What kind of people get rich?

In this blog I will list some of my top Quora answers for the last few days, which focused on many interesting subjects.

In the answers shared today I focused on:

  1. What kinds of people become rich or wealthy?
  2. Is it a good idea for a start up company to copy the ideas of other, often more established, firms?
  3. Should people invest in AirBnb at all or wait a few weeks?

4. What courses can make you rich, or is the secret in something else?

If you want me to answer any questions on Quora or YouTube, or you are looking to invest, don’t hesitate to contact me or use the WhatsApp function below.

What kind of people get rich?

Source: Quora

It is a very broad question but I will attempt well.

There are firstly two kinds of people who get rich:

  1. The inherited wealthy
  2. Those that worked for their own wealth.

The inherited wealthy used to dominant. Now they are a minority in most countries:

That is partly due to the fact that many inherited wealthy people become complacent and lose the money!

In terms of the self-made wealthy, I have noticed the following commonalities – most of these are also backed up by data too

  1. The ability to take calculated risks. Most people are obsessed with not losing. Most wealthier people took risks when they needed to make money. Once people get wealthy, some become more conservative and are in preservation mode, whereas others continue to take risks.
  2. Working hard and smart, and not just one of the two.
  3. Using leverage – so leveraging other people’s time, alongside technology. We only have 24 hours in a day after all.
  4. Investing early enough. The world is full of middle-aged, and middle-class, multi-millionaires. Not all millionaires had high-incomes. It is important not to conflate income and wealth. They can be related but not always.
  5. Not trying to impress others by the decisions you make, how you spend and live your life. Also, not being affected by what is “normal”. Drinking your coffee from a bucket (Starbucks) wasn’t normal and the naysayers said it would never catch on in places like France. People always used to say that business was better done in person, and now many people want to do everything remotely. If you don’t care about what is normal, you will catch trends earlier
  6. Not playing the numbers game. One idea isn’t enough, and sometimes ten isn’t either. Keep trying new ideas.
  7. Not adapting and being complacent when success is achieved.
  8. Not caring about what other people think but also not being arrogant too. Taking on board constructive feedback is great though.
  9. Focusing on ideas and not actions and implementation. Everybody has million dollar ideas. The money is in the execution.
  10. Investing rather than saving money. It is pretty hard to save your way to riches even if you earn a lot, especially in this era of 0% interest rates.
  11. Focus, determination and persistence. Many people who work hard and smart, still give up too early.
  12. Looking after personal health to avoid burnout.
  13. Reading a lot after university. Reading gives you more ideas to implement.
  14. Not making excuses and taking personal responsibility for one’s own actions. There is never a perfect time to do anything.
  15. Avoidance of very bad luck. Most people get good, and bad, luck in their lifetime. The fact is though, if you get significantly worse luck than most people, your chances of getting wealthy are less. This one can’t be controlled as much as some of the other points made here.
  16. The ability to simplify things. The best product doesn’t always win in business. Simple things can often outperform complex things. That is one of the reasons the iPhone is so big – it makes tech easy to use. Likewise, in business, inferior products can beat superior products if the inferior product is easier to buy.
  17. Using time effectively which is connected to all of the above.
  18. Getting many different influences. If somebody is born into poverty, and hangs around others like him or her, they often don’t get new influences. Then if they travel, go to university, watch YouTube or whatever, they start to meet new person. This process of meeting people that often came from humble beginnings makes people think “I can do it too”. 
  19. People who bring value to other people, and know how to monetise it. If you solve a problem for the market and can monetise it, you are onto a winner.
  20. People that learn high-skills like engineering for certain industries like oil&gas can sometimes become relatively rich if they know how to manage money. Money management, branding, sales, marketing, management and many other skills can all help. Ultimately businesses also get rich off more money coming in vs coming out. The same for individuals.
  21. Trusting and co-operating with others without being naive. Many people are overly cynical and closed.
  22. Not having big enough dreams. We are always told to be realistic and not try to “run before you can walk”. Yet sometimes if your dreams are big enough you will work harder. 
  23. Surrounding yourself with the right friends, marriage partner and business partner, and avoiding toxic people that drag you down to their level.
  24. Avoiding excessive use of vices like drugs.
  25. The ability to put yourself out there. Many people, even some business owners, would reject a chance to be on TV because they are worried about how they would be perceived by others.

And let us not forget – sometimes a combination of the above. This means that many different kinds of people get rich, wealthy or both, despite the commonalities that exist.

Will my startup be successful if I am copying business ideas and model?

