What rich people do differently

MILLIONAIRES share traits that are worth their weight in gold – and you can mine these for yourself

BRW recently released their Young Rich list, ranking the top 100 self-made millionaires under 40. With an average age of just 36 and average wealth at a whopping $51 million, we’ve got to ask the question, what are they doing differently?

Because while smart day-to-day finance choices and long-term planning go a long way in building wealth, understanding how the rich make their money may help us catch up quicker.

Here are some investment lessons we can take away from this super-successful bunch.

WEALTH CREATORS RATHER THAN INVESTORS

Look through the rich lists and you’ll see that the people are generally self-made millionaires and billionaires who have had a good idea and built a valuable empire around it. They’ve either started a business from scratch or bought a dud and turned it around.

They generally see an undervalued asset, buy it, add value and then sell it for a profit. It could be a company, a property or an idea. The lesson is to start small and go for it.

APPETITE FOR RISK

That self-belief has to be matched with an appetite to take risks. To varying degrees, the rich are gamblers.

They assess the odds of a new venture or investment being successful and are willing to take a punt because they’re confident they can make it work. They’re also willing to borrow a lot of money to back their dream if needed.

And that’s one of the big differences between the rich and the rest of us … the size of the bets. Where we would have sleepless nights worrying ourselves silly, the successful wealth builders will borrow millions of dollars to finance a project and not even blink.

They follow the adage that if you borrow $100,000 the bank owns you, but borrow $100 million and you own the bank.

NOT AFRAID TO FAIL

Most of us live in fear of failure and the stigma that comes with it. What will others think?

The rich and successful see failure as a learning experience. They know they won’t be right all the time and when they fail they dust themselves off, learn a lesson and try something else.

Harvey Norman chairman Gerry Harvey once said: “You’ve never been in business until you’ve been to the brink, looked over the cliff, learnt the lesson and then stepped back.” Great advice. We’ve been there.

THEY DO THEIR HOMEWORK

While the rich have guts and are happy to take a risk, they do their homework carefully before making a move. They put in the time and effort to ensure they have every base covered, and they’re not emotional about it. After all the research, if the deal doesn’t stack up, they’ll just walk away.

STICK TO WHAT THEY KNOW

The rich do what they do best and stick to it. They understand you can’t be good at everything. When they do divert from their core business, it’s only risking a small percentage of their wealth even though the sheer numbers may seem huge to us.

Westfield shopping centre king Frank Lowy had a small foray into the Ten television network in the 1990s but has really stuck to shops. Gina Rinehart is doing it at media company Fairfax but it’s a small commitment compared with her iron ore mining empire.

DRIVE A HARD BARGAIN

They are generally born negotiators. They want the very best deal and are prepared to haggle to get it. While we get embarrassed about pushing too hard on a purchase, the rich will be relentless in getting the best deal on everything they can.

FRUGAL WITH THEIR MONEY

Most of the rich people we know watch every dollar they spend. Many still have the first dollar they’ve ever made and are positively stingy.

HARD WORK

Despite their huge wealth, the first generation of rich do work hard. A lot harder than most of the rest of us. But it can come with sacrifices that most of us wouldn’t make.

For us, a successful wealthy person is someone who has a relationship with their kids and partner. But so often we see successful Aussies who have sacrificed their family relationships for work, and that’s pretty sad.