15 Money Secrets from the World's Wealthiest People

What do you think would happen if someone decided tomorrow to take all the money in the world and divide it amongst the global population equally? Some say the world would be a better place and everyone would be happy and prosperous. Others say that money would end up in the pockets of the same individuals in no time, and this is because wealthy people know and understand some money secrets that most of the population is unaware of.

So here are 15 money secrets from the world's wealthiest people. Welcome to A Lux.

Number one: Investments are made when there's blood on the streets. Now this is a famous investing adage attributed to Baron Rothschild, an 18th-century British nobleman and member of the prominent Rothschild banking family. Now this money secret reveals that the best time to invest is when there's panic, fear, or uncertainty in the market, causing asset prices to plummet. In other words, it's a contrarian investing approach that encourages buying when others are selling.

For example, consider the global financial crisis of 2008. During this period, stock markets around the world experienced a significant downturn, with many investors selling their assets in a panic. This led to a sharp decline in the prices of various stocks, making them undervalued. But there were some who saw this as an opportunity and had the courage to invest in the market despite the widespread fear and negative sentiment. They were able to benefit from the eventual recovery in the following years as the markets rebounded and stock prices increased. Wealthy people all know this because they have skin in the game and know how to profit from these situations. Recessions are essentially like a Black Friday sale for the rich. That's why they always have some cash invested in recession-proof assets, ready to liquidate to transfer the wealth from those in urgent need of cash to themselves. Love it or hate it, this is how the rich play the game and multiply their wealth, and most people have much to learn. So, you better start reading the biographies we've talked about in our recent video.

Number two: Saving will make you poor; investing will make you wealthy. Here's a red pill that most people are not ready to swallow. Simply saving money without putting it to work is not an effective way to build wealth. This is because inflation erodes the value of your savings over time, causing your purchasing power to diminish. Investing, on the other hand, allows you to grow your wealth by earning returns on your investments, which often outpace inflation.

A wealthy person who embodies this principle is Warren Buffett, the legendary investor and CEO of Berkshire Hathaway. Buffett made his first investment when he was only 11 years old, and his stats are pretty straightforward. He seeks out undervalued companies with strong fundamentals and holds on to them for long periods of time, allowing the power of compounding to work in his favor. By doing so, he has significantly grown his wealth over the years, far beyond what he would have achieved if he had only saved his money. Now, while it's true that saving is important for emergency funds and short-term goals, it is investing that can truly create long-lasting financial success.

Number three: Rich people buy assets; poor people buy liabilities. Wealthy individuals build their wealth by acquiring assets that generate income or appreciate in value. Poor people often spend their money on liabilities, which are things that decrease in value or incur expenses over time, like Lambos. For example, a wealthy person who embodies this principle is Mark Cuban, the billionaire entrepreneur, investor, and owner of the NBA's Dallas Mavericks. Cuban's success can be attributed in part to his focus on acquiring assets and avoiding liabilities.

In the late 1990s, he co-founded Broadcast.com, which was later sold to Yahoo for $5.7 billion in stock. Cuban then diversified his investments to a wide range of assets, including stocks, real estate, and various companies, both through direct investments and as a shark on the TV show Shark Tank. So, by focusing on acquiring assets, Cuban has been able to grow his wealth significantly over time. In contrast, spending money on liabilities or taking out loans to buy expensive stuff that you don't need will make you poor over time. Most people are truly unaware of the costs these things require to maintain.

So, if you want to be rich one day, keep this in mind. If you ever find yourself with a decent amount of money in your pockets, think twice before you spend it. That chance to multiply your money may never come again.

Number four: Compound interest is the eighth wonder of the world. Now, some attribute this quote to Albert Einstein, although there is no concrete evidence that he actually said it. Nevertheless, the phrase emphasizes the incredible power of compound interest as a wealth-building tool, a secret the wealthy understand all too well. Compound interest refers to the process by which the interest earned on an investment is added to the principal, resulting in interest being earned on the new higher principal amount.

As this process continues over time, the growth of the investment accelerates exponentially. A notable wealthy person who's capitalized on the power of compound interest is Elon Musk, the CEO of Tesla and SpaceX. Musk has used compound interest to his advantage by consistently reinvesting profits from his various ventures to fuel growth and generate even greater returns.

For example, after selling his first company, Zip2, Musk reinvested his profits into founding X.com, which later became PayPal. After selling PayPal to eBay, he again reinvested his earnings into establishing SpaceX and Tesla. By consistently reinvesting his gains into new ventures, Musk has leveraged the power of compound interest to grow his wealth and fund innovative projects. Musk's approach to business and investment demonstrates how the power of compound interest can be utilized to achieve exponential growth. This is not limited to traditional investments such as stocks and bonds, but it can also be applied to entrepreneurial endeavors where reinvesting profits into the business can lead to accelerated growth and success.

