A lot of people frequently wonder why some people are prosperous while others struggle with money. Some individuals get richer while some live only with their salaries, even going deep into debt. Why is it that the poor and the middle class work hard but do not really attain security? The answer lies on a person’s mindset and perspective. To get rich, it is important to understand the mind of the rich.
First Step
- Think Rich
The first step in getting rich is to say to yourself that you can and you will get rich. With such perspective, you will be able to gain enough confidence and determination. Dream that you will one day live in a mansion. Believe that you will have more than enough money to pay your bills. Think that you can become wealthy so that you can easily pay for your children’s education. Changing your mindset will help you understand what makes the rich become even richer.
Making Money Work for You
The poor man works for money while the rich man makes his money work for him. The poor and the middle class usually earn money to pay for their expenses while the rich use money to obtain assets that will produce more money. If you want to be rich, you need to open your mind to the way rich people earn money.
Acquiring Assets
- A Powerful Way to Increase Wealth
Inside the mind of the rich, assets are important as these produce income that will take care of their expenses. Assets such as real estate, stocks and bonds can provide passive income to an individual. As income from these assets grows, a rich man would most likely buy more assets to produce more wealth. As such a rich man would become wealthier.
Simply increasing your net worth would not automatically make you wealthy. The rich purchase assets that would provide them income. Acquiring assets just because they are considered assets by accounting standards do not make a person rich. You must acquire assets that produce cash or passive income. It is important to understand that the rich invest in assets that will produce income, in either short or long term. If you have an investment worth 2000 dollars and it produces a return of 12 percent per year, you would get a return of 240 dollars. If you use the additional income to produce more assets, it is likely that your wealth could multiply.
Do not Fear Risk
Rich people are not afraid of risks. Instead, they learn how to manage them. One cannot get rich without facing risks. To get rich, you have to manage risk and to do so, you need to learn and understand how to analyze potential assets. By reading books and articles on investment and business, you can learn how to distinguish real assets from those which are more of liabilities. The greatest risk to any investor is financial ignorance. To be wealthy, learn how to manage risks as no one can succeed in any aspect of life without confronting problems.
*By William Tan, a full time investor and trader.
