What Rich People Tell Themselves When It Comes to Investing (And You Should Too)
What we say to ourselves on a regular basis has an impact on our mindset and outlook in life. There is a reason that positive affirmations have become so popular in recent years. While there still isn’t much scientific evidence to quantify the impact that self talk has on us as individuals, there are some smaller studies that have shown that changing how you speak to yourself can have an impact on your mental health and how you view yourself. Therefore, it’s not a stretch to conclude that self talk also impacts your actions.
You may be wondering why this matters as an investor. Here at EZ FI U, we believe that mindset is one of the main contributors to whether or not you are successful in reaching your financial independence goals. If you ever listen to successful people speak, you might notice that they frequently talk about how they think about things and the impact it has had on their actions and the outcomes of those actions.
Do you ever notice that the rich tend to think about things differently than those who seem stuck in progressing their financial goals? It can be difficult to shift that mindset while you are still working on building your wealth. But it’s so important to start speaking to yourself like the rich do if that’s where you want to be in the future. In this article, we will outline 5 ways that the rich think differently and how to flip your internal script to unblock any limiting beliefs that may be holding you back from achieving your financial independence goals.
#1: My time is my most valuable asset
While you may not be directly saying your time isn’t valuable to yourself, actions speak louder than words. Think about what your day to day actions say about how you value your time. Many of us haven’t actually ever taken the time to actually assign a numeric value to our what our time is worth; Therefore, we don’t think about the time we spend on things as having value - essentially it’s “free labor” from ourselves. We end up spending a lot of time on something that may drive value, but could have been achieved more quickly if we had just invested some money into a time saving process, tool, or hired someone else to do it. This can easily be the case especially for those of you who are true go getters and don’t mind “putting in the work.”
On the other hand, rich people believe their time is of the highest value. And guess what, you should too! They will think about ways to protect their time and energy so it is spent only on the highest value items and find ways to either outsource or expedite the rest. They understand that not everything has to be done themselves, and often times it is more efficient and effective to leverage other people’s skillsets to get the job done.
Your time and mental energy are the most valuable intangibles that exist. One way to start adjusting your thinking is to assign an actual dollar value to an hour of your time. What is your hourly rate? Perhaps it’s a combination of what you get paid at your day job, plus some. Then, next time you are debating doing something yourself, actually do the calculations and trade off of investing your time in this vs finding a way to streamline it or outsource it to someone else who has the skills or may even be better suited to get the task done.
#2 How can I make something happen (instead of why I can’t)
This one is simple. Quite often, we think about what we can’t do or afford right now because we are so caught up in our current situations. Yet when you look at your life, it’s likely that where you were 5 years ago is very different from where you are today. We forget that things can, and do, change.
Instead of thinking about how you can’t afford to make the investment you want right now or you don’t have the skillset to do so, ask yourself HOW you can make it happen. Be curious, do some research, start talking to others who have done what you want to do. This will force you to think creatively about solutions instead of feeling trapped by limitations. Perhaps the answer may be you have to do more work or the solution will just take time, but you will be much more likely to take action if you are focused on seeing through a solution and you believe you have the power to do so.
#3 Play the long game & don’t believe the hype
It’s easy to let the news headlines and Youtube titles shock you into knee jerk reactions. We exist in a world of short term thinking about the here and now instead of focusing on the impact of our actions over the long term. This is a gambler’s mentality and when you take a step back, you will realize it’s not rooted in logic. Examples of this are people who sell their stocks as soon as the market goes down or invest in crypto because of a recent celebrity tweet.
Rich people take the time to build a focused investment strategy, stick with it during turbulent times, and know when to make adjustments (but ones that are not based on hype). They also take the time to become an expert in an area, get educated on the dynamics of this vehicle, and leverage this expertise to spot areas of opportunity others don’t see.
While it can be difficult to not let certain current events sway your strategy, try to focus on investing for the long term. That means researching and analyzing long term trends, data, and insights from experts, not the headlines. Also consider investing in assets that you have solid knowledge about and understand how they might be impacted should certain economic shifts take place over time. Take the time to educate yourself and even narrow your focus to one or two vehicles you have researched and know successful people who are investing in that vehicle that can serve as your guide. By being educated and informed, you will feel more confident about your investment decisions and less likely to make drastic decisions out of fear or panic.
#4 Certain kinds of debt can be beneficial
All debt is bad; This is a very common blanket statement that we hear throughout the financial community. We have been trained to believe that debt is bad, period. Yes, some debt is bad, even crippling: think personal loans, credit cards, and student loans. But not having debt at all is not necessarily the goal. Instead, the goal is to use debt as leverage to fuel your investments and increase your cash flow.
Rich people often have tons of debt - but it’s not considered a negative by the bank. That’s because they leverage their assets to take advantage of low interest rates which allow them to purchase additional cash flowing or wealth creating assets. For example, taking out a HELOC on your home to invest in an apartment syndication that generates a higher rate of return than your HELOC loan allows you to leverage the equity sitting in your home to generate additional wealth. The goal here is to think about how to make your money work harder for you, even if that means technically creating debt.
#5 Jobs are opportunities to learn, not just make money
We are taught that our main source of income is from our job, and therefore how much money you make at that job is the most important aspect to consider. While it’s true that for many of us, a job provides money that fuels our investments, that’s not the way that rich people think about jobs.
Jobs are so much more than just a means to generate an income each month. Instead of focusing on how much money you can extract from your job as the way to measure it’s value in your life, consider what skills and experience you are getting from that job. How can those skills, relationships, and experiences help you in your investment goals? Thinking this way will allow you to consider a wider range of opportunities because you won’t solely be focused on the monetary aspect. A job may be more valuable than another because of the combination of money and skills that it provides you, enabling you to reach your total life goals faster, not just check a salary box.
Remember, this article is not meant to make anyone feel bad about their current mindset. Many of us currently or have had all of these limiting beliefs at one point in time in our lives. The goal is to become aware of which ones are currently impacting you and potentially holding you back from taking action. This way you can focus on making the mental shifts necessary to break through fear or inaction. If you do, we truly believe you will see massive positive change not only in your thinking but in your progress along your financial independence journey.
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