21 Ways Rich People Think Differently

[MadMarketScientist 11]

http://finance.yahoo.com/news/21-way...ly.html?page=1

 

 

1. Average people think MONEY is the root of all evil. Rich people believe POVERTY is the root of all evil.

 

2. Average people think selfishness is a vice. Rich people think selfishness is a virtue.

 

3. Average people have a lottery mentality. Rich people have an action mentality.

 

4. Average people think the road to riches is paved with formal education. Rich people believe in acquiring specific knowledge.

 

5. Average people long for the good old days. Rich people dream of the future.

 

6. Average people see money through the eyes of emotion. Rich people think about money logically.

 

7. Average people earn money doing things they don't love. Rich people follow their passion.

 

8. Average people set low expectations so they're never disappointed. Rich people are up for the challenge.

 

9. Average people believe you have to DO something to get rich. Rich people believe you have to BE something to get rich.

 

10. Average people believe you need money to make money. Rich people use other people's money.

 

11. Average people believe the markets are driven by logic and strategy. Rich people know they're driven by emotion and greed.

 

12. Average people live beyond their means. Rich people live below theirs.

 

13. Average people teach their children how to survive. Rich people teach their kids to get rich.

 

14. Average people let money stress them out. Rich people find peace of mind in wealth.

 

15. Average people would rather be entertained than educated. Rich people would rather be educated than entertained.

 

16. Average people think rich people are snobs. Rich people just want to surround themselves with like-minded people.

 

17. Average people focus on saving. Rich people focus on earning.

 

18. Average people play it safe with money. Rich people know when to take risks.

 

19. Average people love to be comfortable. Rich people find comfort in uncertainty.

 

20. Average people never make the connection between money and health. Rich people know money can save your life.

 

21. Average people believe they must choose between a great family and being rich. Rich people know you can have it all.

[MadMarketScientist 11]

21 rich people who were born rich

21 famous drug dealers

these would be interesting

 

21 reasons why rich people are borderline criminals

21 reasons why average people hate rich people

21 ways rich people show their contempt for everyone else

these would be funny

 

21 ways rich people exploit others just so they can get even more filthy rich.

21 ways rich people have found to "legally" avoid paying their fair share of taxes

these would be educational ...

 

21 reasons why being rich can make you miserable.

21 rich people who say they are happier now that they're poor.

21 reasons why average people would rather be average

these would be fiction ...

[BlueHorseshoe 10]

I wonder what people think of item 3 in the list?

 

3. Average people have a lottery mentality. Rich people have an action mentality.

 

Taking yourself out of an environment of relatively modest but steady and reliable income (schoolteacher, dentist, shopkeeper) and putting yourself in an environment of potential but low probability huge income (market speculation, business startups, pop musician etc), seems to me to be about exposing yourself to a lottery of sorts. It's the 'you've got to be in it to win it' adage.

 

You swap the certainty of average wealth for the removal of the 'glass ceiling' and the uncertain possibility of virtual unlimited wealth.

 

What are other people's thoughts on this?

 

BlueHorseshoe

[MadMarketScientist 11]

I wonder what people think of item 3 in the list?

 

What are other people's thoughts on this?

 

BlueHorseshoe

 

You have a good point ... but I think the author meant average people are sitting on their ass hoping to hit the jackpot whereas rich people are working hard to win the 'lottery'

 

MMS

[BlueHorseshoe 10]

You have a good point ... but I think the author meant average people are sitting on their ass hoping to hit the jackpot whereas rich people are working hard to win the 'lottery'

 

MMS

 

Hi MMS,

 

I see what you mean - I guess some of the statements are confusing because the two elements aren't necessarily mutually exclusive.

 

I'd still be interested to know people's thoughts on this point though, as everyone here who trades for a living has somehow made that decision to remove the 'glass ceiling' - what motivates one type of person compared to the other? Is it purely considerations of wealth?

 

Sorry to bog your lighthearted poll down with heavy psychology!

 

BlueHorseshoe

[SIUYA 11]

- what motivates one type of person compared to the other? Is it purely considerations of wealth?

 

 

weekend musings....

from a trading perspective if you start thinking you are going to create massive amounts of wealth then you have clearly not done your homework, would likely find that there are far better ways to make money, and might be better off being a serial entrepreneur.

 

motivations might range from - wanting to be your own boss, less politics, no commute, more flexibility of time, etc; etc.

 

It might also be that it simply becomes seen by some as a puzzle to be solved....a profession to be mastered. The uncertainty being a hook that keeps you in, and obsessive.

