I ran across a fantastic post the other day by Scott Galloway about wealth creation and wanted to share it because its just a great perspective. I want to keep this short and sweet.
Here is a link directly to the article & some of my key takeaway quotes are below.
My Bullet Point Notes (copy and pasted from original article)
- What is rich?
- Rich is having passive income greater than your burn. People on a path to money focus on their earnings; people on a path to wealth also focus on their burn.
- Anyway, it’s not your income, but your income-to-expense ratio, that determines if you’re rich.
- Four Factors In the Algebra of Wealth
- Focus
- Intelligence and talent are correlated with success, but the strongest signal of future success is your perseverance and resilience: what the books in airport bookstores call “grit.”
- Focus on putting yourself in a position to be financially successful.
- Focus on your relationships.
- Family and friends are essential to long term happiness, and the most important relationship is your spouse.
- Married people grow their net worth 77 percentmore than single people. Marry the right person, and then invest in that relationship every day.
- You’ve wagered 50 percent-plus of your net worth, and value in the marketplace, on that partnership. Don’t keep score, and bring forgiveness, generosity, and engagement.
- Stoicism
- Determine what you can and can’t control.
- a lack of discipline is the antichrist to economic security
- The most powerful forward-looking indicator of your financial freedom is not how much you earn, but how much you save.
- One study found that over a 12-year period, only 5 percentof active retail traders made any profit at all.
- Stoicism is not just about being stoic in the face of temptation. It means having good character. Succeeding in life is much easier if other people want you to succeed.
- Diversification
- Plan A for financial security is being great at doing something that the market values highly, and leveraging that into income and/or equity in a business. But Plan A squared is investments.
- with investments, focus is to be avoided.
- be sure that your time spent tracking/trading does not distract you from what is/should be your source of income and savings.
- Diversification is the kevlar that protects you — with it, bad decisions will still hurt, but they won’t prove fatal. Diversification, in other words, is your bulletproof vest.
- You don’t need to be a hero to get to economic security.
- Time
- It is our most inflexible and valuable commodity, the one thing with which you should not be generous.
- The gangster authority on time, Albert Einstein, supposedly remarked that compound interest is the eighth wonder of the world. Yet our brains are not wired to understand this.D
- Compounding is not just a financial thing. The most important returns in life come from the compounded effects of our investments over time, whether in our finances, careers, hobbies, or relationships.
- Change the timescale of your life, and you change your life.
- Focus
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