People often assume, that after they leave college, and get a really good job, they will be set for life, financially. But let me pose this to you, how many lawyers are billionaires? How many doctors are millionaires? How many engineers are on the Forbes 400?
Answer: None. Well, arguably Elon Musk for the latter, but he doesn't really do too much of the 'engineering' side of things these days.
So, how is this concept really true?
As a society, we seem to have this idea, that in order to be wealthy, we need to be really good in school. We need to get good grades and go to a really good university to get a really good, high paying jobs. Yet, these people aren't the bulk of the millionaires on this planet. There are a few, but less than 0.00000001% of doctors are true millionaires!
This is where the idea of what I call 'Faux rich' comes into place. The true rich, have investments, their own company and live well below their means, whereas the 'Faux rich' have no investments- besides their house, which isn't really an investment, as it costs them money each month, whereas an investment makes them money. They work for someone else, and when they earn $100,000, they act as though they make $150,000!
The true rich
The true rich are the billionaires on the Forbes 400 or the Bloomberg Billionaire Index. These are the people who have spent most, if not all, of their life investing their money.
Yes, these people may have houses worth $20 million, but they are also worth $20 billion! They have more individual stocks than most people have saved, invested and earned in their entire life!
Yes, these people may make use of traditional brokerages, but you can use Investment Apps to help you with lower fees.
They may make $100,000, but they live like they make $12,000! Because they know that they'd rather invest the remaining $88,000 instead!
They understand the power of compound interest, and how they can use it to make themselves incredibly rich. Even Einstein once said something along the lines of:
He who understands compound interest earns it, he who doesn't understand compound interest, pays it.
In regards to compound interest.
The 'Faux rich'
Everyone knows someone who is 'Faux rich'. They are normally the doctors, lawyers, engineers or some other highly-paid profession.
They see on the internet about how the richest people in society have big houses, new cars and designer clothes. So they must have them too! But what they don't realize is: the true rich can afford them, they can't.
So, instead of buying a house they can actually afford, a car they can actually afford, clothes they can actually afford, they get into debt. They go out, and they get more credit cards than one could reasonably need. They max out these credit cards each month, and rarely pay anything more than the bare necessity- usually using credit cards to do this.
They also go out and get a very expensive mortgage. They go out and get an expensive car loan. They go out and get more consumer credit than they reasonably need.
They have all these 'investments'- their house, their car, their boat, their helicopter. But they have no true 'investments' like stocks, bonds or real estate.
An investment is something that makes you money
A liability is something that costs you money
To quote a very famous investor:
The rich buy investments that make them richer. The poor by liabilities they think are investments!
What would I know?
Ok, so I hear you. You don't like some faceless guy on the internet (perhaps on the other side of the world to you!) Telling you that everything you've ever been taught in school is wrong.
But sadly, and as much as it pains me to burst your bubble: I'm not lying.
When you look at the richest of the rich. Warren Buffett. Bill Gates. Jeff Bezos. They all have another thing in common: they are bare necessities.
Yes, Bill Gates and Jeff Bezos may have massive mansions. But they drive beat up old cars. They wear $2 shirts. They don't waste their time looking at cat memes, but rather at researching the latest investment trends.
I know that this is true, because I once believed what my school told me- get good grades, go to a good university and get a good job at the end of it.
And then one day, I got curious. I looked at Warren Buffett's lifestyle, the third richest man on Earth, and saw that it was nothing like what we'd been told in school. I was devastated.
Alas, I decided to get educated. I started my own business. And here I am today!
If you don't believe me, that's fine. But I ask you this, can you live with yourself if I'm right? If you know that you won't (or you have a burning desire to prove me wrong), open up a new tab and do some research! You will find that this is correct.
Just look on sites like Forbes, Business Insider, Inc. etc. And if you don't trust them, look through some typical blog-style websites, you will not be disappointed!
Got something you think I missed out? Tell me in the comments and I'll add it!