 

Maybe generally many people start of doing what they love and it turns out they were good at it, loved it and it brought them wealth. (Trading just may be it).

 

Plus - what is rich these days....the top 1%. 0.01%, or the top 10% - according to the list its the top 50.1%

 

........

as for the 21 list......most are rubbish and taking the assumption rich is about material wealth.....there are a lot of rich people who you dont know are wealthy, they think the same as you, me, or the average joe. Maybe its not that they think that differently, maybe its just the way things are - some people are wealthier than others because of a combination of factors.

 

.and you could probably add to the list...........

 

average people sometimes know or are content with their limitations, rich people sometimes get lucky and think it was all because of them and luck had nothing to do with it. (some of these may then revert to being average)

 

.

[MadMarketScientist 11]

10. Average people believe you need money to make money. Rich people use other people's money.

 

That's a contradiction....

 

Not a contradiction, I think the author meant to say 'need your *own* money'

 

18. Average people play it safe with money. Rich people know when to take risks.

 

......with other people's money...nice

 

Not great but it's true ... it's just the way the game is played ... rich people realize and understand it and play it well.

 

Don't hate the player hate the game! ... sorry for the lame saying ...

 

MMS

[Perrin 10]

I wonder if everyone is aware that Sir Richard Charles Nicholas Branson, also known as Richard Branson, founder of Virgin Records, Virgin Airways, entrepreneur, intrepid explorer, and the 4th richest citizen of the United Kingdom (that's according to wikipedia – I'm not sure if it's true, but if it is it's a heck of an impressive statistic), has an estimated net worth of billions of dollars?

 

Many people think that he is a self-made man. In the media he is portrayed as coming from an average background. If you go up to a random person on the street and ask them who he is and how he became rich, they'll tell you that he was just an average person – an entrepreneur – who founded Virgin Records. He is thought of as an average guy who made good. Of course, he has done extremely well and he is a living legend in the business world. However, he didn't quite start from 'average'.

 

Now, I'm not saying anything negative here regarding him or his businesses – he is a British icon in many ways. And of course the guy is extremely smart, very hard-working and very driven to have got where he is today. He's dyslexic apparently. He's suffered various set backs and despite these (or even, perhaps these also helped in the long run – in learning from his mistakes) he has become who he is. Huge numbers of people look up to him and say, "Wow, if he can do it, I can do it too."

 

However, the fact is that his father was a magistrate and barrister. His grandfather was the Right Honourable Sir George Arthur Harwin Branson, a High Court of Justice Judge and Privy Councillor. The schools that Richard Branson attended were ever so slightly (that's a big understatement) more prestigious (not to mention expensive) than the average U.K. comprehensive school that most of us average types went to.

 

He started out publishing a student magazine when he was 16 then went on to do the other stuff. He failed in several ventures but these failures meant that he went on and tried, tried again.

 

Of course, Sir Richard Branson has indeed achieved a lot more than most people ever will and he is immensely wealthy.

 

However, if Richard Branson was born to an average family, the simple fact is that he would not have had the support and back-up that he got in his life. If an average person from an average family tries to set up a business and fails they could lose everything - house, spouse, self esteem, a lifetime's effort, all that is dear to them, etc. If a wealthy person with deep pockets fails then (assuming they don't bet everything) they can dust themselves off and say, “Oh well, lets give it another shot.”

 

I'm not saying 'average' (whatever that is) people can't become wealthy, but it is a damn sight harder to do if you start out from a lower level.

 

Imagine a sliding scale of starting positions prior to becoming rich, with 'Failure means catastrophe' on the one side, 'Failure without consequences' on the other. In my opinion the best place to start from is one of 'Failure without consequences' (or perhaps with only limited consequences – as maybe having 'Failure without consequences' would mean that a person wouldn't learn from their mistakes).

 

(Side note: In writing and thinking about this, there is even more to the scale that I didn't originally consider – that of starting with the knowledge that 'Failure will be rewarded' – like the banks during the financial crisis. They have been bailed out – rewarded – for failure. Is this a good place to start from? Perhaps that starting point is too far up the sliding scale and in the long run it will result in something unexpected occurring.)

[gazza 10]

After working long hours running my own contracting company in the Aussie bush I developed arthritis and was told to stop all hard physical work. Had a huge tax credit (needed to use it or lose it) so started trading shares and buying precious metals and transferred tax credit to new company.

Enjoy what I'm now doing; no hard yakka, no working long hours in the bush, home each night. Using the brain and resting the body.

Believe education is no burden to carry. But it must be pertinent to the task you wish to do.