Number five: Never put all your eggs in one basket. Now, this is a metaphor that advises against concentrating all of your resources or efforts into a single area, as doing so can lead to a higher risk of loss or failure. Now, in the context of investing and personal finance, this phrase emphasizes the importance of diversification or spreading your investments across a range of assets, industries, and financial instruments. Diversification helps to reduce your risk, as it's less likely that all of your investments will perform poorly at the same time.

A wealthy person who exemplifies the principle of not putting all their eggs in one basket is Sir Richard Branson, the British entrepreneur and founder of the Virgin Group. Branson has built his fortune by creating and investing in a diverse array of businesses across various industries, including music, airlines, telecommunications, and space travel. Instead of concentrating his resources in a single industry or company, Branson has continuously sought out new opportunities and expanded the Virgin brand into numerous sectors. By doing so, he's minimized the impact of any single venture's failure on his overall wealth and business empire.

Now, this approach not only helped him to protect his assets but also enabled him to capitalize on a wide range of opportunities and achieve remarkable success. For instance, when Virgin Records was facing challenges due to the decline in CD sales and the rise of digital music, Branson was able to rely on other businesses within the Virgin group, such as Virgin Atlantic and Virgin Mobile, to maintain his cash flow. Now he's one of the pioneers in the space travel industry alongside Jeff Bezos. Remember, we live in an age where industries are easily disrupted by rapid advancements in technology. The market doesn't care about your business, and mastering the art of diversification is key to survival.

Number six: You will get rich by giving society what it wants but doesn't yet know how to get. This money secret underscores the importance of being a trailblazer and a visionary in the quest for wealth creation. This principle highlights the concept of tapping into the unexplored desires of society, unlocking hidden potential by developing ingenious solutions or products to address these needs. Not only does this approach often involve entrepreneurial prowess, but it also requires a keen sense of foresight and an innate ability to innovate. By doing so, individuals or companies can reap substantial financial rewards while reshaping entire industries and leaving a lasting impact on the world.

Unless you've been living under a rock, you've heard of Steve Jobs, the co-founder of Apple. Now, Jobs was a visionary who possessed a unique ability to anticipate what people wanted before they even knew they wanted it. By developing innovative products and technologies that addressed these latent desires, he was able to create immense value for both his customers and his company, ultimately amassing significant personal wealth.

For instance, the introduction of the first iPhone in 2007 revolutionized the mobile phone industry and changed the way that people communicate, work, and access information. Before the iPhone, there were no smartphones that seamlessly integrated a multitude of functions, such as internet browsing, emailing, music playback, and high-quality photography in a single user-friendly device. Jobs and Apple were able to identify this unmet need and create the product that people didn't realize they needed until they experienced it. Similarly, Jobs and Apple disrupted the music industry with the creation of the iPod and iTunes, offering customers a convenient way to purchase, store, and listen to their digital music. By recognizing the shift in how people consumed music and addressing the challenges associated with this change, Jobs was able to generate substantial wealth and transform the music industry.

So, if you want to become wealthy, find something that society wants and sell it for a profit. Now, have you tried this and it didn't pan out well? Get to work. But after you're done with this video, we've got some more knowledge bombs to drop, so pay attention.

Number seven: You're not going to get rich renting out your time. You must own equity, a piece of a business to gain your financial freedom. One of the secrets to achieving financial freedom and long-term wealth is to own a stake in a business, either through entrepreneurship or investments. Equity ownership allows individuals to benefit from the business's growth and profitability, which can result in exponential financial gains over time.

Jeff Bezos started Amazon as an online bookstore in 1994, and through his vision and leadership, transformed it into one of the world's largest and most successful e-commerce and technology companies. By owning a significant portion of the company's equity, Bezos has been able to amass a vast fortune, becoming one of the wealthiest individuals globally. While Bezos did earn a salary as Amazon's CEO, the majority of his wealth came from the appreciation of the company's stock value. As Amazon grew and diversified its business, its stock price skyrocketed, making Bezos's equity stake increasingly valuable. This growth in his net worth would not have been possible had he relied solely on his salary or hourly wages.

Moreover, Bezos's ownership in Amazon provided him with financial freedom, as it allowed him to step down as CEO in 2021 and focus on other ventures, such as his space exploration company, Blue Origin. His equity stake in Amazon continues to generate wealth for him, even without actively working in the company.

Number eight: There are no get-rich-quick schemes; that's just someone else getting rich off you. Naval Ravikant, a successful entrepreneur and investor, often shares his thoughts and wisdom on wealth creation and personal development through his "navalisms." So to explain the saying, let's refer to one of his well-known quotes: "Embrace accountability and take business risks under your own name. Society will reward you with responsibility, equity, and leverage."

