Rich Man Common Sense

If you look at any rich person’s profile, you will never fail to see reat estate investments that forma manjor part of his portfolio. It is interesting to see the long time love affair the rich have always had with the Real estate and properties.

Either just as an indulgence or as a part of an investment, real estate is an inseperable friend to the rich and there reasons are given below:

1. The average return is higher than most other Investments : Barring a few other investment categories like equity ( which sometimes beats real estate’s rate of return) and much more risker markets like Forex, Real estate is more predictable and earns retursn much greater than the other financial instruments. It is also considered to be more stable and not as volatile as the stock markets.

2. Real estate allows for an impressive recurring income : If you could dabble with real estate and manage to own a few high ticket assets, the opportunity to construct recurring income streams ( at an increasing rate) is a never ending one. It is a wonderful to ensure your income for the future and gets you a lot of cash on the table.

3. Real estate gives you opportunities to grow your wealth : The options are pletiful whehn it comes to decided what you want to do with the property you own — you can rent it out, lease it, use it to run some other business, sell it and lots more. The wealth making opportunities are simply unlimited.

4. Real estate locks up wealth and keeps it safe from unnecessary squandering : Some of the rich folks ( especially the ones who inherit wealth ) are rather impulsive and tend to show-off, squander it away on worthless junk. Real estate makes your wealth sit locked up and a little difficult to liquidate. That is good news for impulsive shoppers since this has, in a way, protected your wealth to erode.

5. Real estate is has high resale value : property, no matter where you are in the world, usually has high demand on it and carries a premium on it. Real estate is Real assets — huge blocks of assets that can make money for you; protect your wealth; protect you from inflation and can be sold for a premium price ( provided you know how to strike deals).

However, it isn’t easy to manage real estate or even enter into the market so easily. You need to be able to build a pile of cash first. This is the game of very rich and you will still need to work hard & smart to get there.

Like it was mentioned before elsewhere in my blog here, value is what makes people pay the price you quote for whatever it is that that you claim to do or produce. Value is what others perceive to be what they might get when they pay for it. Value is what will differentiate you from all others and give you the head-start you will need to keep your chin up and be better than the best. The value you provide to the soicety will define your riches; will set the pace for your journey towards the land of the rich.

Most people are. however, lost on how to ensure that value is reflected on everything you do. Here are a few pointers that will help in enhancing your value :

1. Innovation — going where no man dared to : I wasn’t talking about the ability to produce new things out of the blue. I was talking about your propensity to do seemingly common things differently. You must have the knack to see things in a very different manner compared to how the world sees it and still make sense. You ought to have the guts to carry on thinking this way. Each time you dared to do something different, you are going to be standing at the threshold of a new door looking at an opportunity no one else has seen before — even if they did, they wouldn’t have acted on it.

2. Problem-solving : I heard this a million times when I was doing sales for a major multinational bank — Don’t bring problems to the table, bring solutions. In a way, they were right. No one wants trouble makers, everyone wants to see a problem solver. Someone who can turn tables around and introduce simple solutions to problems — be they simple or complex. Look around the richest of the rich — what have they done? They took a problem and came up with a solution. This single ability alone is a million dollar one.

3. Resilience and the Spring-back factor : Your value is up now because of the fact that you don’t waver. You are rock solid no matter what happens and you have the ability to see things clearly. You are very discerning and even if you were to be disturbed about something — you just spring back to normalcy and go about doing what you ought to do. People who whine about things lost, rarely boast about being able to have any value about them. They are worth nothing.

4. Leadership Abilities : Followers can’t be rich, ever. Followers do have a value to provide, though. It is not to be construed that they don’t have anything to contribute, they do. But then, we are talking about a value that people can put their hard earned money on. They need to come tearing to you and give you their cash. Leaders can do that. You must be able to influence people with your ideas and make them do what you want them to do and still make them feel that they are either doing it for their good or for the common good. How do you get these skills? Two steps — be a good follower and then start leading by example.

5. Knowledge : They do say knowledge is power, don’t they? In effect, they mean that knowledge arms you with value. when you are able to give people information, you provide them value. When you do problem-solving ( which is so easy for you because you have the wherewithal and the know-how), you give them value. This is only possible to achieve if you have your eyes and ears open; read like crazy; ask questions; learn from everything that is happening around you. Keep your ego at home and don’t ever think that you know it all.

