7 Ways Rich People Think Differently Than The Rest Of Us

I’m sure you agree that people are about the same at their core. Most of us care about deeply about our family. We all want to be happy, healthy, and safe. That’s the case no matter how much money you have stuffed inside your pillow.

But wealthy people do think differently. It’s unmistakable and undeniable. I have worked with the rich and not-so-rich for 30 years. I’ve seen how the well-heeled ruminate in their own way and how that variation makes and keeps them rich. The good news is that anyone can copy “rich think” and come out much better on the other side. So how do rich people think?

1. Rich People Know They Don’t Know Everything

People who make a lot of money and hold on to it realize they don’t have all the answers. As a result, they are always on the lookout for new and better ways to do things. They surround themselves with people who offer different approaches. They have mentors and accountability partners. They are willing to consider ideas that conflict with their current way of doing things. If the new approach is better, they adapt. Their ego doesn’t get in the way of their intellect. When they are wrong, they don’t fight it or take it personally.

Contrast that with people who think they have it down. Their mind tells them they have life mastered. As a result they can’t learn anything. Worse, they don’t see it when the universe says “no”. They stick to their antiquated approach and usually get run over by reality.

2. Rich People Ask The Right Questions

You don’t have to be a genius to ask the right questions. You just can’t be lazy. That’s because it takes work to get all the answers to the many questions you have to ask in order to really understand a given situation. It’s much faster and easier to ask a few irrelevant questions and then steam ahead than to sit down and really ask all the important questions.

Let’s say you are thinking about a major decision. A quick approach might be to consider a few superficial questions that just reinforce your preconceived notions. But a “rich think” approach would include such tough questions as:

• What do we really want?
• Why do we want it?
• What are all the alternatives?
• What are the pros and cons to each approach?
• When do we want to have this in place?
• Why?
• Is there another way to reach our goals without doing this or at a lower cost?
• What happens if we do this?
• What happens if we don’t do this?
• What other questions have we forgotten to ask?

You can see which method is harder but leads to far better results. Rich folks aren’t afraid to ask the right questions and then do whatever it takes to get the answers.

3. Willing to Work

People who stay stuck often give up before the miracle arrives. People who use “rich think” see the obstacles of course (because they ask the right questions) but are willing to work hard to overcome them.

4. Patience

Worthwhile goals take time to achieve. Rich people understand this and stay on track. Other people get frustrated when they don’t get instant results and they move on. Sadly, the person who hops around like that is caught in perpetual start-up mode because he’s always beginning something new and never gets to see the fruits of her labor.

5. Wealthy People Self-Correct

This point leads back to the issue of asking the right questions. The effective person continually asks herself if her actions are bringing her closer to or further away from her goal. If she finds that she’s drifting, she corrects course and gets back on track. Less effective people rarely self-assess. As a result they tend to be unproductive.

6. The Rich Lavish Praise On Others And Are Stingy With The Criticism

Small people jump at the chance to criticize. They just love finding the flaws in other people and can’t wait to shine the spotlight on those defects. They dig putting others down. Of course there are people with money who are mean and nasty. But they aren’t rich or wealthy because they are usually alone and miserable.

Rich people, truly rich people, do just the opposite. They seize every chance they get to praise others and always work hard to soften any negative review. This keeps alliances strong, builds teams and motivation. It excites others and brings out the best in them. Everyone wins.

7. Rich People Put Others First

Napoleon Hill interviewed the wealthiest people in the United States about 90 years ago. He found that almost without exception rich people focus on helping others get what they want. It was that singular and fanatical focus on the customer that made these men and women successful.

When people only do their jobs because of the money they usually lead poor lives. Find a way to make money helping other people get what they want and you’ll have more business than you can handle. If you are employed by someone else. The quickest way to your promotion is to follow the “ABH” rule — Always Be Helping!

If you are looking for one word to summarize how the rich think it is humility. A truly humble person asks questions, is of service, treats others with dignity, keeps her eye on the ball, has patience and is willing to do the work. Above all, a humble person values herself and all other humans equally. She respects her own gifts and those of others. As a result she is open to the utmost this life has to offer.

Self-Made Billionaires Around the Globe: Where and Why They Thrive (Infographic)

"SuperEntrepreneurs" are the Cinderellas of the business world. They're the most entrepreneurial of entrepreneurs, the extreme rags to riches stories: they are self-made billionaires.

