Getting Wealthy vs. Staying Wealthy
Hello people!
How are you?
It's that time of the year I absolutely adore – kicking off the cozy winter season, with the sparkle of Diwali just around the corner! Shopping and decluttering sprees, food, endless fun, and a contagious wave of happy faces wherever you go.
Coming back to the topic now-
In the 5th chapter "Getting Wealthy vs. Staying Wealthy", the author Morgan Housel explains how getting rich might involve risk and aggressive strategies, but staying wealthy demands an opposite approach: patience, humility, and risk management. Hence, staying wealthy is often more challenging and significant than getting there in the first place.
The author states,
"If 'wealthy' is not a word you'd apply to yourself, the observation applies to everyone, at all income levels:
Getting money is one thing.
Keeping it is another."
Getting money often involves taking calculated risks, maintaining optimism, and embracing opportunities.
But keeping money requires the opposite of taking risks. It requires acknowledging that a part of your success is due to chance, and luck may not always favour you.
So all we need to learn is to SURVIVE!
A survival mentality is so key with money because one- few potential gains are significant enough to warrant sacrificing your financial well-being and the other- is compounding. It only works if you allow an asset ample time to grow over the years.
Applying the survival mindset to the real world comes down to appreciating three things:
1. More than I want big returns, I want to be financially unbreakable. And if I'm unbreakable I actually think I'll get the biggest returns, because I'll be able to stick around long enough for compounding to work wonders.
2. Planning is important, but the most important part of every plan is to plan on the plan not going according to plan 😅
- it means, a plan is only useful if it can survive reality. And a future filled with unknowns is everyone's reality. Hence, keeping room for error which can let you live happily with a range of outcomes.
3. Optimistic about the future but paranoid about what will prevent you from getting to the future- is vital.
Compounding doesn't rely on earning big returns. Merely good returns sustained uninterrupted for the longest period of time- especially in times of chaos and havoc- will always win.
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In case, you missed reading the first chapter- No One's Crazy, the second chapter- Luck & Risk,the third chapter- Never Enough and the fourth chapter- Confounding Compounding
I hope you learnt something through reading this blog. If Yes, then make sure to like the blog, comment, share and subscribe to the email newsletter if you haven't yet. I post a blog every Monday at 7 pm IST, until then Happy Reading!
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