If you just listen to your mom and do nothing else beyond whatever she taught you, chances are that you wouldn’t be able to do much in your life. Don’t get me wrong here, I am not against moms, In fact I Love my mom very much. But loving is different from learning, isn’t it?

This rant about ” what mom’s teach” is because they teach you everything you need to be become a slave and that’s because they love you. They don’t want you to take risks and they certainly don’t want to see you fail. However, if you don’t take risks and if are afraid of failing, you will end up in a day-shift, shredding wool off a sheep’s back. Here are a few things your mom would never bear to see you doing, but are a requisite for your success ( to be rich, that is) :

1. Learn to get others to work for you : This is perhaps one of the most important skills you will need to hit the bank running and how you learn this skill is upto you. The reason why itis recommended that you work somewhere in some company is because you have the opportunity to pick up skills like these. People are generally very docile, obedient and do whatever bosses say, but are still very tough to manage ( kind of ironical, eh?). That’s why managing them is a skill and you got to learn it. NO, management degrees won’t even help you teach how to stop a woman from crying, forget about leading a team towards a common goal.

2. Work Long Hours, into the nights : Would your mom like it? No. is it necessary? At least in the beginning, yes. Pick up work and slog your way through the day. No rests. No luxury of having fun at the nearby pub or hangout with friends. This is the price you are paying for the riches that you will enjoy later. Economics of the rich, sweety. Don’t argue.

3. Dress Down like Richard Branson : Look like a street thug. Look inconspicuous and certainly don’t yap about your plans to become rich. Get rid of your formal clothing, unless your job really demands it and try to learn the art of being humble. It is a waste of money and time trying to dress up for others. However, if you really like looking good, this point is moot.

4. Be Candid and Tell people off : That’s right. Learn to say, Piss ice water on people who are rude to you ( even elders) and don’t be obliged to anyone — not even your family. I told you, love is something else. In practicality, everyone loves themselves, not you. being candid takes you places — remember Jack Welsh?

5. You don’t “Think over it”, You snap : How many times did you say ” Let me think…umm”, or ” I will think over it”, or “umm I am thinking of..”. get out of it — you don’t need this ‘Ummm’ thing. You got to take quick decisions. Like snapping out of your own self and grabbing the opportunties as they are being created. In fact, you must be creating your own opportunities.

Businesses are set up each day and just as many are lost. Most small business entrepreneurs really go through extremely short life cycles. I won’t throw the all-too-common statistics around but you’d know this much that it isn’t really easy to set up a business and run it successfully and businesses fail all the time.

Why are we talking about business here? Because that is the patented way of being rich, that’s why!

Now, back to the point — buisnesses fail and it almost always due to the entrepreneurs lack of being open to learning; inflexibility in attempting brave new things and innovating. Well, all of these are big points to talk about in some nice business centric blog. We aren’t here to talk about that. Instead, we will talk about a simple thing that needs to be done. Might not be a good job, but it is extremely important.

So what is so damn important? Training!

In business that aims to FREE its owner of the hard work later and let him enjoy the fruits of his/her labor, leverage is everything. The ability to ensure that people ( your employees) work for you in a consistent, proven and reliable manner — in line with the systems you should have worked to create — such that it frees you from a lot of grunt work in trying to catch up with clients; do customer service; answer their questions; cater to their demands, etc. All of this takes up loads of time and that is one thing you don’t have, not to squander, at least.

Here are a few pointers on how to get it right :

1. Train ALL your employees, new or old : Some of the old timers tend to escape the training bit. They might claim to know everything — not done. Each employee has to go through a set training module so as to ensure every one is on the same page and are headed towards common business goals — Your goals.

2. Train them to be better than you are : That’s right and this is one of the secrets the rich never tell you. You must ensure that you pick people who are smarter or better than you are and then train them to be even better. These will be the ones who might spear head your business and manage it while you are away enjoying the fruits of your labor. Treat them with love and care and see what they do for you.

3. Training consistently and repeatedly : People quit, new people come. The ones you are training or have trained already might not have gotten it quite right the first time. You will train them again and you will not stop until they do their job efficiently or if you could manage to make even training an automated or self-managed affair in your business — which is indeed a brilliant thing to do.

4. Training is your responsibility: In spite of all the efforts you put in trying to get people up and running towards your goals, you will be increasingly frustrated about their apparent lack of motivation. It is your job to figure out what they want and give it to them. lack of motivation can be a complex subjec tto handle and you might want to ask experts to do the necessary programs to get them back; to rev them up. But it is your responsibility, nevertheless.

