Being rich is everyone’s dream. Being wealthy is another dream that very few people will ever accomplish. If you ask a random person the difference between being rich and wealthy, they will tell you that the two are all but the same. This is where people go wrong, and especially investors who want to accumulate lump sums of money. Investment experts will tell you that the distinguishing element between the rich and the wealthy is their level of knowledge. While rich people tend to have money, the wealthy will possess the knowledge to make money. The wealthy will always be guided by their dreams while the rich will follow their moneymaking desires. Our issue is not to evaluate the differentiating aspects between the rich and the wealthy, but to provide great strategies that one as an investor can follow to become wealthy instead of being rich.
Investment advisors with “rich” mindsets will suggest that diversifying your investment portfolio is the best way to make more money. This may be true, given that there will be lesser risks of making unexpected losses and such. But have you ever asked yourself why the wealthy have little diversification of their investments? Maybe we should all consider the famous saying “carry all your eggs in one basket and then watch the basket”. Successful and wealthy moguls such as the likes of Buffet and Bill Gates will tell you that the best way to protect your wealth is by diversification, but diversification will not help in wealth accumulation. Instead of diversifying your wealth in many areas, invest in one specific centre and monitor that single item more closely. In other words, this will help you concentrate your capital and drive on what you can do best..
Avoid investing in trends.
New and booming investment trends tend to attract most investors whose motive is to make money in the short term and accumulate more wealth. While these trends may at times lead to the greatest investment breakthroughs, it worth noting that trends easily lose their flavour. By this, I mean better developments will come up and replace the so-called hot trending investment choices. Instead, invest in options that will least be affected by any slight changes in technology or other trends. Look at the successful and wealthy investors; they invest not in the hot-cake trends but in those business options that seem unattractive to many. Donald Trump will continue to increase his property development investments while Warren Buffet will expand his options in boring railroads and electricity. One thing is clear; these individuals will continue to make more money in the seemingly slower investment rides.
. Depend less on your salaries and income.
Have you ever thought of a scenario where a seasonal river dries up, and all the fish in it suddenly die? That is the same thing with depending on your salary and income. As an investor aiming at being wealthy, you should never depend on your salary income. You might be earning a lot of money in the line of your career, but the industry in which you work may suddenly collapse and leave you stranded with no other options to turn to. This brings in the concept of wealth fortification. By this, you should have investments that will be a dependable source of revenue. Incomes from other investments such as shares and real estate should serve as the best means creating passive income flows. These passive income sources are dependable, unlike the salaries that may disappear in case of contract terminations or even layoffs. On the same line of thought, use these passive incomes to develop what you do best with vigor. Let the salary incomes be for activities such as basic upkeep and family development, but not for wealth creation.
. Differentiate between value and cost.
An investor whose target is to have sustainable and long-term wealth understands the concept of value over cost. For every value generated, a cost must be incurred, that is the law of investment. As an investor seeking out wealth, you must understand what it takes to take an advantage of a situation and maximize your wealth. Investors whose motive is to acquire long lasting wealth spend hefty amounts of money in seeking counsel from experienced experts. Their intentions are to learn about the value associated with each opportunity and weigh it against the costs. A wise investor will always favor value of the cost. Even if the tax in a certain investment seems high but the value wins, a wealth-oriented investor will choose value. They use the viable value in a given opportunity and use it for multiple generation of income. This will always make you wealthy. We can say that money must always be made with money.
. Understand your risk tolerance level.
Every investment has a given level of risk. Risk implies that you can lose all you have invested in the event of an unforeseen occurrence. As a result, this tells you that should always understand the amount of money you can afford to lose out of a given investment should it come to such. The idea is to set goals that you seek to fulfill at the end of a given investment period. If you prefer losing not more than 20% of what you have, the best idea would be to invest the remaining 80% in a safe investment environment and the 20% in a risky investment that will generate growth and more income. You will have achieved your goal of retaining your 80% at the end of the period and possibly an additional from the 20% invested in the risky world.
. Become your own boss.
Remaining an employee to another person minimizes your chances of ever amassing wealth. Employees work hard to make their bosses richer each day. For you to acquire remarkable wealth amounts, start by becoming your own boss. The first step towards this is by starting a personal business. Most of the successful billionaires have made their wealth by starting a small business that later translate into the multinational companies that we see. The likes of Bill Gates, Michael Dell and the rest started with small businesses whose initial capital base would be a joke in the current times. Where are they now? They are on the top lists of the wealthiest persons, not richest but wealthiest! You must be willing to risk your money by starting that business you have always wished for. Run your investment activities by the principle that Fortune Favors the Bold.
. Make time your best friend.
Time is as important as the capital required to start an investment. Why is time important in wealth acquisition? The answer to this lies in the seasonality of the market. The market is run by fluctuations that rule out when one should sell or hold. With regard to this, as an investor, one should always study the market timing. By this, I mean you understand elements such as returns and how they relate to the time of a given investment. Similarly, know when to invest in a given sector and when to hold your investments. Learning the time tricks will help you understand the unpredictable fluctuations that make most investors incur losses. You will find yourself operating with high-profit returns throughout the year, which culminates into large wealth.
. Be ready to solicit for fund.
The saying that no man is an island stands in this case. You cannot start from anywhere and become the next Bill Gates. Unless it is a miracle. Wealth acquisition is a systematic process. You will start your businesses; they fail, and you will lose money. That is not the end. Your friends and family are the most important assets you have during your investment planning. They are a source of capital. A fundraising would not be bad; as it will help you have a better capital pool that you can use to boost that failing business which could be your breakthrough. You could take a loan from a trusted lender, like a bank and promote your business. The results will be an increase in returns. Moreover, no one hates increasing returns from an investment.
. Save less and spend less
It is advisable to have a savings scheme but at the same time, do not expect the savings to give rise to something that would be termed as close to large wealth. Banks do not offer high earnings for the money in savings accounts. The implication is that the money left idle in the savings accounts would better be invested elsewhere, where one has a possibility of earning bigger returns. Investment choices are many, and the best choice would convert the money that would otherwise lie idle in the bank into a wealth-generating asset.
On the same point, try to spend moderately. There are those who make great earnings but end up spending everything to please those around them. The money is yours, but you must use it well. Spend when it is necessary and put the rest back into your investment schemes.