Becoming a millionaire or billionaire is everyone's dream. After all, who doesn't want to become super rich as well as buy and own everything in the world – ranging from a castle and private plane to an island?
Becoming a millionaire or billionaire is everyone’s dream. After all, who doesn’t want to become super rich as well as buy and own everything in the world – ranging from a castle and private plane to an island? However, have you ever wondered how a person is able to acquire so much wealth and what are the qualities which not only make someone super rich but also help them grow their wealth which very few people can? Clearly, preserving and growing one’s wealth is as difficult as acquiring it. So, what do the super rich do to remain a super rich? Among many other things which they do, avoiding simple money mistakes is one thing which sets them apart from normal human beings.
Here we are taking a look at 7 money mistakes the super rich usually don’t make:
1. Don’t seek consensus on all business propositions
Billionaires usually have an intuition about what the latest trends are and what the next big story is from the market’s perspective. They are usually the first to spot a great idea to capitalize on and are willing to take the calculated risk in adopting or bankrolling a new concept, product or service. “They do not hesitate in backing a novel idea which can prove to be disruptive and are keen on gaining as much information as they can about it. They avoid taking multiple opinions from different market players into consideration to seek consensus, but carry out an unbiased and clear-cut analysis of opportunities, risks and rewards before making a wholehearted commitment to the investment,” says Santosh Joseph, Founder & Managing Partner, Germinate Wealth Solutions LLP.
2. Don’t diversify the spread too much
Billionaires generally avoid spreading their risk too much across investment avenues. In focussing on a narrow but carefully-determined range of options, they do not get carried away by every new opportunity that arises. Rather than placing 15-20 minor bets with a lower probability of returns, they target 5-10 sizeable stakes with higher prospects. On the flipside, they also do not put all their eggs in one basket. Finding the middle path to successful wealth and value generation is a challenging task, but something which millionaires have acquired with years of practice and patience. Further, in avoiding the pursuit of too many ideas at the same time, millionaires typically converge on a set of potent and robust “ideas, to paraphrase Victor Hugo, “whose time has come.”
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3. Don’t pursue their goals in haste and focus on the interim
Billionaires realize the importance of time and effort required in setting up a successful business venture. As the saying goes, Rome was not built in a day, similarly, millionaires focus on building their business/ team/ processes with the willingness to endure and see the entire cycle through. In addition, “they do not focus on the short term, by exiting at the earliest gain or the slightest setback. They diligently work with a lot of restraint to ensure long-term progress and aim for all-round prosperity as well as a sense of personal accomplishment. They literally dig their heels in and chip in with the expert advice they can offer and the capital required to experience the full potential and impact of the ideas they support,” says Joseph.
4. Don’t interfere in areas of non-competence
Billionaires are astutely aware of their own limitations. Hence when the time arises they do not hesitate to seek professional advice or employ expert services. In clear contrast to the currently in vogue Do-It-Yourself (DIY) mindset and micro-managing all processes related to investments or business, they prefer to collaborate with the best minds in the market for gainful engagement and a fulfilling experience. Thus, they avoid the possibility of being pigeonholed as a person who does not lead new and synergetic projects. In extending this point, however, millionaires also ensure that the business/professional relationships they develop are not jeopardized for unproductive causes. Having said that, they also do not take decisions as a result of peer pressure and avoid herd mentality in running a business.
5. Don’t spend but rather invest
Billionaires are acutely aware that every rupee counts on the road to success and wealth. Rather than indulging in frivolous expenditure, they are more intent in investing their time, money and other resources for the larger benefit of society. “They perceive an investment to be far worthier, as a certain return can be expected on committing one’s support (materially and otherwise), than spending which is a mere expenditure with short lived value. Likewise, millionaires are thrifty and prudent in most monetary transactions, spending significantly less than they earn. Overindulgence, conspicuous consumption, and impulsive purchases are normally eschewed for an economically sound enterprise,” informs Joseph.
6. Don’t let the past weigh down on the future
Billionaires are a self-determined lot with vast reserves of confidence and the wherewithal to stand the vagaries of market cycles. Past performance is hardly indicative of the true potential of what can be achieved. “The classic case of Steve Jobs at Apple provides the ideal case study to understand the power of foresight and perseverance. While learning from one’s mistakes, millionaires focus on the positives to keep the forward movement on. They do not lose faith in the ideas that they support. They do not give up in desperation when things look bleak, but pursue their goals with a singular focus and persist till their ideas advance to full fruition,” observes Joseph.
7. Don’t reinvest earnings in the same business
Millionaires and billionaires usually don’t invest money where it has been earned. Warren Buffett, for instance, seldom reinvests his earnings in the same business because he believes that no one can guarantee you the same return again. On the contrary, there is also a possibility of losing your money if you do that. It is always better, therefore, to look for new avenues where one can optimize returns. Buffett says, “There’s no rule that you have to invest money where you’ve earned it. Indeed, it’s often a mistake to do so.”