The Six Major Excuses That Prevent Most People To Get Rich According to Ramit Sethi
The sooner you start investing, the greater your chances of getting rich.
The incredible growth of the Internet since the early 2000s has totally changed the situation for people wishing to become rich. Before the emergence of the Internet, becoming rich was reserved for a minority of people. Since the early 2000s, the number of self-made millionaires has literally exploded.
The Internet puts the possibility of becoming rich within the reach of the greatest number of people. If the Internet multiplies opportunities, it also represents a major challenge. Indeed, there are more and more sources of entertainment on the Internet. Many end up switching to the consumer side without ever using the power of the Internet to their advantage.
Ramit Sethi was one of those who harnessed the potential of the Internet to become rich. Rather than staying on the consumer side, Ramit Sethi has become a content producer. This is the key to all those who become rich through the Internet.
While still a student at Stanford, Ramit Sethi launched his own website. The name of his site leaves no room for chance: “I will teach you to be rich”. This website quickly becomes a huge success allowing Ramit Sethi to join the camp of self-made millionaires thanks to the Internet.
Since then, Ramit Sethi has been developing his very profitable business to produce courses on personal finance management and write a book that became a New York Times bestseller. It is often said that there is no point in changing a recipe that works.
Applying this precept to the letter, Ramit Sethi decided to use the title of his website for his book. “I Will Teach You to Be Rich” is clearly a must-read for anyone who wants to understand how to become rich in their 20s and 30s.
While reading this book, I was particularly interested in the six great excuses that Ramit Sethi says prevent most people from becoming rich. In his book, Ramit Sethi talks about “invisible scripts” to describe these excuses. These are narrative patterns that many people construct in their heads. This then prevents them from actually going out and making a fortune.
In what follows, I propose to come back to these six great “invisible scripts”, and to explain to you what you must do to get out of these psychological traps.
1. You think you are too young to invest
Many people are aware that they have to invest for becoming rich. However, these people tell themselves that they have the time. At the age of 20, they tell themselves that they are still too young to invest. So they prefer to use their money to enjoy life.
This type of reasoning is typical of those who will never take action and will never invest. You fall into a kind of procrastination that pushes you to put off taking control of your money future.
In fact, the sooner you start investing, the greater your chances of becoming rich.
Whatever your financial means, you need to start investing as soon as possible. In his book, Ramit Sethi gives you several striking examples. Let’s imagine that you started investing just $10 a week at the age of 18. Let’s assume that you were able to achieve an average return of 8%. At age 23, after 5 years of investing with this $10 a week strategy, you would have $3,173 in your possession. After 10 years, you would have $7,836.
Rather than spending your money on things you don’t need, let’s now imagine that you follow this strategy with $50 a week. After 10 years, you would have $39,181 in your possession!
The magic of compound interest is the key to getting rich. To get the most out of it, you need to start as early as possible as Ramit Sethi rightly explains in his book “I Will Teach You to Be Rich”.
2. You are lost in the face of the many opinions that all seem different to you
In his book, Ramit Sethi underlines an important point. With the abundance of advice, you can find on the Internet, you can quickly get lost. Some will tell you that you should invest in real estate, some in stocks, some in bonds, and some in Bitcoin.
Each one will give you arguments that will seem credible to you. By dint of reading various and varied advice, you will end up being lost.
Human psychology is such that when we are lost, we tend to do nothing. You will choose inaction as a defense mechanism in the face of what you judge to be too much complexity for you.
The best answer to this problem is simply to really deepen your knowledge in one of these areas of investment. For example, choose the stock market or Bitcoin, and then make sure that you really deepen your knowledge completely. Don’t limit yourself to the opinions of some people who abound on forums or social networks.
You are your most valuable asset, so spend the time and money it takes to master topics that may change your money future. Once your knowledge is truly developed, you will find that it will be much easier to take action and start investing.
