7 New Rules of Money That Only The Rich Know
Intro
2020 hasn't been easy.
Most people lost their jobs, struggled to pay the bills, and in the worst financial
shape than they were a year ago.
However, that wasn't the case for everyone.
Some people made so much money last year that it's even difficult to imagine that much wealth.
Elon Musk made over 120 billion dollars from January 2020 to December 2020.
I am not sure if he has realized that, but most people will never see this kind of numbers
except in GTA.
And that is not even his entire net worth.
If you consider SpaceX, the Boring company, and all of his other ventures, his net worth
could exceed the 200 billion dollar mark.
Elon Musk might seem like a nerd who doesn't care about money, but he is not.
If you take a look at his biography, you will realize that he has always been really good
with money.
At some point in his life, he spent 1 dollar a day on food so that he could invest enough
money into his startup.
And that's the case with most rich people.
Rich people understand how the game of money works, not everyone of course makes 120 billion
dollars a year, but the world is filled with rich people, so if you want to be one of them,
you should master the rules first.
We have already made a video on this topic, but here 7 more rules of money that you should
absolutely know if you want to build wealth.
1.
Number one: "Someone's sitting in the shade today because someone planted a tree a long
time ago”.
When you look at someone who makes a lot of money, it's easy to fall into the perception
that they are simply lucky.
It's easy to point fingers and accuse rich people of being greedy.
But the truth is, people don't suddenly make a lot of money except when they win the lottery
but rather work super hard their entire lives, and then 20 or 30 years later, their hard
work starts to pay off.
Elon Musk didn't make 120 billion dollars because he worked so hard this year.
In fact, he probably didn't work as much as he usually does.
For the last 17 years, Elon Musk worked day and night to make Tesla a successful company.
He invested over 80 percent of his own fortune that he has made from PayPal into Tesla, and
in 2008, the company literally was on the verge of bankruptcy.
He even reached out to the CEO of Daimler to convince him to buy Tesla because the company
simply didn't have the funds to survive.
But Daimler refused to even invest a dime in Tesla.
Elon Musk spent his last dollars to save Tesla and was homeless for a while since he couldn't
afford to pay the bills.
Imagine making 180 million dollars but still can't afford rent because you invested your
entire fortune in your next startup.
In 2018, Tesla was struggling financially again, Elon Musk reached out to Tim Cook to
convince Apple to buy Tesla, but Tim Cook even refused to meet him.
Elon Musk still somehow managed to save Tesla.
Today, Tesla is worth over half a trillion dollars, and Elon Musk is the second richest
person in the world.
So if you want to be in a better financial position 5, 10, or 15 years from now, you
better start planting your tree now.
2.
Number 2: The most important thing to do if you find yourself in a hole is to stop digging."
let's say you have borrowed money to buy a brand new BMW.
But you don't use it much because you work from home and only need a ride once or twice
a week, but you still have to make your monthly payments.
The rational decision would be to sell that car and pay off your debts since you don't
need the car, but since you have already paid a portion of that car, you don't want your
previous investments to go to waste, so you keep the car.
It's like when you purchase a ticket to a movie but then find out that the movie is
boring, you still keep watching it because you don't want your money to be wasted.
And that is known as the Sunk cost fallacy.
We all made mistakes, especially financial mistakes but don't let that lead you into
making more financial mistakes.
If you started a business and then realized that it was a mistake, stop wasting your money
and time on a failing business.
The money you have spent is already gone!
Warren Buffett was a major investor in many airlines, but airline stocks crashed when
the pandemic hit the world.
Buffett lost billions of dollars, but he didn't insist on keeping his airline shares.
Overnight, Warren Buffett sold his entire portfolio of airline shares and invested in
different businesses that seemed to do better during the pandemic.
3.
Number 3: the worst investment you can have is cash.
Everybody is talking about cash being king and all that sort of thing.
Cash is going to become worthless over time.
But good businesses are going to become worth more over time.
If you know anything about money, then you probably heard about the concept of inflation.
Paper money has no intrinsic value.
It's merely created by the federal reserve to make it easy to measure the value of goods
and services.
Every year the fed either prints more money or in some pomps money into the economy, which
decreases the value of the existing cash in the economy.
So having a lot of cash isn't real wealth.
You are rich when you own businesses that constantly produce something and grow or assets
that in some way, provide value, like a property that can be rented out.
So don't strive to have more cash but use that cash to buy businesses that that grow.
4.
Number 4:" Speculation is most dangerous when it looks easiest."
I remember back in 2017 when crypto-currencies were rising like falcon 9 (SpaceX rocket),
everyone was jumping on board.
No-one wanted to miss this opportunity, but most of them had no idea what bitcoin or cryptocurrencies
are.
They thought they could get in and make a fortune, but soon prices crashed, and some
people lost their entire lives savings.
Not to say that bitcoin is useless or anything like that, but never invest in something you
don't understand.
in fact, "risk comes from not knowing what you are doing" oh yeah, that's also warren
Buffett's quote.
There are literally millions of ways to make money, but if you don't know enough about
it, then you are gambling.
Can you get lucky?
Of course!
But what are the chances that you will get lucky?
Go and ask people who buy lottery tickets.
Not much.
So, don't speculate!
5.
Number 5: "If you buy things you do not need, soon you will have to sell things you need."
The biggest financial mistake most people make is buying things they don't need, especially
when they can hardly afford them.
Life isn't a straight line.
Sometimes you will make a lot of money; other times, business will be down, so if you don't
have a cash cushion, you will have to sell things you really need to pay the bills.
At the end of the day, all that you need is a roof over your head, food on the table,
and some wheels to get around, even if they are not your wheels.
So always limit your expenses that you don't really need and focus on using your financial
resources to build an extra source of income.
How many times we have stories of people who inherited millions of dollars or even billions
but ended up broke because they bought too many things they don't need.
Even athletes like Mike Tyson, who made over 300 million dollars over his career but had
to file for bankruptcy once he retired.
6.
Number 6: Don't get caught up with what other people are doing
Have you ever heard of someone who did the exact same thing that others did and made
a fortune.
Probably not.
That's why don't follow the crowd.
It doesn't matter what everyone else does.
Most people are going to settle for the average.
In fact, if most people are doing it, then you should stay away from it.
Great opportunities come when no one is paying attention.
Being a contrarian isn't the key, but being a crowd follower isn't either.
You need to detach yourself emotionally.
Especially when it comes to investing, whoever everyone is on board and start investing in
a certain company, stay away from it because chances you will end up losing your money
are way higher than you would make something and vice versa of course.
7.
Number 7: It is not necessary to do extraordinary things to get extraordinary results.
Most people think that you have to do something extraordinary to make a lot of money.
That's one way to do it, but making money is usually about small daily choices such
as setting aside 5 dollars a day and investing in an index fund.
You might not become the next Elon Musk or won't be able to build rockets that will make
humanity multi-planetary and in the process become the world's richest person, but with
small right decisions, you can achieve extraordinary results.
So don't aim for immediate great results.
The only immediate results you can aim for are two 4 stocks from Webull if you sign up
and despot 100 bucks and start investing.
Who else will give you two free stocks if you start investing, or learn how to invest
by taking this course on Skillshare for free if you use the link in the description.
These seven rules of money are entirely based on warren Buffet quotes.
If there is one guy who can give you the best financial advice, then it's Warren Buffet.
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Thanks for watching and until next time.