The London-based Centre for Policy Studies identified nearly 1,000 SuperEntrepreneurs from 53 countries by analyzing Forbes' list of the world’s richest people from 1996 to 2010. To qualify as a SuperEntrepreneur, a business person had to have earned at least $1 billion. The report did not include those who had inherited their billions, or inherited a smaller fortune and had grown it into a billion-dollar sum.

The goal of the report was to identify the government and policy infrastructures that best support these superstars of entrepreneurship. After all, these SuperEntrepreneurs are good for the countries where they run their businesses, often creating millions of jobs.

Hong Kong and Israel have more self-made billionaires than any other place, when considered as a percentage of total population. The United States, Switzerland and Singapore rounded out the top five.

Low taxes and low regulation are correlated with higher percentages of SuperEntrepreneurs, according to the report. Government programs to support entrepreneurship did not correlate with the percentage of SuperEntrepreneurs, the report found.

“The results indicate the American Dream – the notion that it is possible for individuals to rise to the top through effort, luck and genius – is not yet dead. Self-made billionaire entrepreneurs have created millions of jobs, billions of dollars in private wealth and probably trillions of dollars of value for society,” the report says. “Moreover, the American Dream is increasingly the Global Dream.”

Take a look at the infographic below to peruse further findings from the report, including examples of SuperEntreprenuers, their geographic distribution and descriptions of what supports SuperEntreprenuerial nations.

The Five Commandments Of Warren Buffett And Charlie Munger

As we consider these men pioneers of long-duration common stock investing, we wanted to share what we believe were the best nuggets of wisdom from the weekend. 

1. Thou Shalt Not Envy.

Munger: “We are way better off by not adding to a culture of envy." 

At Smead Capital Management, our motto is "Only the Lonely Can Play." Sticking to your own discipline when other investors are temporarily doing better than you, is effectively avoiding envy. We don't envy the returns others make in their disciplines and hope our investors stick to the kind of long durations emphasized by Berkshire Hathaway. 

2. Thou Shall Hire Great People and Over-trust Them.

Buffett: "They make mistakes, but we get more success overall." 

Mr. Buffett sounded like author Jim Collins who said, "get the right people on the bus." We try to look for this in our investments and attempt to do this in our own company. 

3. Thou Shall View Competition as the Enemy of Competence.

Munger: “Don't try out for the NBA if you are 5'2" tall. To find a circle of competence, compete against idiots.  The slowness of what we do causes few to compete with our model." 

In essence, we think Buffett and Munger were saying that one should invest in S&P 500 index sectors, industries and companies where the consensus is fearful. Buffett has said that you "pay a high price for a cheery consensus" and gave a loud re-endorsement of CEO Brian Moynihan at Bank of America. The long duration confidence and "slowness" of what we do in our large bank holdings will be a source of future success, in our lonely opinion! 

4. Thou Shall Value Qualitative over Quantitative.

Buffett: "Aesop Was Right (a bird in the hand is worth two in the bush). Fisher was qualitative in analyzing stocks, Graham was quantitative and Charlie convinced me that Fisher is correct." 

Our eight criteria have a clearly qualitative bent and do not emphasize the deep value pattern of Ben Graham. We will comment more about this subject next week, related to recent statistics which show that long-term Alpha is connected to low-capex and high free-cash flow generation companies.

5. Thou Shalt Remove Ignorance from Investing.

Munger: "Investing and business success is about ignorance removal." 

We have argued for years (just ask my kids) that all the math you need to be a great investor is learned by the end of 7th grade. Don't let complexity and high math fool you in the investment vehicles you analyze. We contend that successful investing in common stocks comes in long durations and from doing something which is relatively simple, but humanly hard to execute. Charlie said that See's Candy taught Warren and him about brands and led to the purchase of Coke in 1988. In effect, it "removed some of their ignorance" associated with brands.

via businessinsider

How Young People Can Get Rich Slowly

Today's young people can retire comfortably with $1 million in the bank. All it takes is starting early, spending 15 minutes a year rebalancing their portfolio, and avoiding financial professionals who are mostly concerned with making themselves money.

At least that's the message of William Bernstein, cofounder of investment management firm Efficient Frontier Advisors, who recently published the short ebook "If You Can: How Millennials Can Get Rich Slowly."

It clearly resonates. The book, available for free on his website and for 99 cents on Amazon, is being snapped up by readers, and a New York Times story about Bernstein has spent the last several days at the top of the publication's most emailed list.