Always believe "onwards and upwards"

Have known several wealth people during my life, all of them had the same attribute. FOCUS on what they were doing and PERSEVERANCE in their efforts.

[SunTrader 10]

22. None .

 

It is truly amazing the misconceptions people have about the rich ......... and the poor.

 

Average blah, blah, blah.

 

Doesn't anyone know of a family that has had 2.1 children?

Edited January 6, 2013 by SunTrader

[syswizard 10]

- 21 Rich people who have stolen OPM (other peoples money)

 

- 21 Rich people who have stolen OPM (other peoples money) and practice law as attorneys

[Colonel B 10]

Can i suggest some follow up lists?

 

I just wonder in these days of global financial crisis if there are less people than there used to be who dream of getting rich.Isn't greed what got us here in the first place?

 

I see this kind of nonsense a lot now a days. Its totally suggests and has in the recent past suggested that capitalism and Wall Street caused the financial crisis. I figure I would comment on Mr. Cars comments because I know he can take it. (and dish it out:)

In reference to the global financial crisis and not all of history. Nope shitty government policy got us into trouble. Greed for money and greed for power from the clowns on capital hill were and are the biggest problem. Its ok the folks on Wall Street helped but no way they could have done it alone. But more importantly yes greed got us here. We didn't become the worlds largest super power over night did we? And no I don't think all the folks that pushed us to where we are now were all looking out for their fellow men and all that. Invisible hand.....

 

I dunno,maybe most average people wish we didn't have to live under the threat of financial meltdown for the next 10 years just because a few rich people "think differently"

 

Hate to break it too you but in some sense it doesn't matter what you or they or what the rich think. Bottom line is that its harder to get rich in this day in age than it ever has been before. Again this is mostly do to the clowns on capital hill. So average people should live in fear. They after all are responsible in full or at least in part. Something for nothing mentality sprinkled with we are all going to get rich with housing fools. Oh and don't worry I am in no way cheering for that clown Bush. And in no way shape or form did I hear Romney come through with the or a solution. So yea average folks kind of brought it on themselves.

[fast 10]

Can i suggest some follow up lists?

 

21 ways rich people have found to "legally" avoid paying their fair share of taxes

To say of something that it is unfair is not to say of something that it is wrong.

[SunTrader 10]

To say of something that it is unfair is not to say of something that it is wrong.

 

To say of something that it is wrong is not to say it is illegal.

[fast 10]

To say of something that it is wrong is not to say it is illegal.

 

I agree, but my point is that even if avoiding taxes is unfair (and I'm not saying it is), then that has no bearing on whether to do so is wrong.

[Perrin 10]

Regarding one of the '21' lists that could be created that Mitsubishi mentioned might be interesting -

 

“21 ways rich people have found to "legally" avoid paying their fair share of taxes”

 

Mitsubishi spoke about it above but I'm not sure if everyone knows this - you may well do already but I found it interesting. One way that certain coffee companies (and other companies too) go about avoiding paying corporation tax in the UK. Probably in the US too, I imagine. Many people might know this already as it has been in the newspapers.

 

It's really amazing and I was very impressed with the simplicity when I read about it. It's so simple, yet made me go 'wow'. Also of course it's despicable and shouldn't be allowed - or if it is allowed then everyone should all be able to do it. But of course, the 'average' person or 'average' small business either cannot do the legal ways of avoiding taxes and/or they don't know they even exist.

 

How or why multinational companies were allowed and are still allowed to get away with this, while for most people tax evasion is an illegal act, is not the point of this post. I think that this is not tax evasion (which is illegal), it is tax avoidance (which is frowned upon but not necessarily illegal, depending on how it is conducted and who is doing it). I think that's right but this is such a complicated (not to mention boring) subject, that most people (myself included) do not have a clue.

 

Anyway. What they did was:

 

Manufacturers grow coffee somewhere.

Generic Multinational Coffee Company HQ is set up in a tax haven, the Cayman Islands or wherever. It doesn't matter where, as long as the tax rate is low.

Generic Multinational Coffee Company UK Branch is set up in the UK.

Consumers live in the UK.

 

Manufacturers of coffee sell coffee to Generic Multinational Coffee Company HQ for $1 per unit.

Generic Multinational Coffee Company HQ sells coffee to Generic Multinational Coffee Company UK Branch for $10 per unit.

Generic Multinational Coffee Company UK Branch sells coffee to Consumers for $9 per unit.

 

Which means that -

Generic Multinational Coffee Company HQ makes a profit of $9 per unit sold and pays Cayman Island tax rate on its profits.

Generic Multinational Coffee Company UK Branch makes a loss of $1 per unit sold and pays no tax in the UK because they are making a loss.

