Habits of the rich: 8 rules that will help you make a lot of money
Millionaire Grant Cardone took 20 years of trial and error before he achieved a multi-million dollar fortune. Now, at 64, he earns income from the 18 companies he founded and the 12 apartments he owns. What is his secret? CNBC.
Grant Cardone is the CEO of Cardone Capital, bestselling author of The 10X Rule, and founder of The 10X Movement and The 10X Growth Conference. He owns and operates seven private companies and a portfolio of multi-unit projects worth over $4 billion.
“I wish I knew before how very rich people think about money. I have built relationships with many millionaires in my investing career and observed their habits over the years,” he says.
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Cardone shared 8 money secrets that rich people know but "most of us don't."
1. Wealthy people don't diversify their investments right away.
As a rule, it is recommended to diversify your portfolio by investing in various stocks, funds and other investments.
But as the richest people grow their net worth, they often go all-in on their own projects and then diversify when they start earning more.
Elon Musk, for example, invested the $22 million he made selling his first company, an online directory business called Zip2, entirely into his next business, an online banking service called X.com.
After X.com merged with PayPal, he made $180 million selling PayPal to eBay. This gave him money to invest in Tesla, SpaceX and other ventures.
2. Rich people know that business needs debt, not people.
“As I built my net worth, I didn't accumulate debt on non-essential purchases like designer clothes or luxury homes,” says Cardone. “Even if I could afford to pay the bills, I wouldn't want to spend money on interest payments. Instead, I wanted to invest everything I earned into making more money. For me, it is the contribution of my income to my business.”
Cardone also paid cash for his homes and never accumulated credit card interest.
In some cases, if you're trying to build a business, debt can help you make money by giving you access to income-generating assets sooner rather than later.
3. Home ownership is not always the first investment of rich people.
You might think that buying a primary residence is the American dream, but that's rarely the first thing the rich do.
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Cardone believes that homeownership doesn't always bring the same return on investment as other places where you can invest your money. He has three houses, but he didn't buy them until he was able to buy them with cash.
4. Instead, real estate with cash flow is a place to protect and multiply money.
On the other hand, cash flow real estate – commercial real estate where you earn a monthly income from rent after paying off your mortgage, property taxes and maintenance – is a great way to multiply your money.
You can earn passive income from owning this property and it is often easier to sell than your main residence. When you sell your main residence, you must find a buyer who can imagine living in it. When you sell a profitable rental property, all you have to do is find a buyer who wants to make a profit.
5. Rich people always buy in bulk.
The wealthy are willing to spend more on each purchase to get a better unit price and save time wasted on repeating useless activities.
This may apply to business - the rich may enter into contracts to purchase bulk supplies or equipment - or to your personal life. Cardone buys everything without an expiration date in bulk whenever possible.
6. Wealthy people invest in their network
“I have never been invested in by someone who did not know me. And most of the property I own today was bought from sellers who preferred me to other qualified buyers because we had an existing relationship and they were confident in my ability to close the deal,” he says.
The more someone gets to know you, the more they will trust you and believe in your talents and skills. This results in better opportunities, faster decision making and higher margins.
So invest time and resources in building and maintaining the right connections.
7. Rich people are never happy.
“One of my friends, a serial CEO, worked with some of the richest people in the world. I once asked him what they had in common and he said, “None of them were ever satisfied with what they had already done and instead focused on the next thing they could do,” Cardone said.
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The rich are never satisfied with their previous achievements. They believe they can always do better. This helps them think of future business ideas, inventions, investments, and other wealth-creators.
8. Rich people don't waste time trying to do everything themselves.
The rich know that time is the only truly scarce resource.
In this way, they maximize their time by removing the need to control every little detail of their business or portfolio, and learn how to effectively outsource and delegate to good, smart people who are willing to trade their time for money.
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