In this blog I will list some of my top Quora answers for the last few days.
If you want me to answer any questions on Quora or Youtube, don’t hesitate to contact me.
Do the self-made wealthy use other people to get rich?
It depends if you mean use in a positive or negative way. In terms of the positive way, most wealthy people need to leverage people, indirectly or directly, to get wealthy.
Let me explain. Say you are one of those legions of “everyday millions”.
The kind of person who is middle-aged, middle-income, and you are a millionaire.
The kind of people books like this rightly speak about:
Even in this case, you have still leveraged other people’s:
- Ideas. The stock market has gone up, long-term, due to innovation. Short-term it can go up or down for any number of reasons. Likewise, you probably didn’t get the idea to invest in a vacuum. You used other people’s ideas, for example by coming across an article online, and implementing the ideas free of charge in some cases.
- Technology. Let’s say you have invested monthly in a good platform, you have used this low-cost way to invest.
Now if you run a business, you need to co-operate with others and leverage their time.
In the negative sense of the word, I haven’t seen any evidence that wealthy people manipulate others more than anybody else.
Studies have shown that the average wealthy person is more trusting, or more willing to engage in win-win co-operation, as opposed to people who are often quite closed (and often broke due to that fact).
They are also sensible enough to realise that cheating to get ahead is pointless if eventually you get found out.
There are exceptions of course, but most sustainable wealthy people are merely focused on leveraging money, time and other people, rather than using people in a negative way.
When was the time you felt like a great investor?
If you would have asked me what makes a great investor on day 1 at business school, I would have said things like:
- Technical knowledge
- The ability to see trends
- Beating the market
I now see things different. There is something even more seldom than those traits……the ability to control one’s emotions.
So, the only time I have felt like a “great” investor, is when I have done something which is rare.
So, it might seem odd, but looking back on March has made me realise something even more clearly.
Markets were falling so fast:
The Dow went from 29,000 in February to 18,000 at the worst of the crisis. Markets had fallen in record quick time, even if the overall fall (50% or so) has happened many times.
People who should know better, including institutional investors, said this time is different.
They always say that regardless of the crisis. They were unimpressed by the stimulus efforts from the Fed, and the response from governments. Many said it wouldn’t work.
It wasn’t just institutional investors either. 35% of 65 year olds, according to Fidelity, panic sold from March until May.
I did….nothing, apart from rebalancing a bit from short-term bonds, which rose unlike long term bonds, towards stocks, and waited it out.
The same thing I did during the 25% fall in late 2018/early 2019, and I wanted markets to stay lower for longer for the reasons I referred to on this answer, which was originally answered in March/April – Adam Fayed’s answer to How should I invest my money during the coronavirus crisis?
The thing is, human nature is human nature. Having a PHD in portfolio theory doesn’t make somebody less likely to panic sell during a crash.
I have witnessed countless people, who in some cases have even read academic works by the likes of Vanguard, who have still panic sold after various crashes, even though they said they wouldn’t.
Ironically, in the same way that doctors are statistically more likely to smoke, drink and be overweight in many countries, many people who are financially knowledgable, are even more likely to panic in these cases.
I am not sure why. Perhaps it is because they spend more time consuming financial news or consider themselves smart in the area.
Regardless, the only people I have met who have sustainably got wealthy from markets have just held on for decades.
There are a few exceptions, but a to get great investment results, you don’t always need to have special technical attributes.
They can help, but having strong emotional balance is much more important.
What skills can I develop in my early 20s to become high value?
Firstly, it depends on what you want to achieve. I presume you mean high-value in the workplace, in business and related to money, but maybe are also referring to relationships and other areas of life.
Anyway here is a list
- Communication skills. Verbal and written. If you don’t know how to communicate ideas, having those ideas is less valuable. The ability to communication with people from different cultures and generations is especially important in some industries
- Negotiation skills. This one if self-explanatory
- Soft skills. Communication skills is one example of soft skills, but there are many others, including how to manage others. Soft skills can’t be automated as much as some other tasks. So, we might be going towards a workplace in the future where getting a communication or philosophy degree might be more useful than maths, if machines keep advancing. Ideally, get good at both soft and hard skills together.
- Social media. Knowing how to use it right
- The ability to know how to use money well, in other words manage it (spending and investing habits) rather than just focus on making it. If you can get good at making and managing money, you will get wealthy. If you are only good at making money and don’t learn the managing skillset, then it is harder.
But do you know what is even more vital than skills? Mindset and mentality. I was listening to Gary Vee speak today.
He was speaking about LinkedIn and how its organic reach is now huge. It has gone from an online CV board to something like Facebook 10 years ago…..in some respects at least.
He puts out a lot of free content out there on LinkedIn marketing, like this one:
What stops more people using such tools well? Is it lack of skills or knowledge? Sometimes, but usually, as he pointed out on the Interview I watched today, it is due to things like:
- Being afraid of pushback. There will always be those 1–2% of trolls.
- Not being persistent enough or not even trying the idea to begin with. It is a HUGE misconception that most people will steal a good idea. If you go into a room fo 1,000 and give them gives, about 4% will do it. 50% will give up too soon, leaving 2% who implement over a long period of time.
So, rather than just focusing on skills, also look at attributes like mental toughness, resilience and persistence.
If you have those things, you can outperform somebody with far superior natural ability.