Now this quote highlights the importance of taking responsibility for your own financial success and avoiding the allure of get-rich-quick schemes. Naval emphasizes that true wealth creation requires embracing accountability and taking calculated risks in your own endeavors rather than relying on shortcuts or dubious methods. Always be cautious and aware of your potential temptations to pursue shortcuts to wealth. Naval suggests that such schemes often only benefit the person promoting them at the expense of those who participate. In essence, these schemes prey on the desire for quick and easy wealth but ultimately tend to enrich their creators rather than the participants.

Number nine: Leverage tax-efficient strategies. Disclaimer: we're not talking about tax evasion here; we're talking about tax avoidance. There's a big difference between them. If you're a business owner or simply self-employed, you should always look for legal methods to minimize your tax liabilities and optimize after-tax returns on investments or income.

Now tax-efficient strategies can include choosing tax-advantaged investment accounts, maximizing deductions, taking advantage of tax credits, and strategically timing the sale of assets to minimize capital gains taxes. Let's use Buffett again as an example because he's an advocate of this. Warren Buffett has long been a proponent of tax efficiency and has employed various strategies to manage his personal and corporate tax liabilities effectively.

One key tax-efficient strategy employed by Buffett is his preference for long-term investments. By holding stocks for extended periods, he defers capital gains taxes on the appreciation of those assets. When stocks are held for more than one year, the long-term capital gains tax rate is generally lower than the short-term rate, which applies to assets held for less than a year. This approach allows Buffett to minimize the taxes he owes on the growth of his investments.

Another tax-efficient strategy Buffett uses is investing through his holding company, Berkshire Hathaway. Berkshire Hathaway's structure allows it to retain earnings and invest them in new businesses or assets without incurring taxes on dividends that would typically be paid to individual shareholders. This tax-efficient approach has been a significant factor in Berkshire Hathaway's ability to generate substantial returns for its shareholders over the years. Additionally, Buffett has been a proponent of philanthropy as a tax-efficient strategy. By donating a large portion of his wealth to charitable organizations such as the Bill and Melinda Gates Foundation, Buffett can reduce his taxable income and make a positive impact on society at the same time. Sounds smart, right? Well, that's because it is. And now you know about it. You're welcome, my friend.

Number ten: Create multiple streams of income. Now here are a few examples of income streams: investments, side businesses, rental income, royalties, or passive income from various assets. A wealthy person who leverages this is Oprah Winfrey, the renowned media mogul, talk show host, and philanthropist. Oprah has built her fortune by establishing and nurturing a diverse range of income sources throughout her career, which has allowed her to become one of the wealthiest and most influential women in the world.

One of Oprah's primary income streams comes from her successful talk show, The Oprah Winfrey Show, which aired for 25 years and generated significant advertising revenue. In addition to her talk show, Oprah has leveraged her personal brand to create additional income streams, such as her own television network, the Oprah Winfrey Network (OWN), which earns revenue from advertising and content distribution. Oprah has also ventured into film and television production, creating Harpo Productions and co-founding Oxygen Media, further diversifying her income. Additionally, she's authored several books and launched her own magazine, O, The Oprah Magazine, both of which generate royalties and advertising income. Moreover, Oprah is an astute investor, having made investments in various companies such as Weight Watchers, where her investment has appreciated significantly. Now this investment income adds to her multiple income streams, further bolstering her wealth.

So if you've only got one stream of income, believe us, your chances of getting rich are pretty damn low. But no worries; we've got lots of videos about how to build those up, so make sure to check those out if you need more insights on this.

Number eleven: Leveraging the power of technology to 100x your output. If you're not using advanced technologies, tools, and systems to significantly amplify your productivity and efficiency, well, you will be eaten by your competition. Just watch what the AI industry is doing to the job market right now. Anyway, this money secret involves harnessing the potential of technology to optimize and scale your work, automate processes, and enable better decision-making, which in turn helps to generate a higher return on investment.

Brian Chesky and his team harness the power of technology by creating a user-friendly website and mobile app, which enabled property owners to list their spaces and travelers to search and book accommodations easily. We're talking about Airbnb here. This innovative platform relies on data analysis, smart algorithms, and artificial intelligence to optimize the user experience, offering personalized recommendations and enhancing customer satisfaction. By leveraging technology, Airbnb has been able to scale its operations rapidly, reaching millions of users worldwide and offering more than 7 million accommodations in over 220 countries. The company has also expanded its services to include experiences, allowing hosts to offer unique activities for guests, further diversifying its revenue streams. Airbnb's success can be attributed to its ability to harness technology to create a seamless experience for both hosts and guests. As a result, the company has become a dominant player in the hospitality industry, earning Brian Chesky a spot among the wealthiest entrepreneurs in the world.

