Published on May 21st, 2019 | by Sunit Nandi0
5 Hidden and Powerful Secrets of the Ultra Rich
They Use Other People’s Money
The ultra-rich build their wealth by doing things differently. While there is no single blueprint for how to become a millionaire, analyzing how millionaires built their fortune does give insight into the things they are doing right. Most wealthy people aren’t sharing the secrets to their success – they’re too busy doing the things that got them there in the first place.
Most people will say it’s all about the mindset. This is true to a certain extent – rich people have a unique mindset that drives them to find and build their success – but even this only gets them so far. Instead, they take a different approach to how they work and create their wealth, so when looking at what they do we can get a better understanding of what it takes to become ultra-rich.
Thankfully, the ultra-rich have been closely studied for decades, giving us access to some of their most hidden and powerful secrets for creating wealth. What exactly are these hidden and powerful secrets of the ultra-rich? Check out five of them below!
Salary Only Takes You So Far
It’s easy to assume that a good salary is the first place to start building your wealth. While it never hurts to have a nice salary, this will only take you so far, as even the most skilled professionals will reach a glass ceiling for their salary.
Rich people take a different approach to their wealth. Rather than working tirelessly chasing the highest salary possible, they let their salary work for them. Most people with a salary have an active income – they work a certain number of weekly hours and are paid accordingly.
However, wealthy people look to use their salaries to generate passive income – generating regular income that requires less time and effort to maintain. They use salaries for investments, stocks, bonds, and anything that helps generate a passive income.
Even those starting out with a modest salary can generate wealth through a passive income. For instance, royalties from creative work (e.g. book, song, video) can provide consistent passive income, while investing in cash flow property income is another way to generate impressive passive income.
Remember, a salary only takes you so far – it’s what you do with it that counts.
They See the Value in Assets
We all spend our money on different things. Most people enjoy buying material possessions and treating themselves to a nice experience such as a vacation in the sun.
The ultra-rich are mostly focusing their spending on one thing above all else – assets. This is anything that brings money into your pockets, such as stocks, bonds, property, land, inventory, and even cash reserves.
For example, if an ultra-rich person makes a large cash bank deposit, they do so because they make good interest in their money, making it an asset. Not only does interest accumulate, but they can also use it as liquid funds to pay for any investment they want to make or to cover an upcoming expense.
Most wealthy people have lots of assets. Stock investments are a common asset that can pay huge returns, yet it’s not about investing in hot trends, but rather buying at low prices to minimize risks and reap the most gains. Should the asset become a liability (e.g. stock loses its value) they then cut their losses and get rid of it, as such they often take out car loans as cars are generally a depreciating asset, and these funds could be used to generate them higher interest elsewhere.
There are many assets and liabilities we have throughout life, yet the ultra-rich have a unique ability to see the value of assets over liabilities, helping them to generate more wealth while reducing their expenses.
Time is Better than Timing
Everyone looking to make it rich is obsessed with timing. If only they had known the timing of the market, they could have found the perfect investment for maximum gains. But the ultra-rich don’t look to find the perfect timing, instead, they use their time wisely.
Anyone looking to get involved in the stock market will know the volatility of the market. Prices rise and fall like nothing else, so timing is surely the key to finding the best investments at the right time? Not necessarily.
In terms of buying stocks, time is usually your most powerful ally. Rather than jumping into the latest trends, you buy stocks that have the potential for the biggest growth over time. Patience is a huge virtue and one that the wealthiest stock investors use to their advantage.
They ride out the ups and downs of the market, ignoring those hot trends and sticking to a buy and hold strategy that gives the best return on their investments.
Knowing Value Over Cost
The ultra-rich always know value over cost. When the rest of us are looking at the cost of things, and how to reduce these costs to make more money, the rich are instead looking at the value of something rather than its cost.
For instance, the cost of hiring a premium attorney, financial advisor, an accountant may seem excessive, yet wealthy people understand where the value is in these costs. In the above examples, the cost of paying for expert advice could be the difference between millions spent and millions saved.
Using Others Money
One of the best-kept secrets of the ultra-wealthy is to spend other people’s money to create their own wealth. That isn’t to say stealing from others, rather leveraging money from lenders, investors, and other people to achieve their own goals.
From taking a bank loan to build your business to hiring skilled people to do all the work for you, using other people’s money is one of the most effective methods for building wealth over the long-term. For instance, you could use a mortgage to purchase a property and flip it once the value increases.
You’ve used the lender’s money to pay for the property, waited on it to increase in value, then sold for a profit you get to keep. It’s one of the many ways that rich people spend others money to make their own and will continue to do so.