It’s a common question. While luck and inheritance can play a role in creating wealth, sustaining it across years and even generations is not an accident. It’s the result of a powerful combination of mindset, strategy, and built-in advantages.
The wealthy don’t just hold onto their money; they actively take measures to protect and grow their fortunes. Here’s a breakdown of why they so often stay wealthy.
Better access to financial advice
Wealthy individuals understand that they don’t know everything. They view professional advice not as an unnecessary expense, but as a key tool. They have access to high-quality financial advisers and wealth managers. Usually, you would not get access to these high-quality finance professionals unless your investible assets are at least $20 million. These professionals typically provide sound, ongoing financial advice.
You can refer to the related blog post: What investing services do the wealthy use, or have access to, that aren’t available to average person?
Better financial awareness
They have a greater understanding of how to handle and invest money, the power of money, the pitfalls of money, and how disingenuous people interact with them with an agenda. They are trained at home from childhood on these aspects, because these skills are very relevant to them.
More resourceful connections
They are groomed from childhood on expensive hobbies and various social skills. They are well-travelled. These qualities make them more interesting for others to spend time with. These socialising skills often lead to resourceful friendships and acquaintanceships with achievers and doers. Being in a circle of high-achievers leads to a natural exchange of ideas, business deals, investment opportunities, and valuable information. You eventually draw traits from the company you keep!
More room to make mistakes
Wealth provides a significant financial cushion. A failed business venture or a bad investment that might bankrupt a middle-class person is often just a learning experience for a wealthy individual.
They can afford to make more than a few financial mistakes in the course of their life, and still might remain wealthy. However, a middle-class person can afford to make only two to three financial mistakes in their lifetime, and anything more than that will ensure that the middle-class person is staring at financial hardship.
More productive
They can be more productive with their time, that is, more value created for a unit amount of time spent. This is because they can embrace high-value pursuits as they do not need to earn money to pay for the monthly household bills! They can use their time to learn valuable skill sets, and spend many years building entrepreneurial ventures with high payouts.
More resourceful spouse
They usually marry another wealthy person, or someone with high potential to become a self-made wealthy person. Moreover, even if they are not ambitious or diligent, their life partner would make up for a part of those traits!
Related information
Also refer to the related knowledge resources:
- An introduction to discretionary investment management
- Financial advisers and discretionary investment management
- An introduction to wealth management
- An introduction to family office
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