Secrets of Wealthy People: 50 Techniques to Get Rich

David Stevenson

• Publisher: Teach Yourself
• Year: 2014
• Print ISBN: 9781444793925
• eBook ISBN: 9781444793932
• Topic: Personal Development
• Subtopic: Personal Finance

What do wealthy people know that the rest of us don't?Do they have a secret recipe for success?Is there a special alchemy to make it work? The Secrets of Wealthy People reveals the 50 things you need to know to build your wealth, capital and investments. Some will surprise you, and all will inspire you. Put these 50 simple strategies together and you have a great recipe for a better life, a formula that will unlock the secrets and uncover your potential.

It’s an uncertain world

‘The name of the game is not to get rich rather it’s not to die poor.’

William Bernstein

‘Rule #1: Never lose money. Rule #2: Never forget rule #1.’

Warren Buffett

‘It’s not because things are difficult that we dare not venture. It’s because we dare not venture that they are difficult.’

Seneca

‘It is always wise to look ahead, but difficult to look further than you can see.’

Winston Churchill

‘The man who goes furthest is generally the one who is willing to do and dare.’

Dale Carnegie

Take risks; you have no choice

‘Risk’ is a scary word, especially to older, wealthier investors. They’ve laboured long and hard to accumulate wealth and they don’t want to lose that money on some hair-brained scheme that is doused in risk. But risk as we’ll discover in this book comes in many different shapes and guises and not all of them are obvious!

You must of course be careful of the risks that destroy wealth, but equally alert to the risks of not doing anything to grow accumulated wealth. Risks are all around us and a few of them are worth grasping, especially if you have the right amount of time to capitalize on them. Working out the sensible risks (that allow you to accumulate wealth) from the insane risks (that destroy wealth) is the focus of this book.

Not doing anything, sitting in a cave like primordial man, ignoring the great clamour of modern life is frankly not an option for 99.9999 per cent of the readers of this book. You have to accept that you live in this noisy, messy, risky world and make the best of it. If your idea of wealth creation and preservation is to grab as much of it as quickly as possible by any means and then retreat to a cave full of gold bars, armed weapons and a hatred of government as a confiscating, tax-eating monster… turn away now. This book isn’t for you! The end is not nigh, you have to pay taxes (though you can absolutely minimize them) and as we’ll discover later in this book, gold is probably not the only investment idea worth considering.

The caveman is dead, and the modern man needs to be networking, listening to new ideas, and working out what’s a bad idea and what’s a great idea that could make you wealthier. You need to be building lots of different pots of capital to protect against stuff that might happen in the future. You need to be honest enough to realize that you don’t know what might happen next, and have a plan for it.

In a world of relative truths, and messy realities, we’re largely ruled by probabilities and possibilities – this book is about making sure that your odds of winning are increased by sensible, small incremental steps that help improve your odds. Nothing is guaranteed outside of the cave but the fleet of foot and diligent are more likely to be rewarded with greater wealth.

INVEST IN YOURSELF

Ever wondered how the mega corporations got to where they are today? I’d suggest that we can reduce this wealth of research literature based on corporate analysis to just three simple ideas. The first part is luck, largely consisting of being in the right place at the right time with the right idea. The second part is about sheer hard work and discipline, by the entire workforce, carefully co-ordinated using a plan devised by the management. Last, but by no means least, the company’s management probably stopped being emotional and started ‘objectifying’ what ‘it’ as a business or thing did. In simple language, they got real about the balance sheet, the profit and loss statement, the cash flow and the business’s SWOT (its strengths, weaknesses, opportunities and threats) analysis. They might have even thought long and hard about what brand the company stood for, what it appeared to represent to its customers and acquaintances – and how that could change.

I’d like you to think the same way about yourself: objectify yourself, step outside of your own world view and think of yourself as a business. In later chapters we’ll build a balance sheet based on your assets. We’ll also look at what your brand stands for, and how you might improve your own value to the outside world. We’ll examine ideas about building plans to cut debts and create wealth.

But before we can do any of this we need to start with a simple realization, which is that your career is your primary source of future wealth and that means you need to invest in you! In order to grow your housing capital, for instance, you need a better job or improved cashflow. But to get there you need to understand how to grow your own personal capital (your worth in a job or in your own business). That means understanding what makes you tick, and how over your entire working life (which could be more than 50 years if you retire after 70, as most young readers will do) you can constantly evolve, and build up savings.

Ask yourself one simple question every ten years – is there one thing I can invest in now that will make me more valuable ten years hence? If the answer is obvious, and makes sense after you’ve researched it thoroughly, make a plan to achieve that goal, along the way working out what investment in time and money is required.

TAKE MEASURED RISK – YOU HAVE NO CHOICE IF YOU WANT TO BE WEALTHIER

It is indisputably true that wealth is incredibly easily destroyed by poor judgement, and once lost can take many decades to accumulate again. Yet we shouldn’t react by acting like our caveman and abandoning all risk.

You will never become wealthy unless you take measured risks.

This book is entirely about that challenge of understanding risk, measuring it, conceptualizing it and then embracing it. Embracing risk means using carefully thought through strategies that mix facts, instinct and good ideas into practical investment plans that, for instance, focus on companies whose shares are cheap, or businesses that will disrupt and transform entire industries.

PLAN FOR VARYING TIME HORIZONS

Investing in shares if you need cash in fiv...

Table of contents

• Cover 
• Title
• Contents 
• Introduction
• 1. It’s an uncertain world
• 2. Debt – the anti-matter of wealth?
• 3. Castles, not pension plans
• 4. Invest in you
• 5. Reading the tea leaves
• 6. Spend wisely
• 7. Spend to accumulate
• 8. Good advice is worth paying for… assuming you can find it!
• 9. Compound it!
• 10. The big number
• 11. Working out the right time horizon
• 12. Regular or lumpy – how do you like your investments?
• 13. Diversification is the best risk control
• 14. Be well behaved!
• 15. Shares: the safest long-term bet?
• 16. From tiny acorns mighty oaks might grow
• 17. Back great companies
• 18. Have you got what it takes?
• 19. Cutting down the risk of failure in business
• 20. Beware the rise of the machine intelligence economy
• 21. Network to build personal capital
• 22. A portfolio approach to your career
• 23. Become a cheapskate – the virtues of value investing
• 24. What type of risk are you willing to take?
• 25. Ride the tech tiger
• 26. Emerging markets?
• 27. The liquidity challenge
• 28. Delight in the humble dividend
• 29. Everyone’s favourite – tax!
• 30. On speculation
• 31. The silent killer – inflation
• 32. Future-proofing your investments
• 33. The property game
• 34. The Armageddon fallacy
• 35. The glittering illusion
• 36. Getting emotional about investments
• 37. True to your bond
• 38. Playing catch up?
• 39. Invest where you have an edge
• 40. Timing your investments
• 41. Buying and selling discipline
• 42. Cash and its uses
• 43. Think global, beware confiscation
• 44. Beware the fat pitch
• 45. How to fight inflation practically
• 46. Forever blowing bubbles
• 47. Keep it simple, keep it cheap, use tracker funds
• 48. Hunting down great investors
• 49. Taming your debt
• 50. Be creative
• Copyright