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How Do the Rich Keep Getting Richer?

How Do the Rich Keep Getting Richer?

It is a common adage in most societies that the rich get richer and the poor get poorer. It may be a sarcastic statement more than an absolute fact, seeing that people like Warren Buffet and Bill Gates didn’t start rich but are now one of the wealthiest people on Earth. However, it is true that if we combine a list of statistics, we will find sufficient evidence to at least base a substantial argument in support of that statement. Therefore, the wealth-building strategies of the rich and elite have been tried and tested over the years, proving that they are successful without a doubt.

When it comes to building sufficient, sustainable wealth, most people follow the same basic plan—buy stocks or mutual funds, open a savings or retirement account, or invest in some real estate. These are all great ways to accumulate funds for the future; however, none of these strategies lead to an abundance of wealth in the future. Instead, the rich and successful use their investment dollars differently, creating a snowball effect of ever-increasing wealth to then pass on to their children and grandchildren. Thus, according to them, playing big is not only because they have more available cash at their disposal but also due to the fact that they expect their investments to work for them as a business. This may seem risky and unrealistic; however, with some modifications, these strategies can be effective at any income level.

Here are a few building strategies that have been tried and tested over the years:

  • Investments using borrowed funds: Leveraged investing is a form of investing using borrowed funds. Using borrowed funds to invest, one has the potential to increase their potential returns because you are investing a lower amount of capital. These investments work when the investment returns are higher than the interest being paid on the borrowed money.
  • Seek infinite returns: Risk comes with returns. This is a proven fact. However, one must be willing to accept the risk of failure at all times. Infinite returns are something the rich know intimately about, but they are not regularly discussed amongst the majority of investors. The concept of Infinite return means getting your principal investment back without selling the asset, after which one can gain interest or cash flow on the investment indefinitely. Receiving infinite returns on every investment, when you are receiving cash flow or building equity, is continuous, but one no longer has any money tied up in the investment itself.
  • High-velocity cash flow: Exchange of money happens in an economy. The speed of this exchange is termed velocity. High money velocity is generally associated with a healthy economy. The problem occurring with most investments is that your money is stuck and cannot spin. It may grow in value, but it cannot be accessed without cashing out of your investment. However, with investments that generate cash flow, such as mobile home parks or apartment complexes, money flows out of those investments that can then be used for other ventures. This allows your portfolio to grow along with your wealth.

At Wealth BCI, we deal in profitable investments and steady cash flow for all our clients. Our methods, contacts, and strategies all cater to achieving those goals and allow us to maintain long-term relationships with our clients. This is the hallmark of our company’s growth and reputation. Contact us now to book an appointment!!