to attract political goodwill. That is why you see rich individuals and their companies lining up to donate to political parties and politicians for election campaigns or project launches.
14. The Rich Buy Luxuries with Investment Yields
“One of the most important things a real investor needs to say is this; “I want my money back and I also want to keep my investments.” – Rich Dad
You earn a few cash on a deal or you are paid your salary, and you are off to buy the latest gadget. Sure, that is okay because you worked hard for the money. However, the rich don’t buy luxuries from their savings. They buy luxuries with yields and dividends from their investments. Meaning, they invest first, and spend later.
15. Maintain Multiple Streams of Income
You can hardly find a rich person that only has only one source of income. The secret of being rich and having the ability to multiply wealth is the ability to create multiple streams of income and that is exactly the lifestyle of an average rich person. They are always all out to create new ways to make money.
16. They Read Far and Wide
There are loads of business opportunities buried in books and magazines. The rich folks know this and they can spend a fortune on buying any information that can expand their investment portfolios and financial scope. Most rich people will spend huge money to stay updated and acquire new skills to help them manage their wealth properly.
17. Self Control and Highly Level of Discipline
One of the major reasons why people struggle to manage wealth is lack of self control and discipline. What the rich folks do is to delay gratification till they have excess resources to purchase any luxury.
For example if it would cost 3 Million Dollars to Buy an Escalade, even if an average rich man has the 3 Million Dollars, they might prefer to delay their gratification till when they have been able to double or triple their savings / investments to like 6 or 9 Million dollars before buying just 1 Escalade that is worth 3 Million Dollars and still have 6 Million Dollars in savings/investments.
18. Operates Effective Budgeting System
Another thing that is common with rich people is the ability to set both monthly and annual budget. These rich folks don’t only set budgets; they ensure that they follow it to the latter. This budget consists of an estimate of the money they plan to make in a calendar year and the money they intend to spend serves as a motivating factor that keeps them going until they achieve their financial goals.
19. Engage in Charity
Give and it shall be given unto you. Good measures, press down, shaking together and running over, shall men give unto your bosom.” – The Holy Bible
Whether we believe it or not, Mother Nature has a way of blessing people who give to the needy and down trodden of the society. If you take your time to carefully study a truly rich person that keeps adding to his wealth, you would realize that they have a portion of their profits that they give back to the society. They do this via what is popularly known as “Community Social Responsibility.”
“He that gives to the poor shall not lack.” – Proverbs 28: 27
You would realize that most rich people derive pleasure in giving money to fight worthy causes they believe in (Support research et al), give to support any charity of their choice, or even give out scholarships to students at different level of education. After doing these; somehow fortunes will just keep knocking at their doors.
“Ridiculous yachts, private planes and big limousines won’t make people enjoy life more and it sends out terrible messages to the people who work for them. It would be so much better if that money was spent in Africa and it’s about getting a balance.” – Richard Branson
In addition to the above, setting financial goals is the propeller that propels most people who eventually become rich. Take note; that ‘Rome wasn’t built in a day.’ Every wealthy man you see today once had to fight his or her way through challenges. In your quest to get richer; be sure you pay attention to the points listed above, make it a way of life, work hard and smart and then you will see how your fortune will grow.