This is one of the pillars of the foundation to get rich. It is sure hard work andif someone said it was easy, they were kidding.

If you don’t want to do any of this, you know what you need to do, don’t you?

Now that I got your attention, I’ll talk some sense. First, you’ll have to work; else you won’t see the dough. However, Becoming rich isn’t some rocket science and all it takes to make it big is to plan properly. Now, since is planning is boring and calls for a protocol, most people don’t bother doing it and hence end up regretting later. If you are happy being what most people are, you don’t even have to read further. Thank you. But If you do want to do something about your life later on and ensure a smooth, easy and lazy “making it big exercise”, you should pay heed to the following:

Learn Compounding Interest: The key to being wealthy is to make let money wear the workman’s clothes and do all the hard work, everyday (including weekends) and forever until you instruct it not to. But just like you would have to ascertain and screen employees before you let them work for you, you’d want to do that to your financial instruments too. The parameter you would want to look for — as to the viability of each of these available financial instruments — is Compounding Interest. If you don’t know what that is, get back to research mode and lap it all up.

Start saving and start early: When you are young and loaded bereft of all responsibilities — that ought to be the right time to begin planning the long journey of your financial planning. Don’t let anyone tell you that these are times to bask in glory and roll on the floor without a care in the world and that you are too young for it. Ensure that your investments reflect your risk appetite: As a thumb rule, the younger you are, the more you should be exposing yourself to risky investments – like equity, for instance. Your ability to stomach the risk would be much higher when you are young and you have your age to back you up. But then, do reshuffle your portfolio to something like 50% into equities and then 50% into debt markets or safer instruments when you approach middle-age, and as you move on towards retirement, perhaps it is time to move most of your investments into debt markets and safe instruments.

Add Insurance – both life and non-life: Now, people might just forget this vital part of your financial planning. At all stages in your life, do see to it that you have a life cover so that you can provide for your family if you were to kick the bucket and while you are living, it makes sense to pick up a health policy for yourself and your family to cover for those medical emergencies. You don’t want to end up digging out cash from your savings when these things happen to you, do you? The younger you are, the lesser premium you would pay. Insurance, however, is not a profit making instrument — it is rather an instrument which can be used to prevent your losses due to unforeseen circumstances.

Keep at it: Life takes unexpected twists and there might be days when you’d feel that you might not be in a condition to continue investing –that won’t cut the ice. No matter what happens, you got to continue investing. Just keep at it and stretch yourself as far as you can. The rewards will hang for you to pounce on only if you make a disciplined, sustained and almost religious effort.

If you come this far and look back, you can’t help but smile at the wads of cash waiting for you.

Nothing beats this wealth-building strategy. This is the ultimate secret of the super rich. Most people end up struggling to work on ONE stream of income by having a job. But the rich don’t operate that way. They work towards developing a personal system wherein work is done once and then the money keeps flowing in. Ah..the beauty of residual or recurring multiple streams of income.

So how exactly do we do that?

1. Work religiously to generate Cash-flow : Cash-flow is everything and you are now at a stage wherein you will need to put in the effort to generate it. Get a job or multiple jobs to start generating the cash flow. Give yourself a time — like a year; two or three and work furiously until then. No fun. Just work. Why? You got a lot more things to do; your goals are different and you will be surprised to see that most of the others will think you are crazy, among other things. Now this cash isn’t for weekend parties and mindless spending — it is to be saved. This is what is called “precious money”.

2. Invest in something that doesn’t involve your presence : Most commonly, the rich look at real-estate as n option because it is indeed a one time investment and you would lease it out for tenants who would use it for a monthly fee. See? That starts your second income stream. However, there is just one problem. The costs of owning a piece of real estate is outrageously expensive. We should be doing this much later, when you have a lot more dough to play with. So what’s the other option? Well, there are many but since we are still at a growing stage and don’t really have too much cash lying around. We should be looking to Invest. This earlier Guide on Investing makes for a good read if you need to know a little about it. This is a case where your cash will start working for you. The dividends or the returns coming out of the market returns is to be your second stream of income.

3. Start a part-time Business : Start doing moonlighting or start a business ( you still have the job that can keep things going for you!). We do this to achieve two things — one to give you a taste of things to come and two, because if you do it right, you will generate more cash flow simply because you earn as much as you work ( unlike in a job). You will continue doing this until you are working away into the nights; earning substantial amounts of money and almost getting there — but you aren’t yet. The cash-flow here should be your third source of income.

