What the rich don’t do with their money

When it comes to managing and investing money, the rich are very different from the non-rich.

From my five-year study of the rich and the poor, I discovered that there were certain common money management mistakes the rich never seemed to make.

The rich avoid uneducated risk-taking

The rich do their homework.

They study investments for months before deciding to invest any of their money.

They eschew those emotion-based “can’t lose” investments that always seem to do the very opposite.

The non-rich don’t do their homework.

They don’t study investments.

They take uneducated risks.

The rich avoid fad investing

The rich don’t always take the advice of their “experts”, but they do seek feedback from them regarding potential investments.

They don’t seek out investment advice from their friends or family unless their friends or family happen to be “experts”.

As a result, they don’t fall victim to investing their money in hot tips or the latest fad.

The rich don’t panic

Because the rich have spent many years building their wealth, they have the financial resources, and the liquidity, to weather the volatility of the stock market.

As a result, they do not panic, like the non-rich tend to do when market conditions turn south.

The rich stick to their plan and ride out the down markets, and continue to buy, while everybody else is selling.

The rich don’t put all of their eggs in one basket

Most of the non-rich have their money tied up in a retirement account or some singular investment account that is invested primarily in the stock market.

Conversely, the rich diversify their investing.

They have their money invested in many baskets:

• Some of their money is in the stock market
• Some of their money is invested in real estate rental property
• Some of their money is invested in limited partnerships

• Some of their money is invested in TICS
• some of their money is invested in triple-net leases
• Some of their money is invested in private equity funds
• Some of their money is invested in bonds and other fixed investments

The rich do not depend on hope and a prayer

The rich use financial advisors to help them craft a well-thought-out financial plan that they will follow for many years, or until the financial goals of the plan are achieved.

The non-rich do not create financial plans.

They wing it.

Their investment strategy is hope and prayer.

The rich do not succumb to unbridled optimism

The rich make investments anchored in reality.

They do not go into investments with rose-coloured glasses on.

They understand that investing is a long-term proposition.

They expect the stock market to go up and down, numerous times, while they are investing in it.

The non-rich sees only the upside while investing.

When the market does eventually turn, their rose-coloured glasses break and they run for the hills, pulling their money out as fast as they can.

The rich don’t liquidate

Because the rich follow a plan, they don’t liquidate their investments at the first sign of market volatility.

They stay invested.

And they continue to invest, even when the market is down.

The rich avoid the herd mindset

The rich do not follow the herd when it comes to investing.

They follow their plan.

The non-rich make investments based on what everybody else is doing.

Their plan is to follow the herd.

About Tom Corley Tom is a CPA, CFP and heads one of the top financial firms in New Jersey. For 5 years, Tom observed and documented the daily activities of wealthy people and people living in poverty and his research he identified over 200 daily activities that separated the “haves” from the “have nots” which culminated in his #1 bestselling book, Rich Habits – The Daily Success Habits of Wealthy Individuals. Visit the website: www.richhabits.net