“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.
1. They don’t dilly dally
The wealthy don’t waste any time in getting going. They start investing early in their careers because they understand the immense power of compound growth and the innate value of time in the market.
2. They don’t live on credit
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. Which is not to say they’re completely credit averse: wealthy people are only too happy to borrow if it’s the best way of making an investment that’s likely to appreciate in value.
3. They never spend more than they earn
Wealthy people don’t spend more than they earn, and they don’t tend to be fussed with outward appearances. For example, Warren Buffett 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.
4. They don’t think they can “time” the market
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 in the short term and opt instead to sit it out through the ups and downs.
5. They never make emotional decisions
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.
6. They never put all their eggs in one basket
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.
7. They don’t shy away from risk
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.
8. They don’t forget to invest in themselves
Wealthy people embrace lifelong learning, they keep on top of developments in technology and they stay healthy. But they don’t think they can do it all, either. They are skilled delegators, and they know their limitations. When it comes to financial planning, they tend to have longstanding relationships with their financial advisers.
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.
Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.