When the lower (or lower middle) class imagine the bank account figures of the rich, it often appears in the mind as a line with endless zeros. This is unrealistic for two reasons. The first is rather inconsequential: who spends their money only to have zeroes after the first digit? The second is probably why most remain the cycle of financial powerlessness – the rich do not stack their money in any one account just to watch it breathe. Contrary to popular imagination, the rich do not wake up in the morning, check their bank balance and scream in the words of Dave Chapelle “I’m rich b*tch”.
For those that understand wealth, finance is more or less a language in itself, capital management is a culture. If there is a first rule to this culture, it is that the money is the worker. The rich do not work as much because they send their money to work for them. Pull up the average citizen and ask them what they know about stocks, bonds, treasury bills, mutual funds, or any other personal financial instrument, and you are likely to be met with a indifferent shrug. Yet, they have their savings in a bank offering most of these services!
The general and rather erroneous assumption is that to be a part of these schemes, one needs an excessive amount of money, or that these financial instruments tie up money in a way that makes it unavailable for emergencies if they arise. Sure, there are investment structures that remove the option of a reversal until the term is complete. But there are many without such a clause that allows the investor to withdraw at any moment, without penalty and possibly with a payout for time spent higher than what the bank would have paid on a regular savings account.
The mindset of an investor is something wealthy parents pass on to their children as soon as they can understand the concept of money. The ones that pick it up go on to build on the capital already available to them, the ones that don’t, well…stories of children that squandered their inheritance, selling off landed property and liquidating all manners of assets are nothing new. Of course, there are cases of poorly-made investments, but on closer inspection, it can also be seen that poor risk management is often the culprit in these cases.
Along with investing finances in profitable instruments to learn about savings interest rates and to beat inflation, there is also the aspect of diversifying the portfolio. Basically, this translates to not putting all the eggs in one basket. This is another lesson the rich do not forget to teach their children. With this, they understand from an early age that the road to wealth isn’t the classic “big hit” most imagine, or as we would say in colloquial language, “hammer” or “blow”.
Understanding wealth and the role of personal financial management is a must for anyone hoping to be financially successful in their lifetime. Even if the funds to invest have not arrived, to be ready when they do is one way to ensure that when the opportunity rears its head, it is not wasted to become another sad story of a fall from grace. If you aren’t sure what options are available to you, speak to a broker, speak to your bank, just speak to someone. Knowledge, they say is wealth. Knowledge of wealth? Now that is a legacy of wealth waiting to manifest.