One thing that many of the world’s richest people have in common is the innate ability to grow their wealth. Even in times of economic hardship like today with rising costs of energy and fuel, along with rapid inflation in some countries, the rich tend to weather these financial storms and even prosper during such times. The question is, how exactly do the rich grow their wealth?
It is a common adage that money attracts money, but clearly, the reasoning and strategies employed by the rich must be more sophisticated than a simple soundbite. In this post are insights into some ways the rich cultivate their fortunes through the tough times and the good, so you can hopefully follow in their monetary successes.
They grow their wealth by constantly networking
Almost without exception, the rich are networking experts. For many people, it can be stressful to converse with high-powered people and steadily build a network of contacts, especially for more introverted types. However, networking is a key strategy used by the rich.
They do so for a variety of reasons, but in short, networking and growing a contact base of influential people can be highly beneficial to accumulating wealth. Firstly, it’s an opportunity to discuss business opportunities. Secondly, collaborations can take place that mutually benefits all parties.
Also, being adept at networking increases your visibility in business and social circles, which can be key in receiving business offers. It’s also helpful for knowing who to rely on when you need expert advice or to complete a particular task. For more on the benefits of networking, see here.
Multiple sources of income
For the rich and ultra-successful, the old saying “don’t put all your eggs in one basket” is true. Wealthy people, in general, recognize that they must have several different streams of income to grow their wealth. In other words, a diverse portfolio of business interests and sources of money is crucial.
There are two income types: passive and active. Passive income can come from a range of sources, from receiving rent for an owned property to dividends from stocks. Or, it could be shares or money gained from the ongoing sales of books or apps.
Those are only some examples of the many out there. It is “passive” income because it accumulates without needing to put the time in to generate it every day.
Active income on the other hand is money that directly relates to the time you put into working, such as being the CEO of an organization. The wealthy tend to have a wide portfolio of passive income sources while also working exceptionally hard to generate active income from their main employment.
Wealth comes from knowing when to buy and sell
While wealthy people like the things that come from successful activities and business acumen, they usually do not hold onto possessions indefinitely. For example, rich people tend to have exotic and luxury cars but know the best place to sell high end cars and when to do it.
It could be that they sell these vehicles to improve their short-term liquidity to finance other ventures. Or, perhaps the value of their car collection has appreciated (especially in the case of rare and exotic sports cars), and they take advantage of this by selling specific vehicles for profit. The same holds true for other high-value possessions.
If they are into stocks, knowing when to buy and sell (or hold) also applies. Sometimes, they have brokers that advise them on these decisions.