difference between the rich and the poor in terms of investment and money

Rich People Don’t Keep Money, Only Poor People Do.

If You have followed me for just a little while, You would have found out that I'm intrigued about what makes people Rich and Wealthy and that's because I HATE poverty and even poverty knows I hate it... lol

I'm sure the title of this post caught your attention, right?

I'll be sharing some fundamental truths I've discovered in my many studies of what makes the Rich really Rich.

I'll have to say that what You will learn in this post will be an eye-opener.

This post is not about listing the many things the Rich do that the poor don't do, not at all, rather it is about sharing with You what is at the very core of being Rich, If You don't understand this, You may struggle to be Rich.

Let's Define what Being Rich and Poverty is All About

This is where the problem starts, most people don't understand the meaning of being Rich and being Poor.

Can I say this to You?

Poverty and Wealth is not fundamentally about Money.

​You can have Money and still be poor. For Example, Africa.

According to Wikipedia,  "Africa has a large quantity of natural resources, including diamonds, salt, gold, iron, cobalt, uranium, copper, bauxite, silver, petroleum and cocoa beans, woods and tropical fruits. Much of its natural resources are undiscovered or barely harnessed".

And that You don't have Money does not mean You are poor... Get it right, there's a world of difference between being poor and being broke.

POOR = Absence of relevant Knowledge.

BROKE = Temporary Absence of Money.

Wealth and Riches is more about what how much You know and what You do with what You know.

If someone with a Rich mindset gets broke, it's only a matter of time and he'll bounce back again.

Now that I've given us a clear picture of what it means to be Rich or Poor, let's get in on the main focus of this post.

Why the Rich Don't Keep Money?

The simple answer to that is FOCUS.

What the Rich and the Poor focuses on are fundamentally different which is why they are in different Money brackets.

I wrote a post explaining what the Rich focuses on but in this post I'll dive deeper.

The Rich understands that it is impossible to Keep Money because they know that Money is Debt and a Depreciating Asset; any Money that is not invested is lost.

Will You make a Profit from all your investments? The Answer is an EMPHATIC NO!

But any Money that is not invested is Lost already.

Here's the Explanation

The poor focuses on having Money while the Rich focuses on investing Money.

The Rich knows that You can not have Money because Money is debt. They know that any Money You have, You are already losing it. so the Rich are in a hurry to Invest whatever Money they have in excess of their immediate needs, infact, they are willing to sacrifice some needs to invest Money.

If You don't understand the above paragraph, then kindly read this post I titled the one thing that every Smart Investor Invests In, it will explain to You what Money really is and how to treat Money.

What Does Cash Flow Mean?

I trained as an Economist and I have a Banking background but I'm able to take complex Financial Jargons and break it down in a way anybody that has sense can understand.

Cash Flow means taking your bulk Money to buy up Assets or Investments that will generate consistent cash that will take care of your needs and liabilities.

As soon as a particular Asset/Investment starts generating large enough sums (cash greater than your reasonable needs/liabilities), You start searching for another Asset to buy or Invest in.

The Rich focuses on growing their Asset base slowly but steadily until the Cash Flow from their Assets can not only take care of them but their Generations.

What Does Capital Gains Mean?

In the short term, this appears more lucrative but it's mostly a bomb waiting to explode.

An average poor man wants to always be in possession of large sums of cash because that makes him think he's rich.

They never invest for Cash Flow but Capital Gain; to them, cash flow is too slow, they'd rather want it fast and now.

These class of people don't understand that Money is debt and a Depreciating Asset; they don't understand that the longer You hold Money in Cash, the faster You lose it.

They don't understand that the only way You can hold Money without losing it is to put it in an investment appreciating higher than the Inflation Rate.

So You find people who tell You stories of how they were once Rich... In most cases, they were really not Rich, they were Capital Gain people.

You can not be truly Rich in Money. You can only be Rich in Assets.

It is Assets that You will be able to turn into Money when You need it.

3 Comparisons Between Cash Flow Vs Capital Gains

1. Real Estate Investment

A Cash Flow Real Estate Investor will rather build a house and rent it out. Then he will approach the Bank for loan using the house as a collateral.

He gives the Bank his Equity Contribution for the Mortgage which in most cases is 30%, and he would have calculated to be sure that after building the second house that the rent from the second house will be able to pay the Mortgage from the Bank and he will still have some balance.

In other words, he's not the one paying the Bank from his pocket, it is his tenants paying for the Mortgage. He repeats this process until he has enough houses generating Cash Flow for him.

Note that the Cash Flow will not be much at the beginning, the most important thing is that it is consistent.

But A Capital Gain Real Estate Investor will rather build the house and sell it, Yes he will have more Money in his hands at that moment but the compounding rate of return of that Money if he had rented the house rather than selling it would have been eroded.

In most cases, after a while they are not able to account for the Capital Gains they made because Money is debt and any Money you are holding, you are actually losing.