Source: Quora

No necessarily. Look at these two basic facts:

  1. Ideas don’t usually have copyright. Some brand names do but you can’t force people not to copy your ideas if they stay within certain boundaries. That is why it is possible for you to copy others, but then others can copy you.
  2. Ideas don’t pay the bills. Implementing ideas do. Therefore, there is money in implementing the ideas of others in a better way, and adapting them, but not just directly copying ideas.

Let’s look at some examples about why copying doesn’t always work.

Take arguably the most iconic brand in the world – Coca Cola:

When Richard Branson tried to copy it, it didn’t work:

Even when Coca Cola tried to improve it, it didn’t work, despite people saying it tasted better in a blindfolded test:

The key things are often:

  1. Continuing to adapt even if you are number 1
  2. Focusing on better implementation and not better ideas. If you copy an idea but improve the implementation you have a better chance than if you copy both
  3. Trying to neutralise and improve something rather than just copy. Let me give you a sporting analogy. In the 2000s, Spain and Barcelona were dominant in club and international football. The “tikitaka” style of keeping possession became “the thing”. At the 2014 World Cup, almost everybody tried to copy. The German team, that won incidentally, found a way to neutralise the threat of this style, rather than just copying. We can find similar things in business
  4. Getting onto trends early enough. If you are the 2nd person to copy you have a better chance of success than the 30th person that copies because if 30 people have copied already, at least one would have implemented it better than the first mover.

Is it wise to buy Airbnb (ABNB) stock on the same day when it launches its IPO, or should I wait for a few weeks to see how its price varies? What would you do?

Source: Quora

Well it depends what your feelings are towards the company. If you think it will continue to grow, then buy it.

If you think it is overhyped, don’t buy it. It might also depend on how quickly tourism improves after covid ends.

Remember though, that stock pickers have an awful record long-term.

There are many reasons for that.

The main ones are

  • Everybody has the same access to information these days. You don’t know anything about AirBnb which I don’t know and vice versa.
  • AirbBnB can’t beat the market at the same time as it loses to it. That is the same for all stocks.
  • Sometimes the sell and buying costs compound if you buy shares too often vs buy and hold and reinvesting dividends.
  • A small selection of stocks vastly outperform the market – most don’t
  • If you win today, you might lose tomorrow. I have ran out of the number of people who picked incredible wins, some even for 5 years, but long-term they lost to the market. Maintaining over-performance is difficult. I once watched an episode of Dragons Den on TV and one of the contestants made a lot on Facebook, only to lose it later on.

I am not saying don’t do it, just keep it to less than 10% of your portfolio if you do.

Also, be prepared to lose from it relative to more cautious strategies.

What we have seen in recent years is more smaller investors buying individual shares on platforms, and an increasing amount of bigger investors staying away from individual stocks.

In reality, a bigger sized portfolio can withstand a loss from an individual share that has gone wrong, as compared to a smaller investor.

What course can make you rich?

Source: Quora

No course in isolation can make you rich. What can make you get rich, often slowly, is learning new things and implementing it consistently.

The money is in implementing what you learn. So, the best courses teach you what you need to know as quickly as possible, and also teach you about how to implement and not just learn facts.

Ideally, focus on areas like this:

  1. Anything related to what you are already good at and your can add to this knowledge.
  2. Any course, book or knowledge focusing on managing what you already have as an individual or business (money management courses, accounting etc).
  3. Any course, book or knowledge focusing on adding to what you already have. This could be investing, in essence multiplying your saved income, or multiplying your income through learning how to run businesses, branding, sale, marketing or any activity that can put more in your pocket.
  4. Any new trend in business, which is relatively young enough where you can catch it and implement it in a superior way to others. 
  5. If you have capital, ideas that can be scaled indefinitely through money. Start small and build it up once you see a positive ROI.

As an aside, most people give up too soon. So the money is in implementing, but even more money is in consistent implementation.

The internet is full of free resources, talking about the next big thing, yet few people bother to follow through.

If you struggle to implement yourself, try to leverage other people.

There are some rich procrastinators but they tend to use other people – experts and those that work for them).

In some ways that should be reassuring for a simple reason – if it was easy everybody would do it.

You will therefore knock out 80%-95% of your competitors just by showing up and being persistent.

It reminds me of an old saying that most of success is just showing up.

Further Reading

In the article below, I spoke about:

  1. How can somebody become a millionaire in just one year. Is it possible, or just unrealistic? What options exist for those that are more patient?
  2. How has Covid affected the real estate market globally? Has it only affected some markets or everything? What trends could we see in the future?
  3. Why do people retire too early or is “too early” the wrong way to look at it? Are the reasons for retiring early always the same, or can they vary dramatically between people?
  4. Which investments will be riskiest during 2021? Has this really changed compared to previous years now interest and bond rates are lower?

Click here to read more

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