The popular interest seems to be a combination of older people sharing the text with their young family members and unspoken anxiety about saving for retirement, Bernstein tells Business Insider. "Of course, what I'd really like to believe," he says, "is that I've successfully stoked latent public outrage over a retirement system that somehow expects the folks who teach our kids and flip our burgers to somehow, against all odds, manage their retirement portfolios."

So how can you get rich slowly? Here's some of Bernstein's advice, excerpted from the ebook with his permission:

*** 

Would you believe me if I told you that there's an investment strategy that a seven-year-old could understand and that will take you 15 minutes of work per year, outperform 90% of finance professionals in the long run, and make you a millionaire over time? 

Well, it is true, and here it is: Start by saving 15% of your salary at age 25 into a 401(k) plan, an IRA, or a taxable account (or all three). Put equal amounts of that 15% into just three different mutual funds: 

• A U.S. total stock market index fund
• An international total stock market index fund
• A U.S. total bond market index fund 

Over time, the three funds will grow at different rates, so once per year you'll adjust their amounts so that they're again equal. (That's the 15 minutes per year, assuming you've enrolled in an automatic savings plan.) 

That's it; if you can follow this simple recipe throughout your working career, you will almost certainly beat out most professional investors. More importantly, you'll likely accumulate enough savings to retire comfortably. 

But You're Still Screwed 

William J. Bernstein

Investment advisor William Bernstein

Most young people believe that Social Security won't be there for them when they retire, and that this is a major reason why their retirements will not be as comfortable as their parents. Rest assured that you will get Social Security; its imbalances are relatively minor and fixable, and even if nothing is done, which is highly unlikely in view of the program's popularity, you'll still get around three-quarters of your promised benefit. 

The real reason why you're going to have a crummy retirement is that the conventional "defined benefit" pension plan of your parents' generation, which provided a steady and reliable stream of income for as long as they lived, has gone the way of disco. There's only one person who can repair the gap left by the disappearance of these plans, and you know who that is. Unless you act with purpose and vigor, your retirement options may well range between moving in with your kids and sleeping under a bridge in the rain. 

Further, the most important word is the IF in the above "if you can follow this simple recipe," because, you see, it's a very, very big if. 

At first blush, consistently saving 15% of your income into three index funds seems easy, but saying that you can become comfortably well-to-do and retire successfully by doing so is the same as saying that you'll get trim and fit by eating less and exercising more.

People get fat because they like pizza more than fresh fruit and vegetables and would rather watch Monday night football than go to the gym or jog a few miles. Dieting and investing are both simple, but neither is easy. (And I should know, since I've been much more successful at the latter than at the former.) 

In your parents' day, the traditional pension plan took care of all the hard work and discipline of saving and investing, but in its absence, this responsibility falls on your shoulders. In effect, the traditional pension plan was an investing fat farm that involuntarily limited calorie intake and made participants run five miles per day. Too bad that, except for the luckiest workers, such as corporate executives and military personnel, these plans are disappearing. 

Bad things almost inevitably happen to people who try to save and invest for retirement on their own, and if you're going to succeed, you're going to need to avoid them. To be precise, five bad things — hurdles, if you will — must be overcome if you are to succeed and retire successfully:  

Hurdle number one

People spend too much money. They decide that they need the newest iPhone, the most fashionable clothes, the fanciest car, or a Cancun vacation. Say you're earning $50,000 per year, 15% of which is $7,500, or $625 per month.

In this day and age, that's a painfully thin margin of saving, and it can be wiped out simply by stringing together several seemingly innocent expenditures, each of which might nick your savings by $100 or so per month: a latte per day, a too-rich cable package, an apartment that's a little too tony, a dress or pair of brand-name sneakers you really don't need, a few unnecessary restaurant meals and, yes, an excessive smart phone plan you could, if you had to, not only live without, but also function better without.

Life without these may seem spartan, but it doesn't compare to being old and poor, which is where you're headed if you can't save. You might even save the whole $625 in one fell swoop just by living with a roommate for a while longer, instead of renting your very own place. Again, as bad as having a roomie may be, it's not nearly as awful as living on cat food at age 70.

Let's assume you can save enough. You're not home free, not by a long shot. You've got four more barriers to get by.

Hurdle number two

You'll need an adequate understanding of what finance is all about. Trying to save and invest without a working knowledge of the theory and practice of finance is like learning to fly without grasping the basics of aerodynamics, engine systems, meteorology, and aeronautical risk management. It's possible, but I don't recommend it.

