Millionaires do not and will not work for their money. Yes, you read that correctly.
Very few millionaires achieve their wealth from savings earned from a high paying job. In fact, it is difficult to get rich from your work.
Just imagine if millionaires did get paid in proportion to how much they worked… They’d be buggered, wouldn’t they?
So what do they know that you don’t? Or more to the point, what are they doing that you’re not?
The reality is that most millionaires are either investors or business-owners, not employees.
Saving to seven figures
Saving your earnings to reach the $1 million mark is almost impossible. The low rates offered by banks, combined with rising inflation, make saving a poor strategy to reach the seven figure threshold.
There is a reason that very few people ever actually save their way to a million dollar net worth: low bank interest rates neglect any meaningful return, and compound interest is working more quickly against the value of your savings than for it.
The millionaire mindset expresses a completely different ideology towards an investment.
Millionaires look for the best possible return with minimal risk, while most investors simply look for the best returns. There are many cases where an 8% return trumps a 12% return after calculating for the risk.
Wealthy people spend money differently…
The millionaire views each and every purchase like an investment. Are the $500 speakers really worth $300 more in quality than the $200 speakers?
Is that $10,000 Rolex watch offering $9,800 more in utility than your standard Seiko? Both purchases are expenses rather than investments, but many of the new wealth consider everything they buy to be an asset, even if it’s losing money year over year.
Millionaires do work, but not for money. They work on systems, ideas, concepts that can leverage their time.
My friend, Richard Branson and you do have one thing in common… The same amount of time available.
Most people in the seven figure club got there by earning more than they needed to survive for a number of years, while supplementing their fortune with consistent returns from quality investments.
Remember, the investor can make an infinite amount of money each year by putting money to work.
On the other hand, the employee who “saves money” is left with a job that can only pay so much per hour and offer so many hours. Your opportunities are slim in the professional world, but huge profits can be obtained with each investment dollar.
Case by case: investing vs. working
Let’s consider this scenario. You have a $500,000 portfolio, which at a 12% return rewards the investor with $60,000 in annual growth. Many unspecialized jobs are unlikely to ever match this figure, while many college-educated careers pay somewhere around $60,000 per year.
The investor can earn more in a year with a modest retirement portfolio than can be made with a college education! Furthermore, future growth in earnings by investments is set by you.
Each time you roll your money over year after year, your principal grows, and the yearly payouts rise as well. Very few professions accommodate for a 12% pay increase year over year.
Ultimately, there’s only one solution. You either understand the fundamentals of investing and work towards becoming excellent… Or you can whinge and moan, working for a living for the rest of your life.
When I first started investing, I was prepared to put my ego aside and seem foolish to most professionals. In fact, I would have been considered by them naive and dumb.
The secret here was that I was prepared to be bad and seen as a bit of a moron to actually get good.
Today, my monthly income easily surpasses most of the smarty-pants professional’s yearly income who made me feel 2 inches tall.
Be prepared to be bad to get get good – put your ego aside, admit to yourself that life is not going as well as it should and start investing in your own financial intelligence now.