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3 Quotes That Explain How to Get Wealth đź’°
Unbroken Investing
June 29, 2024 • Estimated Reading Time: 6 minutes
Main Article Preview (Unbroken Insights): "3 Quotes That Explain How to Get Wealth"
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Unbroken Insights
The world is filled with great quotes, mantras, quips and more. Many are interesting and useful, while some are just fun. Following are three that made a huge difference in how I invest and how I created wealth.
The first one is probably the most important.
“Wealth is CREATED with concentration. Wealth is protected with diversification.”
Let’s break that down with a couple of examples. First of all, Warren Buffet frequently talks about diversification in stocks as the best way to “lower your returns to average.” If you want to create a lot of wealth in stocks, you have to concentrate on the right stock, buy at the right time, and sell at the right time. If you know exactly what you are doing that could work.
But there are other examples. Many people create their wealth by concentrating in an industry (my initial wealth was created in real estate) or by starting a business. That is one way to concentrate. Another way is to concentrate on you occupation. Many of my clients created their wealth by concentrating on their dental practice, their IT job, or something similar. Then they diversified that wealth for protection.
That does not mean you cannot continue to grow your wealth with diversification outside of your concentration. I have assets in many other areas that are earning great returns and growing my wealth at 2% to 10% a month, but they did not CREATE my wealth…they just continue to grow it.
That is a good transition into the next saying.
“Never invest in something unless you are an expert or you have a trusted advisor who is.”
That is directly out of the book Richest Man in Babylon, which is filled with wisdom on wealth creation.
Once I had created some wealth, I was invited to participate in some amazing opportunities that were generating great returns for others. So…I jumped in. Even though it was working for others, it did not work for me and I lost a lot of money. Why? Because I did not fully understand the investment and I did not have a trusted advisor guiding me.
I may make mistakes, but I am a quick learner. After that experience, every investment I made was something in which I was the expert or I had a trusted advisor who was an expert. Keep in mind that I am not just talking about stocks. I am talking about experts in crypto trading, Forex trading, agriculture, and much more.
The following quote is from Martha Beck:
“The way we do anything is the way we do everything.”
Applying that quote to others during my due diligence has protected me from many poor ventures. Years ago, I would use a “Mental Grading System” on an opportunity. Nobody is perfect, but this opportunity looks like a B+ or something like that. I would overlook minor flaws and focus on the big picture. However, some of those minor flaws can be indicators of much bigger problems. I’ll share two examples to help clarify.
Albert was the manager of a fantastic opportunity. The concept was simple and the returns were amazing. When we talked, he could answer all my questions very clearly. When he presented his opportunity to our group, he showed up quite late. He could not get the technology to work for a while. Once he started presenting, his presentation had numerous typos and discrepancies from what he had said verbally. Overall, the words our group used to describe him was “sloppy” and “unprofessional.” If that is how he did ANYTHING (a presentation to investors), how do you think he did EVERYTHING (i.e. run his business)? Do I want to invest in someone like that?
Brett had a pretty good opportunity. The returns we solid (3-5% per month) but not amazing like Albert’s opportunity. However, Brett showed up on time and made a nearly flawless presentation. There was one minor error in the presentation. What did Brett do? He apologized, paused the presentation for 20 seconds, and fixed the error. He was almost flawless and when an error popped up he fixed it immediately. I like that. Do I want to invest in someone like that?
There you have it…three quotes or phrases that I used as guidance to create, grow, and protect my wealth. Hopefully, they have the same impact on you.