I'm not suggesting that you need to get an MBA or even read a big, dull finance textbook. The essence of scientific finance, in fact, is remarkably simple and can be acquired, if you know where to look, pretty easily. (And rest assured, I'll tell you exactly where to find it.) 

Hurdle number three

Learning the basics of financial and market history. This is not quite the same as the above hurdle; if learning about the theory and practice of finance is akin to studying aeronautics, then studying investing history is akin to reading aircraft accident reports — something every conscientious pilot does.

The new investor is usually disoriented and confused by market turbulence and the economic crises that often cause it; this is because he or she does not realize that there's nothing really new under the investment sun.

A quote often misattributed to Mark Twain has it that "History doesn't repeat itself, but it does rhyme." This fits finance to a tee. If you don't recognize the landscape, you will get lost. Contrariwise, there's nothing more reassuring than being able to say to yourself, "I've seen this movie before (or at least I've read the script), and I know how it ends." 

Hurdle number four

Overcoming your biggest enemy — the face in the mirror — is a daunting task. Know thyself. Human beings are simply not designed to manage long-term risks. Over hundreds of thousands of years of human evolution, and over hundreds of millions of years of animal development, we've evolved to think about risk as a short-term phenomenon: the hiss of the snake, the flash of black and yellow stripes in the peripheral vision.

We were certainly not designed to think about financial risk over its proper time horizon, which is several decades. Know that from time to time you will lose large amounts of money in the stock market, but these are usually short-term events — the financial equivalent of the snake and the tiger. The real risk you face is that you'll be flattened by modern life's financial elephant: the failure to maintain strict long-term discipline in saving and investing. 

Hurdle number five

As an investor, you must recognize the monsters that populate the financial industry. They're very talented chameleons; they don't look like monsters; rather, they appear in the guise of a cousin or an old college friend. They are also self-deluded monsters; most "finance professionals" don't even realize that they're moral cripples, since in order to function they've had to tell themselves a story about how they're really helping their customers. But even if they're able to fool others and often themselves as well, make sure they don't fool you. 

Only if you can clear all five of these hurdles can you successfully execute the deceptively simple "three fund strategy" I've outlined above.

via businessinsider

All Brilliant Ideas Have These Two Characteristics

I see a lot of startup pitches every year. And the more I see, the more I've realized that brilliant business ideas come down to two things:

1. Is it simple?
2. Does it solve a real problem?

This was made even clearer to me recently while I watched startup pitches in Charleston, South Carolina, at Dig South, a conference combining great entertainment, cutting-edge technology, pitch events, and fantastic networking. 

Here are three fantastic startup pitches I saw — and why they caught my attention:

Eatabit

I hate calling in to a restaurant to place a to-go order. In fact, it's probably the No. 1 reason that I don't place to-go orders more often. I have to repeat my order multiple times to make sure there is no confusion, and when I pick up the food, it's often not quite right.

Eatabit addresses this problem by tapping into something we do everyday, something my teenage daughter does to the tune of 7,000 times a month — text messaging. So why not use text messaging to order food?

Eatabit allows you to text your order to your favorite restaurant. The order automatically prints out in the kitchen and is ready to be picked up when you arrive. If there is any confusion, you can just show the restaurant your text message.

Zubie

The most common problem I have had in my history of owning cars is a dead battery, which often happens at the most inopportune time. In fact, more than 50 percent of breakdowns are battery related.

Zubie solves this problem. It plugs directly into your car's onboard diagnostic port and captures valuable driving data for car owners and drivers that includes location tracking, driving patterns, and, most important, vehicle health.

Because Zubie allows the car to always be connected and collecting data, it enables some really compelling features, such as theft or tow detection and battery-drain alerts. Zubie can alert you before your battery dies. It even assists you with your taxes by helping you easily separate personal and business mileage.

Podanize

As the parent of a teenage daughter, I can tell you that one of the most complex parts of my life is trying to keep up with her schedule. Between orchestra, Odyssey of the Mind, viola lessons, tutoring, and everything else that comes up in her active social life, making it all work can be time consuming and stressful. My wife and I are constantly digging through email and exchanging text messages to try to keep it all straight.

This is where Podanize comes in. It is an online platform that can be easily accessed on your computer, tablet, or phone, and it helps you keep your family organized on a day-to-day basis.

Dig South and these apps are evidence that the best innovation often comes from improving something simple, something that you think doesn't work as well as it should.

via businessinsider