Sunday, 2 August 2015

10 Differences Between Middle Class And Rich People

BY Kalen Bruce

According to Forbes, the 400 wealthiest Americans have more wealth than the bottom 150 million Americans combined. But what about the people in between? The middle class? You may be considered middle class. You’re not poor, but you’re not rich…yet. The middle class seems to be shrinking, according to the data revealed over the last couple decades. That means you’re going to be less likely to be middle class in the future. You’ll more likely be poor or rich. Which side do you want to be on?

If you want to be on the side with the rich, you’ve got to start thinking like the rich. Here are 10 differences between middle class and rich people for you to learn from…


1. The middle class live comfortably, the rich embrace being uncomfortable

“Be willing to be uncomfortable. Be comfortable being uncomfortable. It may get tough, but it’s a small price to pay for living a dream.” - Peter McWilliams

“In investing, what is comfortable is rarely profitable.” – Robert Arnott

It’s comfortable to work a “safe” job. It’s comfortable to work for someone else. The middle class think being comfortable means being happy, but the rich realize that extraordinary things happen when we put ourselves in uncomfortable situations. Starting your own business is a risk and risks can be uncomfortable, but a little risk is what it takes to create wealth and achieve superior results.

Step out of your comfort zone. Look at all your options. You will have to be at least a little uncomfortable if you want to become rich. You might even have to fail and that’s great, because if you’re not failing, you’re not doing much.


2. The middle class live above their means, the rich live below

“There is no dignity quite so impressive, and no one independence quite so important, as living within your means.” - Calvin Coolidge


You won’t catch the average millionaire in a $100,000 car or a multi-million dollar home. 


The rich don’t spend their money on depreciating liabilities, they spend their money on appreciating assets and they live below their means. On average, the rich drive cars that are a few years old and they don’t buy them new, according to studies done in the book 
“The Millionaire Next Door.” Even if they can “afford” that fancy new Escalade, they usually don’t buy it.

Remember, if you earn $1,000,000/year and you spend $1,000,000/year, you’re still broke.


3. The middle class climb the corporate ladder, the rich own the ladder

“The richest people in the world look for and build networks; everyone else looks for work.” 
- Robert Kiyosaki

The middle class tend to work for someone else. They have a job. A career. Upper middle class tend to be self-employed. They own a job. The rich tend to own the business. They own that corporate ladder that the middle class are busy working up. The rich understand that they need more people working for them to earn more money. The rich understand the power of passive income.


4. The middle class are friends with everyone, the rich choose wisely

“It’s better to hang out with people better than you. Pick out associates whose behaviour is better than yours and you’ll drift in that direction.” - Warren Buffett


The rich understand that when you surround yourself with successful people, your own success will follow. Likewise, surrounding yourself with unsuccessful people tends to have the anticipated effect. Your income is usually the average of the incomes of your three closest friends. If you want to earn more, hang around people who earn more. It’s all about aligning your mindset with the mindset of successful people. If you want to be rich, you have to think rich.


5. The middle class work to earn, the rich work to learn

“When you are young, work to learn, not to earn.” - Robert Kiyosaki


The middle class are easily persuaded to change jobs when someone offers more money. 


The rich understand that working isn't about the money, especially in the early years. It’s about developing the skills and traits you need to develop to become rich. That may mean working a sales job to better understand the world of selling. Or it could mean you work at a bank to better understand accounting. If you want to be rich, you should be working to learn the skills you need to become rich. Most rich people didn't get there by earning a high salary.

6. The middle class have things, the rich have money

“Too many people spend money they haven’t earned, to buy things they don’t want, to impress people that they don’t like.” -  Will Rogers

Back to the fancy cars and big houses. That’s where much of the middle class spend their money. Drive through a middle class neighbourhood and you will usually see brand new cars, expensive landscaping and high-dollar homes. The rich understand that to become wealthy, you have to want money more than you want things. If you keep buying things, your money will keep going with them. It’s funny how that works. For example, Warren Buffett still lives in the same home he bought in 1958. And he only paid $31,500 for it.

Stop buying things and start focusing on keeping, saving and investing the money you earn. If you are a shopaholic, start shopping for assets. Become interested in investing, then look for bargains on stocks and businesses instead of shoes and electronics. That being said, it’s not all about saving your money.


7. The middle class focus on saving, the rich focus on earning

“Your greatest asset is your earning ability. Your greatest resource is your time.” - Brian Tracy

“If you would be wealthy, think of saving as well as getting.” - Benjamin Franklin

Saving is important. Investing may be more important, but earning is the foundation of both. You understand that you need to save and invest, but to really achieve extravagant goals with them, you need to earn more. The rich understand this and work on creating more avenues to earn and earning more with the avenues they have. If you really want to become rich, work on your earning ability, not your saving ability.


8. The middle class are emotional with money, the rich are logical

“Only when you combine sound intellect with emotional discipline do you get rational behaviour.” - Warren Buffett

Steve Siebold interviewed over 1,200 of the world’s wealthiest people over the past 30 years for his book “How Rich People Think”, and according to him there are more than 100 differences in how rich people look at money compared to the middle class. One of the key differences he found was that the middle class see money through the eyes of emotion, but the rich see money through the eyes of logic. Making emotional financial decisions will ruin your finances. Warren Buffett explains that investing has much more to do with controlling your emotions, than it has to do with money. Emotions are what cause people to buy high and sell low. Emotions create dangerous business deals. Leave emotions out of this and turn to logic.


