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4 Vital Traits You Need to Build Wealth

by Shawn Johnson
February 26, 2022
in Entrepreneurship
4 Vital Traits You Need to Build Wealth

opinion expressed by entrepreneur Contributors are yours.

For many people, success is synonymous with wealth or celebrity. As a result, libraries and booksellers offer thousands of books, studies, and articles with advice on how to get rich.

Writers of get-rich schemes target a growing audience who believe there is hidden knowledge about wealth accumulation. The gullible people spend thousands of dollars looking for a guru who is ready to reveal the formula for accumulating wealth. With modern writers capitalizing on demand, store shelves are flooded with their advice, tips, and secrets. His audience ignores the fact that the money does not go to the buyer of a book or seminar attendee, but to the author and the presenter.

action required

Wealth is gained not by passive reading or listening, but by action. Knowledge is potential or stored energy, essentially useless until it is used and turned into karma. Actions – not ideas – Build wealth by developing a new industry (like Elon Musk) or by investing (like Warren Buffett).

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There are no secrets or shortcuts to wealth (except for marriage to a wealthy spouse). However, the top of the financial pyramid is usually the display of distinctive characteristics.

Four Important Characteristics of Wealth Creation

Habits of unusual success achievers are not inherited but are learned and practised. Establishing these qualities is neither easy nor difficult but intentional and persistent. While some may have a natural tendency for some trait, they are available to everyone.

Center

Daily life is full of distractions at every level. Some are important, but most are irrelevant. Focus is the ability to set a goal and focus completely on it until it is achieved. Earning wealth is a journey of years if not a lifetime. While good fortune can affect the length of the journey, the gift of sudden luck is rarely given.

Most fortunes are built by gradually investing a portion of their earnings wisely consistently. Focus on your destination, and you avoid wasted time, energy and capital of detours, misdirections, and chance. Paul Samuelson, the first American to win the Nobel Prize for Economics, advises, “Investing should be watching the paint dry or the grass growing. If you want excitement, take $800 and go to Las Vegas.”

RELATED: 5 Ways to Build Wealth by Investing in 2022

self discipline

The Yin to Yang of focus is self-discipline, which is the ability to control one’s thoughts and actions. Some have even defined discipline as “the ability to postpone gratification.” Investing requires regularly saving a portion of your income for tomorrow, eg, negating the immediate pleasure of shopping today. People who cannot control their spending rarely earn or keep money.

Most successful people are not exceptionally gifted or have a genius level IQ, but rather ordinary people who learn to link the actions of today with the results of tomorrow. To paraphrase the humorous Will Rogers, self-discipline enables you to avoid spending money that you don’t need to buy things you don’t need to impress people you don’t like.

Specialization

Many confuse knowledge with expertise. comes from prior reading and experience; Expertise is the ability to use knowledge to achieve specific results.

An example of the difference is between a physician and a surgeon. Both are physicians, although physicians lack the skills gained from hours in an operating room when managing a patient’s overall health. Similarly, surgeons usually lack the general diagnostic skills of a physician. Both professions require specific expertise to excel in their profession. Specialists recognize and compensate for potential complications or failure, making adjustments as needed to stay on course.

Successful investors need knowledge of such topics as accounting, finance and security analysis gained through study. However, expertise develops through the consistent, objective application of knowledge, or what researchers call “deliberate practice”. Also, it requires practice on things you don’t do well. Research shows that working on what you can’t, can turn you into the expert you want to be. Experts are made, not born.

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risk management

Because the future is unknown, all aspects of human existence are at risk. Successful investors must understand the types of risks inherent in the action and reduce the likelihood (frequency) and losses associated with an event (magnitude). One of the most successful investors of all time, George Soros’ investment philosophy focuses on potential investment losses. In his words, “It is not important whether you are right or wrong, but how much money you make when you are right and how much you lose when you are wrong.”

Investors can manage their investments to minimize potential losses by:

  1. Knowing their risk tolerance, People vary in their comfort when taking risks. A high-risk investment is likely to be volatile with price changes igniting extreme investor sentiment. The rule of thumb is that any investment that makes an investor sleepless is an investment to avoid.
  2. Ensuring potential returns consistently exceed potential losses, Consider tossing a coin where the result is 50/50 heads or tails. Investing in a coin is only to gain as much as you can afford to lose, it is a gamble, not an investment. On the other hand, it may be worthwhile to invest with a 10% chance of 100x payouts depending on the amount invested.
  3. Using an investment risk mitigation strategy, A recommended practice is to avoid or reduce an assumed risk by diversification or similar strategies.

The road to wealth is often long, full of potholes and the wrong direction. Many embark on the journey and find that the exclusive pursuit of wealth is too demanding and the tradeoff between the present and the future is enormous. In the words of author, artist, and poet Julia Cameron, “We really want to do what we’re really meant to do. When we do what we’re meant to do, the money comes to us, for us.” Doors open. Feel useful, and the work we do feels like play to us.”

RELATED: 4 Steps to Living Abundantly, Attracting Wealth and Better Business

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