Sunday, May 6, 2018

Why the rich become richer and being poor is often your own fault


This title may sound pretty arrogant but may be… may be there is some truth in it.  First of all, I am well off but, just a very small fish in a much larger fish bowl of wealthy people. There are people that are truly poor without being at fault. But if you are a Canadian, being poor can often be blamed on your own bad choices.  Sounds harsh, maybe but I think it is true.  I am not talking about the wealthy families in this country where wealth is passed on from generation to generation.  Often though, those families lose their wealth in a few generations.

Why is it that lottery winners often are paupers within a few years after their win?  Because they don’t have the skills to build and/or retain their wealth. That is truly the real cause. They don’t have the skills.  Why do once rich families lose their wealth despite all the careful planning of grand pa?  Because the offspring does not posses the skills to build or maintain wealth.  It is also the reason that estate planning for your family often fails. It is the reason why many wealthy do not automatically bequeath their wealth to their offspring nor to a self-entitled government but rather they give it to a charity of their choice.

The goal of every parent is to provide their offspring with the skills to lead a fulfilling and happy life. That is often not the same as dumping a load of wealth on their offspring. It is truly about providing your kids the tools for leading the life they want. Once you give them those tools it is like a horse led to the water, but the horse will have to drink it by itself (you see I can write gender neutral 😊).  If you just blindly cover your kids in wealth, it may deprive them of the motivation to strive for a happy and fulfilling life. They are not self-made and are then not much better off than aforementioned lottery winner.

Remember those old, often British, theatre plays where the old man was off-ed by the younger generation to get at his wealth. And once the old coot was gone, the young started to fight amongst themselves including a number of additional murders?  Typical Agatha Christi mysteries. That is the nightmare of many wealthy people. That is not why they are wealthy.  Most are wealthy because they want the means to do in life that what they feel is worthwhile doing.  Look no further than Melinda and Bill Gates. Look no further than Ray Dalio or Warren Buffett. Look at George Soros who pursues his political ideals, whether you agree with them or not. Yes, there is greed, but it is the greed to do ever greater and ever more ambitious projects that these wealthy people feel is worthwhile. They are not Mr. Goldfinger who wants to own the world.  You think Space-X is about getting rich?

You don’t have to be a genius to be rich or well-off.  But you do need skills. And the rich are far from skimpy telling others about how to do it. But you can lead a horse to water (here we go again) but that horse will have to drink it. You can have all the skills that makes one wealthy, but in the end, you also will have to have the guts to implement them.  Don’t blame Warren Buffett and Charlie Munger who tried to teach millions to become wealthy by sharing their knowledge in Berkshire’s annual reports. Don’t blame Ray Dalio who made famous videos about how the economy works. Don’t blame Bill Gates who was at the forefront of empowering this world into one of endless opportunity. Don’t blame Rockefeller who provided the world with so much and so cheap energy, something we now take for granted and seem to despise. Bill Carnegie with his foundation, or Betty Ford, or Hewlett, or….  They all tried, in one way or another, to give their wealth back within the context and knowledge of their time.  Because they all know they can’t take it with them to heaven.

So, if you want to be wealthy, even if it is just to have a nice ‘Freedom 55’ delusion, start learning about what those people have tried to teach the world. Many of them have not skimped on proving their insights and  given it mostly for free.  These are all people that didn’t think that the government or society owed them a life of leisure. They did not want to be ‘taken care off’ from Cradle to Grave. They made their own life and then gave back a lot of their wealth to society.  In this country, mismanaged as it is right now for the benefit of the self-righteous and self-entitled, nobody has to be poor and nearly everyone has the means of building the life they want. So join the rich, who only will get richer and leave the whiners behind in poverty.  It won’t be always easy and you have to set clear goals for yourself. And never forget, it is not about the goal, it is about the journey to reach it.  After all, by the time you get there it may no longer be what you want.

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