4. Full-time Business will find a way on its own : Once you get started on your part time business and develop enough client, you will begin to realize the need to have additional help to manage some of this work or to do things you might not be good at, like accounting. You will hire your first employee and then scale up from there depending on your pace of growth. You will free your time now to an extent and you will do well if you focus this time on getting more clients while you hire someone else to do the delivery. You are now slowing evolving into a business. Let’s say you are still on the third source of income. You will let go of your job at this stage.

5. Leverage : Here’s where it begins to make sense. Slowly your employees will start working for you and you can slowly build a team of people who will across the functions of operations, delivery, sales and marketing ( although you contributed a lot here) and accounting/finance. When you do develop systems and ensure that things seem to be working without your involvement, you are getting there. Leverage is what makes businesses powerful. leverage is the tool of the rich.

6. Idle you, active Money : Your business is taken care of ; that’s your first source of income now. You have been saving money every month, haven’t you? That’s your second source of income. After a certain time, you will be making a lot of money which you can now use to build assets like homes, ranches, commercial buildings and lease them out – this will be your third source of income. This will fetch you more and more dough — this is your playground bubba! Do what you like!

That would be an ideal blueprint for building a system for multiple streams of income. How quickly you will get here is a function of how well you put this into practice and whether you will persevere or not.

That says it all. Doesn’t it? Just look around you. Google any rich guy you want to do research on and you are most likely to find out that they would never have a job. For them, giving others jobs to do is a job. Here’s the thing , the big secret : You can never be rich if all you are paid at the end of a month is a pittance for the hard work that you have put in. Jobs are mundane, monotonous and are very specific in nature.

Let’s start out as a teacher — you are most likely to be a teacher for the rest of your life until you can be as old as you can be and that will be it — your life story. I don’t know about you, but that’s the last thing I’d want for myself. I would want variety; spice and happiness. I would want to cherish my life – because that’s the only one I’ve got.

People tell me why they have a job in the first place — they tell me that they have it not because they love it ( See, you are beginning to lose me already!) but it is because it provides them a fixed amount of money at a pre-determined time every month. This is security for them. I fail to see how people can be so assumptive about things — didn’t they think about what would happen to them if the company they are working for closes down? Files for bankruptcy? what would you do if your boss simply asked you to quit one fine day? You call this security? letting someone call all the shots?

Just how did you think you will have more money and freedom to do what you like( that is what being rich means!) if you were hooked up at work for about 8-10 hours everyday at your job and then earn X amount of money every month.

I don’t see too many options for you? How about you?

Let’s talk about a few things you could do to get into the millionaire mindset. Many of us don’t have a planned approach to life and that’s why many of you remain where you are – stuck with the force of a disease called ‘averagitis’. Making wealth isn’t rocket science and in fact it is more like mining — long, consistent, hard work and getting your hands dirty at least until you find traces of whatever you were mining for.

Listed below are a few classic principles that the rich know very well. Their lives are planned and executed around these principles and you would do well to follow them :

Wealth rewards the risk takers : There, you see that? Well, now you know why no matter how hard you worked at your lousy day job, you’d still get the same payment. In some emerging economies where the inflation hovers around 6%, you will realize that your annual increments of about 10 % is a joke since the effective rate of increase is only 4% i.e your 100 $ becomes 104$ . Impressive, I must say! There is no wealth when you work for someone else, simply because the time you are putting in here doesn’t fetch you what you would have got if you applied the principles of leverage ( basic business)

Show me the passion, take the money : Without passion, you won’t even scratch the itch of being rich! There needs to be that fire in the belly. The craving, tearing through everything else type of aggression that should be fuelling each and everything you do.

Committed, not just wanting : The rich are truly committed to their quest of making wealth. They just don’t WANT to get wealthy. They create opportunities for themselves and then apply themselves 100% towards their goals of becoming rich. Day in and day out, they do stuff that will take them that much nearer to their goals. A life long commitment, they won’t rest until this is cleared.

Slogging their pants off : Notice the truly rich and trace back to their beginnings ( na, as usual, please ignore the inheritance ducks) . what do you see? You won’t see lazy bums day-dreaming about being rich and owning cars and mansions. You will see them working like their lives were at stake and sometimes selling peanuts ; WWF stickers and posters : Pokemon game sets; dictionaries and encyclopedias or sometimes selling ideas. They wake up earlier than most people and sleep much later than everyone else does.

