Your income is determined by your skills
Hate it or love it, money runs the world.
Forget life-upgrading purchases, uber-memorable experiences, or top-notch healthcare, you can buy back your time — which you can spend as meaningfully as you wish.
“Money does not buy you happiness, but lack of money certainly buys you misery.”
But building wealth is easier said than done—it’s a long and arduous road laced with sacrifices and obstacles.
By sharing the top 10 pieces of wealth advice I’ve ever come across, I hope to ease your journey.
P.S I’m not a financial advisor or a certified expert, so please consider this advice only for informational purposes.
Maximize Assets. Minimize Liabilities.
An asset appreciates in value over time and/or yields a constant flow of money—stocks, bonds, businesses, collector items, patents, gold, etc.
A liability depreciates and constantly pulls money from you — cars, houses, fancy clothes, loans, credit debts, and mortgages.
“Rich people acquire assets. The poor and middle class acquire liabilities they think are assets.”
Your net worth = your assets minus your liabilities. So wealth-building burns down to maximizing the former and minimizing the latter.
What Real Investing Is Supposed to Be
Wealth is built by buying and holding assets for years and decades — not by gambling on hype.
“If investing is entertaining, if you’re having fun, you’re probably not making any money. Good investing is boring.”
Markets are sentiment machines driven by people’s emotions that nobody can predict — for every “expert” recommendation that turns out favorable, ten go awry.
But in any 20-year period, the market indices have risen — the short-term highs and lows will be flattened over the years. As Warren Buffett says,
In the short run, the market is a voting machine, but in the long run, it is a weighing machine.
So stay put, have conviction in your investments, and buy the dip whenever you can.
Pay Yourself First
When you top up your streaming balance, you’re making Netflix richer. When splurging on clothes, Levi’s coffers are getting fatter. When eating out, you’re enriching the restaurant owner’s pockets.
Your own wallet? Sparse with the meager left-over pennies. Investing these tiny “savings” will yield nothing. Therefore,
Don’t spend and invest what’s left, but save and spend what’s left.
To take willpower out of the equation, set up an Automatic Investment Plan (AIP) — recurring monthly transfers from your bank account to your investments.
Don’t Fall Prey to Lifestyle Creep
Lifestyle inflation doesn’t come screaming through the front door, it surreptitiously slides through the tiny window hole.
As conservative as I like to think I am, my spending has shot up since I’ve started earning good money — expensive clothes, extra shoe pairs, costlier groceries, etc.
In this era of consumerism, hyper-available luxuries, and exaggerated social-media lifestyles, it’s never been easier to spend — did I mention the lenient credit debts?
“We buy things we don’t need with money we don’t have to impress people we don’t like.”
Buy only what will upgrade the quality of your life. And before splurging on something, defer it for a week, month, or year.
More often than not, you’d have dodged a bullet.
Think Decades, Not Months
Napoleon Hill’s Think and Grow Rich drove home a valuable lesson — it’s your thinking, not time that earns money.
Part of building long-term wealth is making choices that cause short-term pain and discomfort.
Compare a low-paying startup job vs a lush high-paycheck Fortune 100 job.
Despite the heavy work, the former’s high-stakes environment and innovative technology will hammer valuable skills into you — that can accelerate your career by decades.
When faced with the classic passion vs money choice, it’s worth asking “How would things look like a year, 5 years, and a decade down the line?”
Buy only What You Can Afford
“If you have to think about “affordability,” you can’t afford it.”
Do you think twice before buying a pack of M&Ms? Supercars are the same for the ultra-rich.
What you can afford is determined by the amount of money you can part with barely any change to your life.
Saving Is Worse than Spending
When a friend calls me for a low-risk investment strategy, I ask him why. And he replies, “My dad has 6 million rupees lying in his bank account”.
Saving is worse than spending — at least with the latter, you get something pleasurable.
Bury $10,000 in your backyard and with growing inflation, 20 years later, it would be worth less than $1000.
Don’t save, invest your money — so it isn’t devoured by inflation.
The Golden Rule of Investing
FOMO, media hype, analyst “tips”, or your buddy’s recommendations aren’t viable investment strategies.
As long as the green candles stack up, it’s all fine and dandy. But as the slightest red shows, you’ll panic sell — violating the “time” commandment of good investing.
The only way to brave the rocky rollercoaster ride of the markets is by having conviction in your investment.
And that can happen only when you understand what you’ve invested in.
While my crypto portfolio’s down 50%, I’m calmly sipping my pina colada and buying more.
Divorce Your Time from Your Money
If you work all your life, when will you live?
“If you don’t find a way to make money while you sleep, you will work until you die.”
There are only two main ways to divorce your time from money—starting and growing a business so it can function without you or owning chunks of other businesses (stocks).
Accumulating cash-flow generating assets like commercial real estate, dividend stocks, and high-yield bonds will also do the job.
But for all these, you already need a large corpus of money — so start investing as early as possible. Compounding will do the magic.
The Only Asset that Will Yield You Lifelong Returns
Saving, investing, buying assets, all these things are ultimately tied to your income. And your income is determined by your skills. As the wealth equation goes:
Your earnings = Number of hours worked X Your hourly intrinsic value
The more skills and the deeper your expertise in each one, the higher your intrinsic value. The only other way is working longer — but working 12 to 14 hours a day is a recipe for disastrous burnout.
As MJ DeMarco says, “Education doesn’t end at graduation; it starts.”
All it takes is a basic computer, the internet, and some dedication.
Disclaimer: This article is for informational purposes only. It should not be considered Financial or Legal Advice. Not all information will be accurate. Consult a financial professional before making any major financial decisions.