Don't forget that for the Cash Flow Real Estate Investor, while the Mortgages are running on his properties, he is still making Money because the rent from the properties are more than enough to pay for the mortgage and leave him with a balance and after the tenure of the Mortgages, the houses all belong to him.

Can You compare the wealth of the Cash Flow Real Estate Investor and that of his Capital Gains counter part?

             2. The Cow and the Milk

We all agree that Milk is important but that means that the Cow generating the important Milk should be more important, shouldn't it?

So also, Money is important but Assets generating Money should be more important.

The Rich Cash Flow Investor will rather own the Cows generating the Milk, so that he never lacks Milk but the Poor Capital Gain Investor will rather sell the Cows so he can lay hold of the important Milk.

Does that makes sense?

But that is exactly what most of us do when we give preference to Capital Gains over Cash Flow.

           3. Cryptocurrency Investment Vs. Cryptocurrency Trading

You may be wondering, is there a difference?

There's a world of a difference my dear... One is a Cash Flow Investor, the other is a Capital Gains Investor.

The Cryptocurrency Investor, invests for Cash Flow, he never dumps all his Cryptocurrency Assets, he's patient enough to allow time to happen to his investment.

But for the Cryptocurrency Trader, the moment he sees a little appreciation in his Crypto Assets, he gets excited and sells off which is why you see many Cryptocurrency Traders who are just making movements and never progress.

The Regret of a Cryptocurrency Trader

Let me share an image with You which is always the story of most Cryptocurrency Traders.

They never stay long enough in any investment to get the real results, once their investment see a little appreciation, they are more than happy to offload them which is why most of them are not Rich.

Regret of a Cryptocurrency Trader

A Real Life Story of a Cryptocurrency Trader

I got chatting with some guy on Social Media and he mentioned to me that He's been a Bitcoin Investor since 2009.

I couldn't believe my ears...

You don't know why?

I'll tell You right away...

Just a $1 investment in Bitcoin in 2009 would have given You 185 bitcoins, Let's assume he was very extravagant and only 50 bitcoins is left in 2017, that will still be a massive $285,000 at the current rate of $5,700 for 1 bitcoin.

You get the drift?

So that guy was never a Cryptocurrency Investor, he was a Cryptocurrency Trader.

As at the time he was telling me this, there was nothing to show that he got into Bitcoin in 2009.

Now, he can't account for the Capital Gain he made from selling off his bitcoin... are you getting the message?

Your wealth is in your Investment Assets, hold on to it, sell sparingly, never dump everything.

Be a Cash Flow Investor not a Capital Gain Investor.

Cryptocurrency Investment Advice from an Old Gentleman

Some days ago, I got a message from a 68 years old gentleman by name Richard Junone, see his message to me below.

 Richard Junone 

position

I'm an elderly gentleman, closing in on 68 years of age. My son introduced me to Crypto in late 2012. After doing a lot of researching Btc I felt strongly that It had a lot of growth and potential ahead of it.

So my son and I built my 1st rig and I started mining in January 2013, pulled $5,000 from my IRA and bought Btc at $13.44 and have never looked back since.

The sweetest sound that I've ever heard was the clink of my 1st mined Bitcoin way back when. That was as satisfying a note as there ever was on any musical scale. Nothing but happy days ahead since.

Don’t get me wrong, there have been bumps in this Crypto highway, the demise of the Silk Road, Mt Gox, DAO hack to name a few but as a HOLDer (holding on for the long duration) not a HODLer (hanging on for dear life) and not day trading, has rewarded me with quite a decent profit. It just takes a lot of patience (Sisu) and doing your research with due diligence.

I have since invested in Ethereum (Dec 2015), Monero (Jan 2016) and lately Omisego (July 2017) all purchased from some of my profits from Btc to go along with my newly acquired free Bch and recently free Omg.

I'm currently operating 3 rigs equipped with 6 gpus each. 2 mining Eth and 1 Monero for now, all of which will be re-evaluated after Metropolis kicks in to see which direction I go from here.

So I ‘m back to doing more research in order to help with my next moves but I'll always be a strong believer in Ethereum which is where I've made my money so far. HOLDing on to the rest for now.

Btc $5,000-10,000, Eth $2,500- 5,000, Monero $200-400, Omg $100-1,000 no one ever really knows but MY research says yes and so far MY research has not proven me wrong. Bought Btc at $13.44, Eth at .80, Monero at .48, Omg at .43 Bch for free.

No where to go but up for me. Just biding my time. It's taken me over 4 and a half years to get here but I've made over $4,000,000 so far with just my original investment plus the cost of my rigs and I’m still sitting on a lot more.

Taking a position and HOLDing is where the real profit is and it isn't going to happen overnight.

So if you want aggravation and ulcers go ahead and day trade, try and beat the Market I wish you luck but the real money comes with Research, HOLDing and Patience.

This post above which is more like an advice from a mentor even though I don't know him and I've never spoken to him should ring a bell to You.

Make no mistakes about it, Investing not Trading is the way to enduring Success and Wealth.

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