8 Money Lessons From The Rich And Famous


8 Money Lessons From The Rich And Famous

These high net worth individuals didn’t grow their wealth through luck or by chance. Instead, they owe their financial status to a combination of discipline, persistence, savvy and boldness. Steal their tips.

Published on 3 October 2016

Made a profit? Don’t spend it – reinvest it. As tempting as it might be to spend the money you made in the stock market, American billionaire Warren Buffet says that reinvesting the profit can help you turn it into something bigger. On his website, he says that he learnt this at a young age. With the money he earned from installing a pinball machine in a barbershop, he bought more pinball machines, placing them in other shops. After selling his business, he invested the proceeds in stocks and to start another small business. “Even a small sum can turn into great wealth,” he shares.

Look for ways to trim costs

You’ve heard the phrase “You have to spend money to make money”. But this isn’t always smart. Take Amazon, for instance. Back in 2009, it reported in a shareholder letter that it had shaved tens of thousands of dollars off its electricity bills, simply by removing all the light bulbs from its vending machines. By eliminating this unnecessary expense, the American electronic commerce giant understood that even small amounts add up.

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Never stop learning

As busy as he is, chairman of CK Hutchison Holdings Ltd and Hong Kong’s richest man, Li Ka-shing always takes the time to read. A Bloomberg article published online in June 2016, tells how Li educated himself on the plastics industry when he started making plastics as a young man. Modern Plastics, a monthly US trade publication was one of his main sources of knowledge and ideas. “Even if I don’t get enough sleep, I’ll spend an hour to read every evening,” he was quoted as saying. These days, Li reads books that are related to his life and businesses.

Be patient with your financial goals

There will be occasions where you will lose on the stock market, and you won’t always be in a position to contribute to your retirement fund. It’s easy to feel discouraged when you feel like your financial goals are completely out of reach, but it’s important to stay on track with them and avoid making impulsive decisions. One of the richest women in America, Oprah Winfrey, admitted to having had a nervous breakdown over her struggling cable network, OWN, back in 2011. But she persisted with her goal, and earlier this year saw a remarkable turnaround in ratings and ad revenue for her five-year-old business venture.

Take control of your spending

Financial discipline is underrated, according to author Alan Corey, who only goes to the ATM once a week and pays for everything with cash. “That way, I’m forced to stay on a budget without counting pennies and saving receipts,” says Corey, who wrote A Million Bucks by 30. “I can spend only what is in my wallet. I turn it into a game where each week, I reduce my ATM withdrawal amount by $20 to determine how low I can really go.”

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Learn from your money mistakes

We have all made financial mistakes, some bigger than others, but the point is to learn from them so as not to repeat them. This is how you come to understand what works and doesn’t work when it comes to maintaining your wealth. As Bill Gates, Microsoft founder and the world’s richest man once said: “Don’t whine about your mistakes, learn from them”.

When investing, remember: the rewards should far outweigh the risks

While there’s no such thing as a riskless return, you should always look for investments whose potential returns are greater than the potential losses. Multimillionaire life coach, author and motivational speaker Anthony Robbins advises people to find investments with asymmetric risk and reward. Specifically, he recommends using the “5-to-1” rule – so if every dollar you invested could potentially return five then you’re on the right track, because, even if you’re wrong four out of five times, you’ll still break even.

Be certain when making financial decisions

“You have to pretend you’re 100 per cent sure,” says Andy Grove, former CEO of Intel. “You have to take action; you can’t hesitate or hedge your bets. Anything less will condemn your efforts to failure.”