The major difference between the poor and the rich lies in the quality of their investment. To be wealthy is not about accumulating millions of dollars in your account but, putting your dollars to work. This why many find it difficult to understand how money works, some have associated their financial struggles with ill-luck. There is nothing like accidental wealth, every wealthy person took the necessary steps to acquire whatever they have in terms of liquid cash and assets. Knowing what to do with money is more important than having to struggle to acquire it. Some have died in the process of trying to work for money but, smart people know how to make money work for them.
Over 80% of income earners don’t know how to make money work for them. They spend their entire life chasing after wealth which they end up not getting. When you give a person with little or no financial knowledge $10000, within a few months he spends the money acquiring liabilities. Some feel that wealth means buying cars, houses, and other expensive stuff. Rich people think differently, a good investor doesn’t need $1 million to start a business, with just $1000, he can start up a business that will employ over 1000 people in 5-years.
Some individuals will rather spend money to showcase their wealth, they want to travel to New York for vacation, buy expensive jets, and build mansions. There is nothing wrong if you chose to spend your money that way after all everybody has a free will to decide how to spend his money. If you desire to be wealthy then you need to understand how to put your hard-earned income into proper use. First, understand that money spent can never be regained while money invested will yield returns. When you decide to buy a television, for instance, that is money spent. That TV set will never yield a single dollar throughout its lifetime. Rather you have to spend money to maintain it, buy subscriptions to allow you to watch movies, sports, and other programs.
If you decide to buy a laptop instead of a TV set, then you’re probably thinking like Bill Gates or Warren Buffett. A laptop can serve as a long term asset, for a student, you can use your laptop to work online, engage in stock trading, and several other business opportunities.
Investing in assets will generate money for you while investing in liabilities will take money away from you. Before investing in assets, it is important to understand that, the short-term investment will mean limited returns. Most great investors carry out long term investment, the reason is that the value of money tends to appreciate most in the future.
That is why banks will pay more interest on long term fixed deposit than short term because they understand the technique. For example, investing in cryptocurrency like Bitcoin seems to be an investment with great prospects. There are predictions that the value of Bitcoin will rise to an unprecedented amount in the nearby future. Taking advantage of that opportunity will likely turn you into a Billionaire in the future. There are virtual currencies like Ethereum that has provided several opportunities, early investment is usually ideal to avoid much competition.