Hello, friends! Today, I suggest touching upon an interesting topic, and after reading, I would be glad if you share your opinions in the chat about all this.
In my opinion, there are only two radically different approaches to life and capital growth.
First approach: Your task is to constantly increase your assets, which will generate increasing profits in the future. For instance, you have a certain cash flow coming from business/work/schemes, etc. From this cash flow, you allocate a significant portion to various assets – shares in businesses, stakes in startups, stocks/bonds, investment instruments, crypto-assets, and so on.
You save significantly on life itself, as your main goal is to increase and multiply capital. Consequently, all your income is directed towards this goal. Instead of quickly parting with earned money, redistributing and giving them to others (entertainment, services, travel, expensive useless purchases, etc.), they hardly slip through your fingers and are redistributed into assets that will bring in even more money in the future.
At the same time, you manage risks intelligently, calculate and care for every penny. You diversify and minimize risks, and in the long run, you engage in a STABLE, low-risk increase in your assets and capital. This approach, often followed by renowned businessmen like the Rothschilds, involves a life focused on maximizing rational and constant accumulation and exaggeration of assets.
Second approach: You also have a cash flow, regardless of its source. Almost 100% of it is spent on life. You have a super-active and interesting lifestyle, expensive purchases, and so on. To maintain this luxurious lifestyle, you are compelled to earn more and more, as your desires and goals are constantly escalating.
Your task is to constantly take big risks, come up with things that will bring you exponentially more income each time. Meanwhile, your level of needs keeps growing. Your body, brain, everything starts working differently. 24/7 you are preoccupied with how to increase your cash flow even more to sustain a luxurious lifestyle that you cannot give up.
This involves more risks, more ups and downs, more stress, actions, immoral decisions, and so on. However, some percentage of people, through this strategy, quickly achieve unprecedented heights. Lifestyle is at its maximum, but there is a chance that one day, if you decide to take a break for a couple of months, it will all fall apart. You might find numerous examples among artists, media personalities who caught the hype but ended up living in poverty after a few years.
In conclusion, these are the two approaches I distinguish. Each has its place. The first is slower and safer, while the second is faster and more interesting.
In theory, one could attempt to combine them, but it’s very challenging and might end up neither here nor there.
The majority opt for the middle ground. I’ll explain with an example. Let’s say you currently earn $10,000-$15,000 per month. Yes, it’s enough for everything, there’s a certain range of possibilities, etc. However, you don’t adhere to either of the two approaches mentioned earlier; instead, you live somewhere in between. What is the likelihood that you will eventually reach $500,000-$800,000 per month? Almost zero.
Meanwhile, if you lean towards the first option and focus on accumulating assets from the $15,000 per month, allocating $13,000 to harsh asset accumulation, for example —> after some time (even if not super quickly), it’s quite likely that you will have accumulated enough assets to generate $500,000-$800,000. Something might take off from your investment, especially if you approach asset accumulation wisely. You also reinvest the cash flow from accumulated assets back into asset accumulation. The cash flow from them is even greater, and the probability of something taking off is higher (especially if you approach asset accumulation intelligently), and so on.
Or, the second option, you go all-in with $15,000 per month, engage in hardcore networking, today you meet people in Monaco, tomorrow in Dubai, the day after tomorrow in London. You interact with people whose income is significantly higher than yours. They involve you in some venture, something clicks, and so on. There’s also a chance that after some time, you might reach $500,000-$800,000.
If you are somewhere in between these two options, the probability probably decreases by hundreds of times because you are simply living an average, measured life to which you get used. You invest a bit here, save a bit there, travel a bit, come back home, and so on.
Naturally, you can be much happier than those who swing to extremes. That often happens, I guess. But the post’s theme is not about how to be happy but how to be rich. We’ll talk about happiness another time.
Well, I hope my logic is clear. I tried to illustrate the above theory with an example.
At the same time, it was clearly noted that the background is very important. For instance, if you were born into a family where assets are already accumulated by your ancestors, and you have a huge cushion, so in any case, you can turn to them, and you will live better than 99% – it would be foolish to follow the first option. The second option is, of course, more reasonable. And so on.
The comment about happiness – I agree. But right now, the discussion is specifically about how to become richer, not happier. Happiness, for each individual, may lie in completely different things.