Why is it that earth’s richest 1% holds half of the World’s wealth? Why is it that every year Warren Buffett retains his position in the list of World’s Richest People? And why is it that liquor baron Vijay Mallya dropped out of the list of India’s Wealthiest People?
More often, people believe that making money is equivalent to being rich. But what they really forget is – It’s not about how much you make, it’s about how much you keep. A high income doesn’t necessarily mean that you’ll stay rich. I personally know a senior dentist who earns significantly every month but fails to maintain a substantial net worth.
When most people say they want to be a millionaire, what they really mean is “I want to spend a million dollars,” which is literally the opposite of being a millionaire ~Morgan Housel
The greed of staying ahead of your neighbor comes out of fear that you may stay behind in the rat race. This greed makes you buy huge apartments which you don’t really need, expensive cars and flashy clothes to show off your materialistic wealth. Since you can’t confront controlling your self-esteem and irrational behavior, you make a blunder of your finances by making thoughtless financial decisions.
All this happens because we live in a world of instant gratification. It becomes really hard to resist to buy unnecessarily when you are getting a fat paycheck. And if you keep competing consistently, you won’t be able to accumulate the real fortune.
If you live with the mindset that you need a big house in DLF and a flashy Mercedez to appear rich, you are highly misguided.
Managing Money is Harder than Making Money.
This often reminds me of Boris Becker, a former World No.1 tennis player and an Olympic gold medalist, who won 6 Grand Slam Titles, 49 Singles Titles, and 15 Doubles Titles. After having enjoyed a prolific career in professional tennis, he retired with a net worth of almost $167 Million. And in 2017, he filed for bankruptcy. He got filthy rich by making money but couldn’t stay wealthy by managing it.
In the end, he ended up with just materialistic things, not money. And recently, he was found selling his trophies to pay off the debt that he had accrued after his retirement.
If you buy things that you don’t need, soon you’ll have to sell the things you do need ~Warren Buffett
In future, certainly, we’ll get to hear more such stories. And the underlying message will always be – Staying Rich is harder than Getting Rich.
What Does It Take to Stay Rich?
It’s really simple to stay rich but doesn’t mean that it’s easy.
Few things that will surely help you to stay rich:
- Stick with your investing process through thick and thin. Don’t interrupt the compounding engine unnecessarily
- Delay your instant gratifications
- Live below your means
- Save more and invest more. Year after year. You would think that it’s boring. Yes, it is. Successful investing is never exciting. It’s a slow and steady process that takes its own time to show magic
- Most importantly, be patient and control your irrational behavior
We often resist simplicity because it makes us change our habits. Simplicity is in staying invested while the Change is in delaying gratifications and being patient. It’s easy and boring but difficult to practice.
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If you ever happen to read about Mark Zuckerberg, Warren Buffett, and Bill Gates, you’ll realize that they live below their means. They don’t spend extravagantly, drive expensive cars or wear flashy clothes. They are followers of frugality which makes them enjoy doing things that matter the most to them.
As Charlie Munger has said,” Like Warren, I had a considerable passion to get rich, not because I wanted Ferraris – I wanted the independence. I desperately wanted it.”
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Follow RichifyMeClub on Twitter
Read about The Psychology of Money by Morgan Housel
Read more about Global Wealth Report by Credit Suisse
PS: The cover image has been taken from Roman Shymko
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