Holding no less than half of the world’s entire wealth, the globe’s richest 1% is an elite club that has turned the creation of wealth into a fine art in its own right, amassing a staggering array of riches that is almost unfathomable to the average citizen. Personal opinions aside, these are people with an undeniable knack for creating and building wealth, people playing on their own playing field and by their own set of rules.
But what exactly are they, and how might we apply them in our own lives? Join me as we take a peek behind the exclusive curtain, exploring what the top 1% has to say on how to create and accumulate wealth (and yes, world’s richest man Jeff Bezos will be making an appearance!).
How To Create Wealth Rule no. 1: Start making money, not earning it
“The only way to make real wealth is to get rid of your salary.” James Altucher
The majority of us are taught to go out and earn money, a simple employee transaction in which we receive money in return for the labour we provide.
How many of the 1% are employees, though? None. Because salary ties your wealth to your personal labour, and the finite resources of your own personal time and effort.
Wealthy people are different because they don’t earn money, they make it. In other words, instead of providing their own personal labour in exchange for money, they provide value, the value that resides in the companies, products and services they create, and the money that they invest. And, unlike your time and energy, these are massively scalable outlets, hence the potential for massive wealth.
How To Create Wealth Rule no. 2: Know the value of your time
“The rich invest in time, the poor invest in money.” Warren Buffett
This links neatly in to what we were saying in point 1. Wealthy people appreciate the value of their time because they recognize that money is a representation of value provided, not the time and effort put in.
That’s why the owner of a business with a valuable service that taps into a user need can be extremely rich while putting in very little time, while employees work round the clock to earn comparatively trivial sums of money.
Employees undervalue their time because they are obsessed about earning money; wealthy people jealously guard their time because they recognize that time is the opportunity they have to make money.
How To Create Wealth Rule no. 3: Understand how money works
Compound interest is the eighth wonder of the world. He who understands it, earns it … he who doesn’t … pays it.” Albert Einstein
Wealthy people share an intuitive understanding of how money works. Specifically, they understand how wealth (or, conversely, debt) accumulates (the principle of compound interest), and how their money can be used as a tool to generate more money (investment and passive income). Both are vital to building any significant wealth. I’ve already covered the principle of compound interest in some detail in my Ultimate Guide To Compound Interest; as for passive income and investment, that’s one for a future post, but I think Robert Kiyosaki of Rich Dad, Poor Dad fame sums it up best when he says: “Don’t work for money; make money work for you.”
How to Create Money Rule no. 4: Keep evolving
“The death knell for any enterprise is to glorify the past – no matter how good it was…what’s dangerous is not to evolve.” Jeff Bezos
It’s interesting how many of the top investors and business people emphasize the importance of investing in yourself, your knowledge, your skills, your ongoing development. And likewise, in any money-making enterprise, you can never afford to stand still. If a business fails to react to its business environment and constantly change and evolve with it, it will die. And if Jeff Bezos, the richest man in the world says that, then I for one believe him.
How to Create Wealth Rule no. 5: Be willing to commit
“If you’re happy to sit at your desk and not take any risk, you’ll be sitting at your desk for the next 20 years.” David Rubenstein
Whatever intellectual arguments we might put forward to describe those who go on to amass huge fortunes, I think that there must still be a significant part that comes down to individual mindset and character. There must be something that sets these people apart, to have millions and billions in the bank account but still keep on going when they have more than they could possibly hope to spend. And in the first place, there needs to be that willingness to take the initiative, take the risk, live outside of the comfort zone. And actually, that’s something that most of us will never do. I like this quotation from David Rubenstein because it’s a reminder that we get out what we put in…we make our choices and, having made them, we shouldn’t be surprised with the end result. We’re not all going to be millionaires – nor do we need to be – but for those with a curiosity, I hope that you’ve enjoyed this reflection on the wealth mindset.
In matter of fact, this is the first wealth article I’ve done in a good long while…so if you enjoyed it, and would like to see more of this kind of content, please do let me know by sharing and leaving a quick message in the comments below. And as ever, live well, live smart!