Why the rich get richer?

“The philosophy of the rich and the poor is this: the rich invest their money and spend what is left. The poor spend their money and invest what is left.” – Robert Kiyosaki



According to an Oxfam report published in 2020, 2,153 billionaires of the world own more wealth than the combined wealth of 60 percent of the world's population. And this gap has even widened during the pandemic. The rich have stayed rich, even became richer while the poor have reached a state where it will take them a long time to recover from their financial losses.


This wide inequality between the rich and poor often raises questions and debate as to why the gap does not seem to close ever despite so much economic development. The topic has been a subject of research for decades and ignites curiosity among people as to the reasons why this occurs. Maybe you have wondered about this too. In this post, we will focus on the actions that the rich take that makes them richer and how you can incorporate them into your life to improve your finances-


1. They invest in assets that bring them income

The rich know one thing clearly- invest more in the assets that can make them a handsome income without them having to trade much of their time for it. In his book 'Rich Dad Poor Dad', Robert Kiyosaki describes two kinds of investments that people make- assets and liabilities. Assets are those investments that grow in value over time while liabilities cost you money in some form or other and depreciate over time.


While it may seem counterintuitive, many people consider houses and cars as their assets but in reality, they are liabilities as their value decreases over time and money is spent on maintaining them. The rich don't put all their eggs in one basket and diversify their investments. They invest in things that will generate income for them and then re-invest the returns on those investments to purchase more assets.

For example, if you bought a piece of real estate and made it available for rent on Airbnb, then that investment would be an asset because it would generate you an income that doesn't trade your time for it.


2. They prioritize their time

Rich people assign a high value to their time. They delegate their tasks to other people which frees up their time so they can focus on growing their business. They hire other people to look into the small details or tasks that need to be taken care of while giving them time to work on things that generate more income.

Take an owner of a startup, for example- they usually have too many tasks to manage and have a small group of people to work with which consumes a lot of their time but as they grow in business, they can hire more people who can take care of tasks that just require their supervision so they can direct their time in expanding their venture.


3. They have access to better investing prospects

Yes, it might sound unfair but some investments are accessible only to the rich. There is a category of investors called an 'Accredited Investor'. They are investors who have high net worth and are considered to have more knowledge about investment products and thus have access to investments that other people don't have. They also possess a special status under financial regulatory laws and have access to unique investments which have higher returns.

The saying- 'Money begets money' seems to have some truth in it. You get opportunities to make more wealth simply by being rich.


4. They have influential networks

Rich people have connections with other rich people or have access to them. This gives them more growth opportunities. Having a strong and influential network can gain you prospects that may not be available to an average person. If you come from a rich background and you decide to start your own business, you are in a better position in terms of capital, investments, and influence as compared to a person with no such background.


5. They think long term

Most rich people are very intentional about spending their money. They focus more on investing than spending and this is what makes their wealth grow over time. They think long-term when it comes to investments. Warren Buffet in one of his interviews said- “I would tell them don’t watch the market closely … the money is made in investments by investing … and by owning good companies for long periods of time. If they buy good companies, buy them over time, they’re going to do fine 10, 20, 30 years from now.”


6. They invest in themselves

You will hardly find a rich person who doesn't invest in themselves. Most rich people keep themselves updated on the developments in their fields. This makes them aware of any opportunities that may arise. To keep up with the game, they educate themselves regularly and hire valuable people who can take their businesses to the next level.


Now that you know what the rich do that makes them richer here's how you can adopt some practices in your life to help you grow your wealth-


Plan your purchases

Understand the difference between wants and needs. The major difference between the rich and poor is that the rich focus more on saving and investing while the poor have the 'Earn more spend more' philosophy which doesn't leave any opportunities to grow wealth. Live below your means is a mantra to grow your wealth over time. Focus on saving a large percent of your income and invest it. And if you have large expenses, plan them in a way that you can use the returns on the investments you made to fund those purchases.

Focus on buying assets and limit your liabilities

Focus on making purchases that generate income directly or indirectly and strive to limit or eliminate your liabilities. For example, investing in the latest fashion might be an investment for you if you are a social media influencer as it can generate more income in the future by attracting clients but a liability if you do it only for keeping up with trends. Limit your liabilities to a house or car and make investments in maintaining their value.

Start investing early

Start saving and investing as soon as you start earning. Invest a major part of your savings each month. Educate yourself thoroughly on the different investment options available and choose according to your risk appetite. Although it's never too late, starting early when you have relatively lower levels of commitments can help in saving more and thus investing more, giving you the benefit of compound interest when seen over a long time perspective. It might also help you in early retirement if done right.


Educate yourself financially

Before investing in any commodity, educate yourself about the nitty-gritty of the purchase. Making well-informed decisions can help you grow your wealth in the long run. Financial literacy is a power you need to leverage in your journey to becoming rich. Read books, articles, and resources that make you aware of how to save and invest your money properly. Making wise decisions about investing can make a substantial difference in your financial journey.


Diversify your investments

Diversifying your investments can help with coping with any losses and balance out the returns while still maintaining profits. Educate yourself about different investment options and have a mixture of these in your investment portfolio.


Focus on the long term investments

Most rich people made a large percentage of their wealth by the long terms investments they made. Invest a percent of your income in such investments as they tend to give high returns in a longer time frame.



Now that you know what the rich do dif