By Joel Dansby* on Aug 11, 2020
Although we are in the business of building wealth for our clients, we are always on the lookout for those “pearls of wisdom” from the ultra-rich that might bring some elucidation to those who wonder why they’re not. Of course, for most of our clients, wealth is a state of mind not necessarily contingent upon a net worth statement but more about fulfilling their ambition of a good life today and for the rest of their lives. But, as Steve Siebold, author of “How Rich People Think,” found after interviewing multi-millionaires from across the globe, those who seek to be among ultra-rich are of a different mind all together with a clear demarcation in attitude about what it takes and what it means to be rich.
It’s interesting that he spent nearly 30 years on his project because his initial findings could have been lifted from any front page article covering the Occupy Wall Street movement. Essentially, he sees the divide between “average people” and the rich as those who think money is the root of all evil versus those who believe poverty is the root of all evil. In classic OWS prose he writes that, “the average person has been brainwashed to believe rich people are lucky or dishonest.”
In the same vein, he echoes some of the same sentiments that we’ve been hearing in the class warfare meme of every election year: That the average person thinks selfishness is a vice, while the rich see it as a virtue. It’s that negative perspective, Siebold says, that holds the average person back, while the rich maintain that if they don’t focus on helping themselves first they will never be in a position to help others – somewhat along the lines of “have you ever gotten a job from a poor person?”
While many of Siebold’s findings are grounded in diametrically opposed perceptions of money, he does offer some interesting insights in the ways the rich approach investing which keeps them on the receiving end of opportunity. For instance
- Most people allow their emotions to guide their financial decision-making while the rich view money through a logical prism.
- Along the same lines, the average investor believes that the markets are rational and that all they need is a sound strategy grounded in logic. The ultra-rich know that the markets, at least in the short-term, are driven by fear and greed which creates continuous opportunities. Think Warren Buffet.
- Finally, average investors flee from risk, while the rich embrace it knowing that there would be no returns without.
The book offers much more for anyone who cares to explore the minds of the rich – travel safely.
*This content is developed from sources believed to be providing accurate information. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. Individuals involved in the estate planning process should work with an estate planning team, including their own personal legal or tax counsel. Neither the information presented nor any opinion expressed constitutes a representation by us of a specific investment or the purchase or sale of any securities. Asset allocation and diversification do not ensure a profit or protect against loss in declining markets. This material was developed and produced by Advisor Websites to provide information on a topic that may be of interest. Copyright 2023 Advisor Websites.