Tag: secret of money

7 Secrets Of Money the Rich Don’t Want You to Know

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Ask most personal finance experts and they’ll tell you the secret to becoming rich is no secret at all: Work hard, live below your means and save every dime. The nation’s One Percenters, however, might disagree.

Secrets Of Money

There’s no shame in a modest lifestyle — even Warren Buffett lives frugally. But if your goal is to get rich, it’s helpful to know these seven secrets the ultra-wealthy aren’t likely to share.

1 Salary isn’t the whole story

Climbing the corporate ladder will only get you so far; at some point, you reach your earning potential and plateau. The rich know that in order to grow wealth, it’s important to make your money work hard for you — not the other way around. In fact, Robert Kiyosaki, author of the No. 1 best-selling personal finance book “Rich Dad, Poor Dad,” built his entire money philosophy around this concept.

Generating income from passive, rather than active, income sources is the best way to do this. Investments that yield passive income include dividend-paying securities, rental properties, profits from a business you do not directly manage on a daily basis — even royalties on creative work or inventions.

2 Take advantage of time, not timing

If the recent Dow Jones crash proves anything, it’s that no one can predict what the market will do tomorrow. The wealthy know this and make no attempt to moonlight as day traders.

Time is more important to investment success than timing,” explained Peter Lazaroff, a certified financial planner who manages portfolios upwards of $10 million for Plancorp, LLC. “Most of the population believes that timing the market’s moves is the key to growing rich through the stock market. The wealthy, however, understand that time and compound returns are the most important factor in growing wealth.”

Though it might seem counterintuitive, getting rich requires investors to adopt an unsexy buy-and-hold strategy, ride out market fluctuations and ignore speculation.

3 Put it in writing

The difference between having an idea and putting it on paper is often what separates the uber-successful from average folks. And if you equate success with wealth, it might be time to start writing down your goals, both large and small, in order to become rich.

Thomas Corley, author of “Rich Habits: The Daily Success Habits Of Wealthy Individuals,” noted that 67 percent of the wealthy people he surveyed wrote down their goals, while 81 percent kept a to-do list. If your goal is to become a multimillionaire, write it down along with an action plan for making it happen.

4 Understand value over cost

According to Justin J. Kumar, senior portfolio manager at Arlington Capital Management, “The wealthy person has three best friends: her attorney, her accountant and her advisor. The wealthy tend to use the law and tax code to their advantage when figuring out how to maximize their wealth, especially over multiple generations, and they are not afraid to spend money up front for counsel to get these answers.”

Kumar explained it’s common for middle-income Americans to cut corners in order to save money, yet ultimately find the results lacking. “The wealthy look at value over cost, but they are still prudent in their decisions,” he said.

5 Eat out less

People who are concerned with saving money often skip the daily latte. The rich enjoy small splurges such as Starbucks whenever they want and instead look at saving from a bigger picture.

Author Paul Sullivan and colleague Brad Klontz, a clinical psychologist with an academic appointment at Kansas State University, conducted research on the difference in spending habits of the 1 percent and the 5 percent. The 1 percent spent 30 percent less on eating out and saved it for retirement instead. “And that, more than the cost of a Starbuck’s latte, is what, over time, separates the wealthy from everyone else on the wrong side of the thin green line,” Sullivan wrote in Fortune.

6 Be your own boss

Employees work to make their bosses rich. If you’re aiming for true wealth, consider starting your own business. According to Forbes, nearly all of the 1,426 people on its list of billionaires made their fortunes through a business they or a family member had a hand in creating.

“Many middle class workers think that starting a business is too risky,” noted Robert Wilson, a financial advisor and frequent contributor to CNN, NBC and CBS. “The wealthy understand that what’s risky is allowing your time and earnings to be dictated by a boss who couldn’t care less about whether you get what you want for your life.”

7 Use other people’s money

To the average person, “it takes money to make money” might sound like a tired cliche used to justify irrational spending. For the rich, it’s a golden rule of wealth.

The key is leveraging other people’s money to increase your own wealth.

“Trading time for dollars is a losers’ game, especially as technology destroys many jobs that don’t require a highly skilled human being,” said Wilson. “Using money from banks/investors and hiring people to work for you is a time-tested formula for building wealth, not to mention the tax laws, which heavily favor businesses.”

Whether you’re fundraising to start a business or flipping real estate for a profit, relying on other people’s money to do the heavy lifting greatly increases the return. Of course, it’s also riskier than relying on your own funds. But if you follow the sage words of the great Warren Buffett, consider that “risk comes from not knowing what you’re doing.”

Who Created And Invented The Money

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What is money?

Who Invested The Money
Who Invested The Money

Money is an agreement between people. It is an agreement that this much of something will be worth this much bread, and this much cheese, and this many slaves. But it’s convenient to be able to move money around between people, so even in the Stone Age people used small, valuable objects as money, so they could carry it around and use it to buy other things.

The History Of Money: Seashells And Beads

Probably people started out using rare seashells as money. When they needed more money and couldn’t find enough rare seashells, they realized that you could make an object valuable by putting a lot of work into it. So they started to make their own small, rare objects by carving beads. People have also used all sorts of other things as money. They’ve used paper as money, or cocoa beans, or cowrie shells, emeralds, diamonds, gold, silver, and bronze. Beads were often a kind of money well into the 1800s. Anything small, not too heavy, and fairly rare or hard to make will work as money.

The first metal coins

The earliest metal coins came from China, where people used small pieces of bronze to trade things starting around 1500 BC, possibly to replace the cowrie shells they used before that.

Coins issued by the government

Governments invented coins with guarantees around 650 BC. Governments or businesses mark this kind of coin with a promise that this coin is worth what it says it is worth. So – if you trust that government – you don’t have to weigh each coin before you accept it. The first coins of this kind were from Lydia, in West Asia. Lydian kings used the coins to pay mercenary soldiers. But many people preferred to keep on using mainly credit for trading instead.

Paying taxes in money

When governments began to require people to pay their taxes in money, gradually gold, silver, and bronze coins became common all over Europe, Asia, and Africa ( except for South Africa). In South America, the Aztec empire collected taxes in cocoa beans, in the same way, starting about 1400 AD. Traders even made fake cocoa beans to trick people into thinking they were money.

Debasing the currency

The governments that minted these coins figured out that if they didn’t have enough money, they could mix the gold with more silver to make it go further, or mix the silver with more bronze. That way they could make more coins with the same amount of metal, and have more money to pay their soldiers with. The Romans did this in the 200s AD.

But of course pretty soon people figured out that these coins weren’t really worth what the government said they were worth, and then they didn’t want to take those coins in stores. Or they demanded more coins, so it would be the same amount of gold or silver as before.