Moreover, for business owners, it is far more rare to find younger people with these traits than great natural ability and skills.
Skills can be compared eventually. Attributes and personality traits can be as easily.
If you have a rare skill in 2020, it might not be rare in 2030, once word gets around about it.
Somebody can’t just copy you as easily though.
Is it true that most Instagram influencer pretended to be rich in order to attract followers?
Yes a lot do, but it depends on their genre and niche. Ultimately, it is far easier to sell something which looks tangible, compared to something which is like a dram (say to stop working at 40).
In addition to that, these influencers know their audience. In general, their audience isn’t wealthy people.
If it were, they would know that many wealthy people are very careful with money and don’t always try to show off.
Instead, a lot of their audience has given in to the idea that success means having a fancy car
Or big house:
Some of these influencers are rich (in terms of both wealth and income or just one of them).
Others are not:
Either way, they are only “looking rich” to people who have never read the evidence on how the rich actually spend their money on average.
This quote is a far more realistic view of wealth than the average social media portrayal:
As the title of one of his books said, Stop Acting Rich and Start Living Like a Millionaire
So, the best thing you can do is ignore these fake influencers, or learn from their qualities (maybe marketing) without taking their advice.
Which ones are the places in which becoming rich is easier?
It depends if you mean countries or industries. If you mean countries, there is a trend happening in the world today.
We are moving towards a fourth industrial revolution and a digital economy.
We have already partially moved there, but we are maybe less than half way there.
That means that location isn’t as important as it used to be. People aren’t as impressed by fancy London or NYC offices these days.
In fact, more people realise the negatives with that model which include:
- Higher costs which are passed onto the consumer
- More risks as covid has showed
- Sometimes a very localised solution. So if you bank with HSBC in the UK and move to Singapore, you might be passed onto HSBC Singapore, as one example I could use of many. Most people prefer to deal with the same lawyer, consultant or advisor globally or indeed have a “human-less” experience on an app.
- Often slowness and inefficiency as you need to commute, go for long meetings etc
These days, therefore, people are more likely to do things remotely.
That is changing the world.
I will give you one recent example. Lebanon. This happened, unfortunately, a few weeks ago:
If that would have happened in 2015, or especially 1995, the demand for emigration would have skyrocketed.
Demand still rose, but these days, the number of people considering remote work has gone up.
So, I was reading an article which said that demand hasn’t gone up as much as expected for emigration from Lebanon. Covid wasn’t the only reason.
This means that where you were born, and where you currently reside, isn’t as important as it used to be.
Now sure, it is still a huge benefit to be born in the middle of one of the world’s richest cities.
It simply isn’t as big a deal as it used to be. We might actually see house prices fall in some of those cities in the next 10 years, and rise in some other places where nomads can live, for this very reason.
If you mean in terms of industries, the easiest industry is always the one you have experience in.
Everybody knows that most start ups fail but few ask why. One of the biggest reasons is that people try to start up in areas where they have little or no experience.
So, by far the easiest way to make money in business is to get a job first.
Get good at it. Build up your contacts, skills and learn from your mistakes.
Alongside seeing areas to tackle inefficiency, you have a good starting point to start a business.
So it is only “easier” because you have put in more work to begin with.
Finally, investing for a long period of time is easier, in some ways, than business.
The reason is simple…..you aren’t competing against anybody. If I invest in the S&P500 for 40 years, and you do too, we will get the same return, if we invest the same amount.
We can both win. In comparison, business is about competition. It isn’t winner take all in all circumstances, as you can collaborate with competitors.
However, it is competitive. With investing, you only need to leverage time to build up a $1m+ portfolio investing for decades.
You don’t need to invest much to get there.
What’s the fastest you’ve witnessed someone go from rich to poor?
The credit crunch. Countless people have forgotten about that term.
Indeed many people forget that what became known as the global financial crisis, or global economic crisis, of 2008–2008, started as a credit crunch.
In other words, 6–18 months before Lehman Brothers collapsed, banks didn’t want to lend to others.
It started first in the US, but came to the UK after Northern Rock needed to be rescued by the UK Government.
This was after countless people waited outside their doors as speculation mounted about the banks issues:
The situation got worse, of course, once Lehman Brothers collapsed.
After that, even less banks wanted to lend to businesses and people.
I personally know several real estate developers and businesses go under quickly at that time.
Some of the smaller time landlords did OK, unless they were too leveraged.
Often they just waited it out, especially if they had a cash buffer.
They just decided not to add to their property positions for over a year, or longer, in some cases.
The people who really got hit were the businesses reliant on debt-fuelled property expansion in the UK, Eastern Europe and beyond.
Many of them had just had a great 1990s and 2000s, and saw several trends, such as rising house prices after countries in Eastern Europe joined the EU and, in some cases, Eurozone.
Some of these people saw their luck run out and run out quickly because they had bills to pay.
They paid off those bills by trying to sell property and then a vicious cycle was the end result.
It made me realise a number of things. The biggest thing was how dangerous leverage can be.
It increases your returns on the way up, but also increases them on the way down if you aren’t careful.
Second, past performance isn’t always maintained in business. So, never get complacent.
Most of those previously successful businesses and individuals would have been fine with a higher cash buffer in their business accounts, private investments and lower overheads.
Instead, when the money was easy, they invested as much as possible on a debt-fuelled product (property development to sell on).