 

Corporation tax in the UK is something like 26% for over 1.5 million profit and 20% if under that, I think.

 

Would you like to hazard a guess to the corporation tax in tax havens like the Cayman Islands? A quick google search seems to suggest there is none.

 

(I think I've got all that right – apologies if it's not. I'm not an expert in this in any way at all. But then are any of us? The systems created are very complex and time consuming to look into. I cannot begin to imagine why that might be the case.)

 

Back to the tax avoidance above - the companies that were doing it (they still are I assume?) save millions in taxes each year. And for those companies that are doing it, apparently it's legal. Or at least it was, the government might change the rules now that it's been exposed in newspapers a lot recently.

 

Just imagine that you run a small 'average' coffee shop, selling little cakes that you bake yourself and making cups of coffee for your customers in your small 'average' town, population 20,000. You live the 'right' way, being honest, you don't steal, you don't take advantage of anyone. You work long hours. Rents are high - rent sucks a huge amount of productive value out of your business, so much so that sometimes you wonder why you even bother. But you persevere. You pay your taxes, you make a living - it's not much - but you get by.

 

Then one day Generic Multinational Coffee Company UK Branch opens a shop in your town.

[GlassOnion 12]

@Perrin:

 

 

Generic Multinational Coffee Company UK Branch opens a shop in your town.

Here in the states we call it Walmart.

[Mysticforex 13]

How do we define Rich? It would not be the same for someone living in Liechtenstien ( ranked #1 by the UN for 2011) as it would for some living in Somalia ( ranked #194 same survey).

[SIUYA 11]

in Somalia, the rich think the laws dont apply either - or they create those that suit them as well.......usually via force....thats how they become rich.

[fast 10]

That's fine,just don't tell us "we're all in it together".

 

Wouldn't dream of it.

[DylKay 10]

I think this will be appropriate with this subject....

Beliefs.doc

[DylKay 10]

Downloading the above file turned my security centre off and i am not able so far to restart it."access is denied"

 

there are no problems with it....

[SunTrader 10]

I haven't tried it, nor plan to. Even before Mitsu's comment.

 

Is it too long to just copy/paste it?

[MadMarketScientist 11]

Van Tharp Back-To-Basics Series

by Van K. Tharp, Ph.D.

 

What Does Van Tharp Mean When He Says:

 

"We Only Trade our Beliefs About the Markets"?

 

If you are a regular student of Van Tharp's work or reader of this newsletter you hear this a lot: You can't trade the markets, you can only trade your beliefs about the market. Let's explore what this really means.

 

As a long time modeler of what makes great traders great, Van understands that to model effectively you have to find out what highly accomplished people do in common. Once you get the common tasks that produce excellent behavior, you need to get the ingredients of those tasks. Those ingredients include the beliefs, the mental states, and the mental strategies necessary to carry out those tasks.

 

Let’s look at some statements and see what you believe about them:

 

The market is a dangerous place to invest. (You are right.)

 

The market is a safe place to invest. (You are right.)

 

Wall Street controls the markets and it’s hard for the little guy. (You are right.)

 

You can easily make money in the markets. (You are right.)

 

It’s hard to make money in the markets. (You are right.)

 

You need to have lots of information before you can trade profitably. (You are right.)

 

Do you notice the theme?

 

You are right about every one of these beliefs (whether you said yes or no to any of them). If you don’t believe in any of these statements, what do you believe instead? You are right about that too! However, there is no real right/wrong answer. Some people will have the same beliefs and agree with you and others won’t.

 

Therefore, whatever your beliefs about the markets are, they will direct your thinking and your subsequent actions.

 

What is a Belief?

 

Beliefs are a primary way to filter information from the world. Beliefs are judgments, categorizations, meanings or comparisons. They determine how we perceive reality and relationships in reality. What you expect (i.e. your reality) depends upon your beliefs and they are largely unconscious. Every sentence in this document represents one or two beliefs, including this one.

 

One of the beliefs that is most productive for good trading is the belief that you are totally responsible for your own results as a trader. When you adopt this belief, then you can learn from your mistakes. However, if you tend to blame someone else (your broker, your spouse, the person giving you tips) or even the market for the results that you get, then you will tend to repeat the same mistakes over and over again.

 

When traders “own their problems” and assume responsibility for the results produced, then they discover that their results come from some sort of mental state that either allowed them to 1) follow their rules, 2) not follow their rules, or 3) trade without having any rules.