9. The middle class underestimate their potential, the rich set huge goals

“Set your goals high, and don’t stop till you get there.” - Bo Jackson

The middle class set goals. Sometimes. It’s the capacity of the goals that differ from the middle class to the rich. The middle class set safe goals that are easily obtainable. The rich set goals that seem impossible, difficult or crazy. But they know they are achievable. It all comes back to having the proper mindset.

When you’re setting your goals, ask yourself if they could be bigger. Ask yourself if that’s really all you can do or if you can do more. I think you can do more.


10. The middle class believe in hard work, the rich believe in leverage

“It is much easier to put existing resources to better use than to develop resources where they do not exist.” - George Soros


Hard work is a necessity. For all of us. If you want to reach the top (whatever that may be for you), you've got to put in the work. The problem is that hard work alone will rarely make you rich. You can’t become rich by doing it all yourself. You have to use leverage to truly become rich and stay that way. Leverage works in many ways, from outsourcing to investing. The more leverage you can incorporate, the more time you will free up to work on the things that really matter in your business and your life.

Some differences between the middle class and the rich are vast, while others may seem simple and minor. The fact is that if you want to become rich, you have to think like the rich and do the things the rich do.
http://www.lifehack.org/

4 Habits That Make Wealthy Traders

It’s some rather simple qualities—like being decisive and managing risk effectively—that ultimately separate the traders who succeed from those who don’t.

The mental part of trading is as important as the systems and indicators you use. Today, we’ll touch on some insights from an excellent book for traders, Larry Williams’ Long-Term Secrets to Short-Term Trading.

Insight #1: “Why do most traders lose most of the time? Markets can spin on a dime and most traders cannot.”

Even the best traders (or the best trading systems) are going to be frequently wrong. That doesn’t negate the trader or the system; that’s just part of trading.

The challenge for traders is accepting that the trade signal was errant. In a case such as this, Williams’ correctly points out that we’ve been trained to “hang in there” and “have faith in our initial insight,” even if it’s clearly the wrong course of action.

That’s just our ego needing to be right so badly that it will often ignore the exit signals that warn the trader of the impending problem.

His analogy may help you work through this issue. He compares trading to robbing a bank. A bank robber may successfully break into a bank and start scooping up the money, but when the lookout guy warns the man in the safe that the cops are on the way, the robber drops the money and runs.

If the robber were like too many traders, he might stay in the bank and hope the warning about cops being on the way was a false warning. As Williams says, “The instant you learn to trade reality, not wishes, you will break through the wall of fire to become a successful trader.”

Insight #2: “It’s not the trade, it’s the battle.”

Too many traders believe that their last trade is a reflection of just how good a trader they are (but they are the only ones who feel that way about themselves). This boils down to one word: expectation. If you expect to win all the time, or even the vast majority of the time, you’re setting yourself up for a lot of heartache.

That frustration, though, is the very same force that will truly make your negative perception of yourself a reality. And even a good trade can be damaging if you let it warp your disciplined approach.

The fact of the matter is that this is a game of odds and should be played over a long period of time. Focus on the war, not the battle.

Insight #3: “The amount of (or lack of) evidence for a market move does not make the move any more or any less likely.”

All traders, but especially new traders, have one of two problems. They either buy too soon, or buy too late (and in reality, when it comes down to it, those are the only two problems in trading).

The first problem of buying too soon is a sign of not wanting to miss out of any part of a move. Of course, if you jump in and the move never becomes a reality, the trade suffers.

The second problem is the opposite. The trader wants to make sure the move is going to happen, so he or she will wait for all the right signals to verify that the move is for real. Of course, by that time, most of the move is behind you. While it’s easier said than done, one has to find a balance between the two extremes. In this case, the best teacher is experience.

Insight #4: “What’s the difference between winning traders and losing traders?”

Well, first, there are a few similarities. Both are completely consumed by the idea of trading. The winners and the losers have committed to doing this, and have no intention of going back. This same black and white mentality was evident in their personal lives, too. But what about the differences?

Here’s what Williams observed:

The losing traders have unrealistic expectations about the kind of profits they can make, typically shooting too high. They also debate with themselves before taking a trade, and even dwell on a trade well after it’s closed out. But the one big thing Williams noticed about this group was that they paid little attention to money management (i.e. defense).

And the winners? This group has an intense focus on money management, and will voluntarily exit a trade if it’s not moving—even if it’s not losing money at that time!
There is also very little internal dialogue about trade selection and trade management. This group just takes action instead of suffering “analysis paralysis.”

Finally, the winning traders focused their attention on a small niche in the market, or a few techniques, rather than trying to be able to do everything. Hopefully the second description fits you a little better, but if the first one seems a little too familiar, you now at least know how to start getting past that barrier.

Source: www.moneyshow.com/

Quote for the day

“Risk should almost invariably be limited. Not only the experience of those whose trading I have observed but my own experience proves that whenever one departs from this general principle he is inviting serious losses.” - Richard D. Wyckoff