Money maketh more money : After a certain time, all the money earned will slog to make more money. A relentless chain of working links that will all supplement your income to take into the millionaire league. Investing in appropriate vehicles like equity, businesses and real estate will allow this to happen and that is the true leverage that we keep mentioning about. The high Interest rates in the vehicles mentioned above will do a one-up on the inflation and give you sufficient rate of return such that your money is truly making more money for you — by the power of compounding.

Most people need a job to make money. However, the amount of time you spend on trying to manage your hand-to-mouth existence is so huge that you barely have anything left that you could use to make more money with. Surprising! Didn’t everyone whine a little while ago that they all wanted to be rich?How come you work so hard that you don’t make money anymore? You only kill time and get paid a pittance for it!A humongous number of people work to live. Just like that. X amount of cash flows in — Expense A, Expense B and Expense C ; a lucky few get to save Y amount of money( most don’t) which will be used up to buy a house; a car or something else that can be categorized as dumb ( because you’d have to take a loan for it — *OUCH*). If you are putting in the time (9-5; 8-8 or whatever) you got to be able to make that much money. You put more time, you make more, right? Wrong! You are still paid the same peanut salary that you get. How about those who love doing what they do and they would keep whining all their lives about this? Well, aren’t they supposed to be making a lot of money they do what they love? No, they are worse than the former group of people who just ‘ work’.Working for someone else and making ” them” money is the worst thing god wished upon you. I wouldn’t wish that kind of life on anyone, simply because if you were that smart that you were employable in the first place, you would have done well doing it all for yourself, instead of slogging away for someone else. In the name of security, you have let go of claiming your self-respect ( because there is shit thrown on your face in those cubicles); in the name of the brand you are working for, you have a salary that could be featured as the joke of the month; looking at working so hard to make a living, you would have forgotten how to raise some real money.So if you have been working for any length of time now, I ask you again, my poor little busy bee, where is the money?

The rich aren’t rich because they have been destined to be. They are rich because they have prepared themselves to be rich. They have paved their foundations well. They have applied themselves and have invested considerable time and effort in developing themselves. There are some things that are found commonly among all the rich — I mean, absolutely no exceptions.

Here they are:

Well read : Look around and you will find that most of the self-made rich ( I am not talking about the suckers who get rich because of inheritance) are extremely well read. They just read — it doesn’t matter what they read on. It doesn’t matter how they do it and when they do it. But they do it, nevertheless. It gives them the confidence to have known something; the inspiration that is dutifully conveyed by the book and also the vocabulary that is a requisite for the truly global entrepreneur.

Passionate : I will bet everything I possibly have on this one — Most of the entrepreneurs whom I know haven’t even started with money — they started with passion. All of this passion was used up to fuel an idea into fruition and that is what ensured that the business came alive. You will see that these entrepreneurs are the only ones in the entire company who come earliest and leave last. They open and close doors. They feel and live in the company – while everyone else is working for a monthly salary.

Focused : Entrepreneurs are known to crave change – well, at least the adventurous types crave it. But focus is something they always have. Focus, as in clarity in an urgency to do something productive, has always been a predominant trait in successful entrepreneurs. A not so focused entrepreneur is like wild pollen – subject to fly away where the winds are strong.

Persistent, to the point of being adamant : When you first look at their stubbornness, you’d think that they are selfish, adamant and narrow-minded. However, you will realize that it is indeed a valuable trait to have because entrepreneurs actually get used to people not accepting their ideas. Their lofty ambitions and seemingly crazy ideas seem whacky to most people. Given this bit of reality – entrepreneurs have developed their thick skin over the ages and this is something you will notice among most of them. Once they ideate, they are on – no mater what.

Humble & people – centric: The only grumpy people you might even find on earth are those morons who work for others ( Pardon the condescending attitude towards a respectable majority of people, but it is a fact). The middle-level managers are the ones who create most problems. Have you tried to reach out to the decision makers? See how they are! Humble, friendly, understanding, all-knowing-yet-sympathetic !

These are traits you will need to have to be rich. It doesn’t make sense to try and be like mentioned above after being rich, simply because you can’t be — you’ll be too caught up with your everyday nitty-gritty.

The time is now. Go out there and get yourself a make-over. Change yourself for good.