 

When traders take the time to write down all their beliefs (about themselves, the markets, money, etc.), then they can establish a much better idea of what they want to trade, and how they want to trade. They can also see flaws in their thinking much easier. It is valuable to know which beliefs support you as a trader, and which ones hinder your progress.

What is a Mental State?

 

Every task has an optimal mental state that will allow you to accomplish it effortlessly. For example, to execute a trade you benefit from courage and total commitment. Fear, in contrast, is a big disadvantage as a mental state for executing trades.

 

Mental states are primarily what most people call discipline or emotional control. Examples include: being impatient with the markets, being afraid of the markets or being too optimistic about the markets.

 

Controlling your mental states is just part of the answer, but when you can see that you are the creator of your own results as a trader, then you can really make progress.

 

What is a Mental Strategy?

 

To understand mental strategies, you have to understand how people think. People think in their five sensory modalities (that is, in terms of visual images, sounds, feelings, taste and smell).

 

A mental strategy is the step by step way in which you use these modalities; it is the specific sequence of your thinking. For example, the most effective strategy for the action step of executing a trade is to 1) see the signal, 2) recognize internally that this is the signal you decided you should take, 3) feel good about it, and 4) take action. If you do anything else, you probably won’t be able to take action or it will be very slow.

 

The Psychology of Trading

 

Once you have a clear understanding of which beliefs, mental states and mental strategies are the core factors in top trading performance, you can then teach the same skills to others and have them perform well too. And when you can see this success duplicated in others, which we have been able to do in most aspects of trading, then you know you have a workable model.

 

The key psychological traits of top traders are

 

1. Personal Responsibility

 

2. Commitment

 

3. Their psychological “profile”

 

4. Working on personal issues (e.g., self sabotage)

 

 

Trading fundamentals include the Ten Tasks of Trading.

 

1. Self Analysis

 

2. Mental Rehearsal

 

3. Low-Risk Idea Development

 

4. Stalking

 

5. Action

6. Monitoring

 

7. Abort

 

8. Take Profits

 

9. Daily Debriefing

 

10.Periodic Review

 

Traders need to be reminded of these tasks and to eliminate any self-sabotage that keeps them from following the tasks. Van teaches all of these steps in detail in his various products and workshops.

 

Van Tharp believes that everything revolves around your beliefs, mental states and mental strategies, so with that in mind, everything about trading is 100% psychological, including why and how you trade and which system you will follow or build.

 

Many traders have a hard time “believing” this and it is almost the antithesis of what people learn in academic finance. So only you can decide whether it is worth the time to learn more about yourself and the psychological aspects of trading.

 

People get exactly what they want out of the markets. Most people are afraid of success or failure. As a result, they tend to resist change and continue to follow their natural biases and lose in the markets. When you get rid of the fear, you tend to get rid of the biases ~ Van K. Tharp, Ph.D.

[Vinayak 10]

http://finance.yahoo.com/news/21-way...ly.html?page=1

 

 

1. Average people think MONEY is the root of all evil. Rich people believe POVERTY is the root of all evil.

 

2. Average people think selfishness is a vice. Rich people think selfishness is a virtue.

 

3. Average people have a lottery mentality. Rich people have an action mentality.

 

4. Average people think the road to riches is paved with formal education. Rich people believe in acquiring specific knowledge.

 

5. Average people long for the good old days. Rich people dream of the future.

 

6. Average people see money through the eyes of emotion. Rich people think about money logically.

 

7. Average people earn money doing things they don't love. Rich people follow their passion.

 

8. Average people set low expectations so they're never disappointed. Rich people are up for the challenge.

 

9. Average people believe you have to DO something to get rich. Rich people believe you have to BE something to get rich.

 

10. Average people believe you need money to make money. Rich people use other people's money.

 

11. Average people believe the markets are driven by logic and strategy. Rich people know they're driven by emotion and greed.

 

12. Average people live beyond their means. Rich people live below theirs.

 

13. Average people teach their children how to survive. Rich people teach their kids to get rich.

 

14. Average people let money stress them out. Rich people find peace of mind in wealth.

 

15. Average people would rather be entertained than educated. Rich people would rather be educated than entertained.

 

16. Average people think rich people are snobs. Rich people just want to surround themselves with like-minded people.

 

17. Average people focus on saving. Rich people focus on earning.

 

18. Average people play it safe with money. Rich people know when to take risks.

 

19. Average people love to be comfortable. Rich people find comfort in uncertainty.

 

20. Average people never make the connection between money and health. Rich people know money can save your life.

 

21. Average people believe they must choose between a great family and being rich. Rich people know you can have it all.

 

This is such a great list! I love and agree with all the quotes. I am going to bookmark this!