7 Things Financially Successful People Have In Common
You would think that for all the great products he helped put out into the world that Steve Jobs would have been the wealthiest man in the world, but the truth is he wasn’t even in the top 40 of the wealthiest people at the time of his death.
Apple, the company he co-founded and helmed until his passing, was and is wildly profitable – with cash reserves bigger than many countries. In contrast, Tesla, the company headed by Elon Musk, who, earlier this year, overtook Jeff Bezos for the #1 spot (Bezos has since regained the crown), barely turned its first profit last year after being in business for 18 years.
Steve Jobs could have demanded more stock from Apple to pad his wealth, but it wasn’t important to him. Interestingly, his ownership of another company he founded, Pixar, made up the bulk of his wealth – not Apple.
The acquisition of Pixar by Disney made Steve Jobs Disney’s biggest single shareholder. Here’s what Steve Jobs had to say about money:
“Being the richest man in the cemetery doesn’t matter to me. Going to bed at night saying we’ve done something wonderful, that’s what matters to me.”
Jobs’ material possessions reflected his philosophy towards money.
For instance, the house he lived in with his wife and children in Palo Alto – a house some would consider modest by Silicon Valley standards. The 5,768-sq ft house is currently valued at around $10 million. Compare this to Bill Gates’ 66,000 sq ft house in Medina, WA, with an assessed value of around $132 million. Does the bigger house make Bill Gates feel more fulfilled than Jobs ever felt? I doubt it.
According to Merriam Webster, the definition of the word “rich” is: Having abundant possessions and especially material wealth.
Having possessions may make you feel rich, but it doesn’t necessarily make you financially successful. Just ask all the pro athletes and celebrities who had many “possessions” but ended up losing everything because they lacked financial intelligence. Nobody would consider them financially successful.
Financial success, to me, is doing the right things financially to have the resources to be able to live your best life – a life without having to worry about money. Is Bill Gates’ house proof that he lives a better life than Steve Jobs did? I doubt it.
Being financially successful means not having to wonder how you’ll pay for your expenses if you can’t work anymore.
A couple living in a modest house can go on as many trips as they want to see their children and grandchildren have achieved what they set out to achieve with their investment goals – financial independence.
In contrast, the doctor or lawyer working 70-80 hours a week to keep up with the mortgage, car payments, and vacations but who misses important milestones in their children’s lives may be rich in possessions but poor in fulfillment.
What do the financially successful do that sets them apart from those who are merely rich in possessions?
If there is one common theme among those who have achieved financial independence, they have clear objectives about what they want to achieve, and they can see through all the fluff and BS that prevents them from reaching their objectives. They don’t care what anybody else thinks. They’re true to themselves.
Here are the 7 things I have found that financially successful people have in common:
They Stick To A Few Core Investment Principles.
The financially successful typically have a few simple investing rules they always live by. One of Warren Buffet’s most famous quotes has to do with his first two rules of investing:
“Rule #1: Don’t lose money. Rule #2: Never forget rule number one.”
The financially successful understand the true cost of losing. While many investors can project an opportunity’s potential returns – taking into account the compounding effect of cash flow – the financially successful take it one step further. They take into consideration the compounding effect of losing. They calculate lost opportunities and the compounding effect of lost money. That’s why they don’t like to lose and why they don’t speculate.
Consistent with their aversion to losing money, the financially successful wrap a few of their other core investment principles into a certain class of assets: cash-flowing alternative assets that are tangible and appreciate over time. You can’t lose your entire investment with hard assets. And because they’re illiquid, they’re insulated from the madness of the mobs.
The financially successful are not so rigid as to not consider investment alternatives outside of their core portfolio. They understand that times change, and new trends will come along that will have sticking power.
They’re willing to adapt to the times as long as the new opportunity is consistent with their core principles of:
- Not Losing Money.
- Tangible Assets.
They Key Off The Incentives And Motivations Of Others.
The financially successful don’t have a problem with leveraging others’ expertise, but they will key off others’ incentives and motivate them as part of their decision-making. That’s why they’re skeptical of financial advisers that receive transaction-based compensation. That type of compensation can only incentivize these advisers to churn their clients’ accounts.
What is their motivation for putting their client first? None. They would lose money by investing in sound long-term investments that cash flow and grow over time.
On the other hand, an investment partner that is only compensated when their investors are compensated will attract the financially successful ear. A partner incentivized by making decisions that profit everyone is the type of partner the financially successful will want to team with.
They’re Cynical About Wall Street.
They know how Wall Street operates. They know all the manipulation that goes on behind the curtain, and they know the house always wins.
Economic fundamentals are low on the list of market mechanisms in the stock market, and that’s why the financially successful refuse to play in the Wall Street sandbox.
They Ignore Gifs And Memes.
The financially successful don’t go along with the masses. They’re not affected by what’s trending on social media, what Redditors are buzzing about, or what Elon Musk’s views on Bitcoin are. They don’t care. They see through all of the fluff and the BS.
They know hype when they see it and avoid it at all costs because they know that the hype always comes with the crash. Their aversion to flash explains why they don’t jump on any investment bandwagon.
They Don’t Spend For Show.
Big homes, fancy cars, and fancy vacations don’t do it for those who are financially successful. These assets only take away from their goals. They prefer productive assets – assets that propel them along their journey to financial independence and not hinder them. Assets that serve no other purpose than to say, “Look at me! Look how rich I am” have no place in their lives.
Their Investment Horizon Is At Least Three Years.
The financially successful know that short investment horizons only fuel risk-taking and speculation. Long-term windows impose self-discipline – the discipline required to allow an investment to mature and work its cash flowing and appreciation magic.
The financially successful do not fit within society’s idea of the rich. That’s ok with them because they’re principle-centered – both in their personal as well as their investment lives.
Being grounded is what made them financially successful, to begin with, and it’s not something they’ll betray because the masses are chasing something new.
Michael Foley, president and CEO of Humabilt Capital, oversees the entitlement process, funding, and operations for Humabuilt Capital. Mr. Foley has been a full-time real estate investor since 1995 during which time he has developed hundreds of single-family homes, townhomes, condominiums, and apartments. Mr. Foley started his investment ventures in Long Beach, California, and has expanded to Apex and Durham North Carolina. Mr. Foley is a graduate of the University of California at San Diego.