3. You don’t invest because the market seems to be at its peak
Once you have acquired sufficient knowledge, you are ready to invest. You have chosen the stock market. It is an excellent choice. However, you suddenly start to have doubts. You look at the Dow Jones or the S&P 500. You see that these indices are historically high.
You become afraid to invest when the market is at its peak.
At that point, you have to remember one golden rule:
Time in the market always beats timing the market.
You will make the difference, thanks to your patience. You will become rich by staying as long as possible in the market where you choose to invest. Rather than constantly changing your strategy, you will stick to yours. This will help you do better than 99% of people who cannot replicate Warren Buffett’s strategy.
The solution to your problem can be summed up in the three letters of the following acronym: DCA. DCA stands for Dollar-Cost Averaging. It is an extremely effective strategy that consists of regularly investing a fixed amount of money. In this way, you smooth out your costs. Even if the market seems high to you today, you will end up winning in the long run by following this strategy.
4. You are lost in front of all the investment options that exist
The more you learn about the investment world, the more you realize that there are many options. As I explained earlier, you have the stock market, real estate, gold, Bitcoin, bonds, …
Faced with so many options, you find it hard to choose.
The good news is that you don’t have to choose between all these markets. You’ll be able to take advantage of this profusion of choices to diversify. The allocation you make to each of these markets will vary according to the macroeconomic context. When the Fed lowers interest rates to zero and prints trillions of dollars out of thin air, you will more naturally go to Bitcoin and the stock market.
Real estate is a good option to take advantage of the advantageous credit rates in these circumstances. When the Fed changes its monetary policy, you may eventually return to the bond market.
The important thing is to invest as soon as possible. Then you can adapt your strategy as you go along. Nothing is ever set in stone in life. The important thing is to act quickly.
5. You are afraid that your lack of knowledge will cause you to lose the fruits of your labor
You work hard without counting your hours. You want to get rich and you give yourself the means to do so. De facto, the money you earn, which represents the fruit of many hours of labor, is precious to you. You are afraid of making bad choices in the stock market and losing the precious fruit of your labor.
You have two solutions to this problem. The first is to constantly deepen your knowledge through books and training. The second is to take advantage of your natural advantage in the stock market. This advantage consists in staying on the market as long as possible.
Rather than improvising yourself as a trader, it is in your best interest to be one of those who invest for the long term. This will also give you the advantage of having fewer fees and taxes to pay.
By making patience the first of your qualities, you will follow the example of Warren Buffett. You will keep control of your emotions, and you will be able to buy low and sell high. This ideal behavior is the exact opposite of what most retail investors do: they buy high, sell low in panic, and multiply trades which costs them a lot in taxes.
6. You are afraid that fees and taxes will destroy your investment potential
You don’t make millions from the fruits of your labor. Your budget for investment is limited. You don’t want fees and taxes to destroy your investment potential. So you choose to leave aside the stock market or Bitcoin.
This is a fundamental mistake. As with any problem, there are solutions that you can apply to get around it. If you do a little research, you will see that you have platforms that allow you to limit the transaction costs of trading in the stock market or the Bitcoin market.
For taxes, you have the keys in your hands. If you opt for long-term investments, you will reduce them drastically. You have the power in this area. So you have no reason not to go for it.
Finally, you should know that Bitcoin is divisible up to eight units after the decimal point. You can invest in Bitcoin for $1 if you wish. So there is no reason to miss out on the opportunity of a lifetime.
Ramit Sethi’s success shows that you can get rich at an early age if you make the right decisions. It’s all about making money management a priority for you. If you don’t take care of your money, no one will do it for you.
So the key is to get started as soon as possible, regardless of your budget. You will then adapt your investment strategy as your knowledge increases. You will also learn to take into account macroeconomic conditions to take advantage of them.
By reading the book “I will teach you to be rich” by Ramit Sethi, you will be able to get rid of all those “invisible scripts” that prevent you from becoming rich. You will be able to make the fruits of your labor bear fruit. An essential book that I recommend to all those who want to take control of their future in terms of money.
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