I'VE been an independent financial advisor for more than a decade and one of the questions that I am periodically asked is, “What is the secret of being wealthy?” The answer, and you may be taken aback by what I am about to reveal, is not about getting richer.
up in a typical middle-income family, I often wondered how wealthy
people managed and grew their wealth. In particular, I wanted to know
what separated the truly wealthy people from the rich. Both shared an
undeniable ability to make money and could afford to lead comfortable
and lavish lifestyles. Yet, those in one of these groups were clearly
the front-runners because their wealth had the ability to last
In 1998, I enrolled in a Chartered Financial
Consultant (ChFC) course to study personal wealth management. In 2000, I
started my own independent financial advisory business. In the process
of growing the business, I was privileged to learn from some of the best
wealth managers and professionals from the United States, Australia and
I also discovered a unique approach used by the likes of
John Rockefeller, Andrew Carnegie, Li Ka-shing and Bill Gates to become
not only rich but also tremendously wealthy. Armed with all this
knowledge, until 2008, I focused my business on serving clients with a
high net-worth, which included a niche group of multi-millionaires and
owners of listed companies. In time, I identified a common pattern in
the characteristics, behaviour and habits of all these wealthy people.
wealthy know not to keep or hold on to too much cash in the bank. They
are aware that interest rates offered by the banks will not be enough to
offset actual inflation. Therefore, one of the most logical steps to
take is to keep a minimum amount of cash in bank deposits while
investing the rest.
The wealthy constantly review the performance
of their investments. They have no reservations in getting rid of
underperforming investments that do not meet their expectations. They
will not hesitate to take on investments that will generate a handsome
The wealthy are never lulled into a false sense of
security over the assets they own. They demand to be made aware of any
risks that might reduce or deplete the assets, and will explore methods
to safeguard, protect and preserve their wealth.
The wealthy are
also very conscious of unnecessary living expenses. For example, they
don't like the idea of over-purchasing life insurance policies and
paying expensive premiums. They regularly review all their insurance
policies and will take action to cease or surrender irrelevant ones .
The wealthy demand more
fact of the matter is that wealthy people demand more for their money.
They are never satisfied with just having money sitting in the bank or
having it invested in one or two investment vehicles. If anything, they
want their money to work even harder for them. With such a high regard
for their money, the wealthy place enormous emphasis on optimising their
money. In fact, I'd say it's bordering on obsessive and rightly so!
contrast, these characteristics and habits of wealthy people tend to be
absent in the rich and middle-class. Certainly, the rich generate a
high income. They may put their money into fixed deposits, buy one or
two properties and invest in unit trusts or shares. However, they are
too busy to spend more time optimising what they have. They hope that by
earning more money, they will one day become wealthy. The same can be
said of the middle class. When their income increases, they fail to
optimise their hard-earned money.
Other than the lack of time and
discipline, one of the main reasons they failed to optimise their money
is that they feel lost and do not know where to place their
investments. As a result, they assume that if they make more money, they
will become wealthy.
In short, those who are not wealthy focus on one thing and one thing alone how to make even more money.
capability is the ability to generate an active income. Therefore,
anyone who works as an employee or business owners has this capability.
What most people underestimate or fail to appreciate is the power of
money optimisation, defined as the activity of optimising the income and
assets that you already have. Money optimisation is about making your
accumulated assets work for you to support your lifestyle
money optimisation, your hard-earned income may not be translated into
meaningful savings. Furthermore, your hard-earned assets will not be
able to grow at an optimal rate or be properly preserved and protected
against various risk factors. Without money optimisation, chances are
you're probably not going to be in a position to support your various
needs and wants in life, especially if you stop earning an active
income. Most disastrous of all is that you will never be on the fast
track to becoming wealthy or get out of the rat race.
Think of it
this way: to succeed in any sport, one must not only focus on playing
on the offensive all the time. Champions and their coaches will tell you
that to win a championship, it is necessary to strike a balance between
good offence and having a tactical defence.
So, to come back to
the question: “What is the secret of being wealthy?” The secret of being
wealthy is not about getting richer; it's about optimising what you
have and striking the balance between focusing on both your moneymaking
and money optimisation capabilities in equal measure.
Yap Ming Hui/Thestar