Number twelve: Use stealth wealth. Stealth wealth refers to the practice of accumulating and maintaining wealth without displaying it openly or extravagantly. It involves living a modest lifestyle, avoiding conspicuous consumption, and keeping financial success private to avoid drawing attention to oneself. This money secret is employed by some wealthy individuals who prefer a low-profile approach to their financial success, valuing their privacy and focusing on long-term wealth preservation.

A wealthy person who has successfully applied the stealth wealth approach is Chuck Feeney, the founder of Duty-Free Shoppers or DFS Group. Now Feeney is a billionaire and philanthropist, known for his frugal lifestyle and commitment to giving away his fortune through his foundation, Atlantic Philanthropies. Chuck Feeney has long embraced the concept of stealth wealth. Despite being a billionaire, he's chosen to live a relatively modest life, avoiding the flashy trappings typically associated with extreme wealth. He's known to fly economy class, wear a simple watch, and live in a modest apartment. By keeping his low profile, Feeney has been able to maintain his privacy and avoid the constant public scrutiny often faced by other high-net-worth individuals. Instead of accumulating material possessions, Feeney has focused on using his wealth to make a difference in the world through his foundation, Atlantic Philanthropies. He's donated billions of dollars to causes such as education, healthcare, and social justice. In 2020, Feeney officially completed his mission to give away his entire fortune, a goal he referred to as "giving while living." Remember, at the end of the day, you won't find any satisfaction in hoarding vast amounts of cash but in giving something back to society and uplifting others. Now that's a belief that we deeply follow.

Number thirteen: Fiat money is not real money. You know there used to be a time when cash was a store of value and saving actually made a lot of sense, but those days are long gone. The rich know this better than anyone, hence why they always hold most of their wealth in assets to avoid erosion from inflation. Fiat money is a government-issued currency that is not directly convertible to a commodity like gold or silver, but instead derives its value from the trust and confidence that people have in the stability of the issuing government and its economy. Central banks can control the supply of fiat money, and its value is subject to factors such as inflation, economic performance, and even government policies. Understanding this fact will help you position accordingly in times of crisis. If you want to be wealthy one day, you can't afford to not understand this.

Number fourteen: Create your money principles. Creating your money principles means establishing a set of guidelines or rules that govern your financial decisions and behaviors. Building and defining your principles has a clear purpose: creating discipline, making well-formed choices, and ultimately achieving financial success. Ray Dalio, a billionaire investor and founder of Bridgewater Associates, is a prime example of someone who's developed and adhered to his own money principles. Ray Dalio's money principles are based on his life experiences and investment expertise, which he's detailed in his book "Principles: Life and Work." We definitely encourage you to give it a read. The secrets he reveals in there helped Dalio to build the biggest hedge fund in the world.

Number fifteen: The Pareto Principle. You've probably heard of the 80/20 rule if you're a true A-luxer. The Pareto Principle asserts that 80% of outcomes often result from 20% of the causes. In the context of wealth and financial success, this principle suggests that focusing on the most impactful 20% of actions, investments, or strategies can lead to 80% of the desired results. By identifying and concentrating on high-impact activities, individuals can optimize their efforts, increase efficiency, and achieve significant financial success. A wealthy person who has successfully applied the Pareto Principle is Tim Ferriss, an entrepreneur, investor, author, and podcast host.

So, Ferriss is best known for his book "The Four-Hour Work Week," in which he shares strategies for maximizing productivity and achieving more with less effort. Ferriss employs the Pareto Principle in various aspects of his life, including his business ventures and investment strategies. In business, he focuses on identifying the most critical tasks that generate the majority of the results and delegates or automates the remaining tasks. This approach has allowed him to streamline his workflow, reduce the time spent on less impactful activities, and achieve more in a shorter period of time. In investing, Ferriss applies the Pareto Principle by concentrating on a select few high-potential investments rather than spreading his capital across numerous opportunities. So, by focusing on the 20% of investments that yield the highest returns, he can optimize his investment portfolio and achieve greater financial success.

Moreover, Ferriss encourages his followers to apply the Pareto Principle in their personal lives too, emphasizing the importance of prioritizing tasks and focusing on activities that bring the most significant impact to their overall well-being and happiness. At the end of the day, that's what matters most.

And there you have it, A Luxer. These are the 15 money secrets the rich use to stay ahead of the rest. Now, we're curious to know which money secret mentioned in this video do you think most people are unaware of? Drop your answer in the comments below. We're always curious to hear your thoughts.

With all of that said, it's time to wrap up this video. If you found this information valuable, don't forget to return the favor by tipping us with a like and a share. And as always, thanks for watching A Lux. Or if you'd like to learn some more, hey, check out this video next!