Want to build wealth? Break these 8 rules
Being "upside down" is usually a negative term when applied to financial matters, but multimillionaire Robert Shemin believes that sort of thinking is ... well ... upside down.
Shemin, author of "How Come That Idiot's Rich and I'm Not?" feels there are two positions when it comes to wealth: right side up and broke, or upside down and rich. Shemin prefers upside down. The best way to build and maintain wealth, maintains Shemin -- once considered the "least likely to succeed"-- is by breaking the rules you think and hear about when building wealth.
Following are eight rules worth breaking -- in upside-down order -- and what Shemin and other financial gurus have to say about them.
Diverging from the traditional mind-set may put you on the right course to riches.
8 rules to break to get and stay wealthy
|8.||Avoid mistakes, learn before investing|
|7.||Don't ask for help|
|6.||Follow the path your advisers recommend|
|5.||Don't invest in uncharted territory|
|4.||Try to time the market|
|3.||Have enough money or good credit to invest|
|2.||Don't get into debt|
|1.||Have a plan|
8. Before investing, learn enough so that you're not going to make any mistakesThe problem here: Fear causes inaction, Shemin says. "Everything in life has a risk and a cost for doing it, and a risk and a cost for not doing it. Rich idiots focus on the risk of not doing something." In his experience, most people don't get started on stock market or real estate investing, or in estate planning, because they're so scared of making mistakes, they're overwhelmed.
"Of course you should expect to make mistakes when you start investing (or any time)," agrees Ramit Sethi, who writes the popular blog, IWillTeachYouToBeRich.com. "But if you start with small amounts, any mistakes won't hurt you too bad. Plus, any mistakes can be mitigated by time."
7. Don't ask for help"We're taught from an early age that you've got to do everything yourself and that if you ask for help, something's wrong -- you're dumb," Shemin says. Yet he adds that getting help is critical to most people's success. "Getting rich is a team sport."
From selecting the best stocks to the best mortgage, trying to figure out everything yourself is stressful and won't likely result in the best decisions, he explains. "Everybody's good at a few things and not good at a lot of things."
M. Nora Klaver, author of "Mayday! Asking for Help in Times of Need," says, "Asking for help is actually a sign of strength. It shows that you recognize the gap between where you are and where you want to be -- financially and otherwise -- and have both the smarts and guts to take action and seek others' support."
6. Choose the path your advisers recommendOf course, asking for help wisely means asking the right people. Get referrals, and in interviewing potential financial advisers, "ask how they're getting paid," Shemin says. "You really have to be careful about who you're dealing with."
Michael Edesess, author of "The Big Investment Lie: What Your Financial Adviser Doesn't Want You to Know," says, "The path your financial (adviser) advises is the one that will make them the most money. Money they make is money you lose. It's that simple." Edesess adds that there are ethical financial advisers out there but, he contends, "You're most unlikely to find them at the big-name firms."
5. Don't invest in uncharted territoryShemin gives the example of virtual real estate, which people are buying and selling with real money through Second Life. "When I found out about this, it made no sense to me," Shemin says."And a lot of smart people out there ask, 'Why would anybody buy and sell space on the Internet that doesn't even exist?'"