We all know that the rich keep getting richer, but the question is how can we learn from them?
Sometimes it can seem as though rich people are born lucky with inevitable success ahead.
But the reality is that anyone can become rich.
It’s not like they have any special secrets.
After all, even the rich can only invest in property, shares and business like any other ordinary Australian.
But the secret is they understand and follow 7 key concepts for success.
And the good news is that these handy lessons can help you increase your chances of getting rich too.
So, here are 7 reasons the rich are getting richer, and how to learn from them to supercharge your own success too.
1. Compound interest
You don’t see too many rich young people, apart from successful entrepreneurs or those born into wealth.
Why? Because it takes time to grow assets.
Rich people understand that it takes money to make money, and that’s because the benefits of compound interest are the biggest for large assets.
For example, a $500,000 asset compounding at 10% per year would increase your wealth by half as much as a $1 million asset would.
So that means that after a decade, that $500,000 investment would have grown to $1.35 million while the $1 asset would have increased to $2.7 million.
Of course, this is one of the reasons why property investment is so popular in Australia.
The huge annual gains many real estate investors and owners have enjoyed in the past year have translated into huge numbers meaning investors and owners have been able to build impressive property portfolios.
Leverage is using something to maximum advantage of the term can also be used to describe using debt to buy assets with the plan to generate a profit higher than the interest payable.
What is important to note is that rich people aren’t afraid of (good) debt.
That’s because they understand that debt is how investors are able to grow their wealth faster, building a bigger asset base and generating better compounding returns.
In effect in today’s low-interest-rate environment good debt that generates returns higher interest rate is really an asset.
3. Professional help
There aren’t many rich people who don’t have a comprehensive team of finance and investment specialists at their disposal.
The recognises important to invest in their future because that’s where they’re going to be living.
Here at Metropole, we have an award-winning of strategists, wealth advisors, buyers agents and property management agents.
Whether you’re a first-time or seasoned investor, you should always consult a good team of professional experts before making an investment.
4. The power of property investment
Almost every rich person owns property.
That’s because property investment can provide a passive income, stable cash flow, excellent tax advantages, diversification and many more benefits.
The rich understand that owning a property is not just about having a place to live in, but also about investing in an asset that will continue to increase in value over the long term.
5. Financial fluency
Rich people are financially fluent - they understand how finance tax and the law work.
They have learnt everything they can about how money, finance and property works and were able to start investing early.
And you can do the same too.
But while a trusted mentor and team will help immensely, you still need a solid understanding of how things work to make sound decisions, otherwise, you’ll be easy prey for the many spruikers.
6. The long game
Warren Buffet once said: “Wealth is the transfer of money from the impatient to the patient.”
To become successful and rich requires both patience and persistence.
Becoming successful and rich is a long-term investment, there is no such thing as a get-rich-quick scheme.
Yet what many people do wrong is they speculate rather than invest, and then they look for that “big deal” that will land them a jackpot in a short period of time.
This doesn’t make good investment sense and it’s not how our most successful and richest people have built their wealth.
You don’t have to look for the latest fads or the latest speculative growth areas if you create your own capital growth by buying a good property at a fair price, and then adding value through refurbishments, renovations or redevelopments.
By doing this you are “manufacturing” your own capital growth.
7. ‘Like-minded’ people
Rich and successful people are renowned for surrounding themselves with like-minded people.
Fact is, if you want to succeed in life, you absolutely must surround yourself with other successful people.
You’ll usually find that successful people are successful because they have expert knowledge and skills in very specific niches.
But while they’re experts in their field they have developed strong relationships which they can call on at a moment’s notice.
Michael Yardney is a director of Metropole Property Strategists, which creates wealth for its clients through independent, unbiased property advice and advocacy. He is a best-selling author, one of Australia’s leading experts in wealth creation through property and writes the Property Update blog and hosts the popular Michael Yardney Podcast.
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