“The rich get richer: The poor get poorer”
Thats a common term that I’m sure everyone has heard before. Many has come to accept it as a fact. But does it have to be that way? What makes the Rich richer, and the poor poorer?
First of all, what makes an individual rich? By the car they drive? House? Monthly expenditure? You’ve got to understand, even if you make $5000 a month, but you squander away all that money within that month on luxury stuff, you might appear rich, but in fact you are not. Here is why.
Most of the rich people around did not get to where they are by spending away all of their paycheck every month. Picture 2 managers with $10,000 a month, manager A spends all of it on enjoying himself, manager B only spends $5000 a month, and invests the other, every single month. Naturally, manager A doesn’t get richer, or even becomes poorer, while manager B becomes richer.
Most of the rich have the ability to put aside a large proportion of their income to investment. The poor don’t. The rich have the ability to do that due to their large income. The poor can’t do that due to their small pay check. And even when the poor get a raise, they would just increase our monthly expenditure, and that includes their bonuses.
“The rich get richer cause they know how to spend their bonus and pay raise, not on material gains, but in investments.”
Most of the rich reinvest their investment returns. The poor don’t. Many of my peers make $1000 from their $10,000 shares, and immediately sell and splurge on a holiday or a material gains. They remain that “10,000-dollar-air”. You should reinvest to enjoy compounded returns.
“Spending your profits in shares really leave you standing in Square 1, with another ring on.
So what is there for the poor to do? Well, simply, do what the rich do. Do not get yourself into the situation where you’re living from pay check to pay check. Want to buy your dream home on loan? Hold off that desire until you can comfortably own it without putting yourself in a tight financial situation.
You must understand its really not a situation of the poor staying poor. Its a situation of the poor making themselves stay poor.