If you want to be rich – whatever your definition of that may be – it pays to change your mindset about money. Millionaires might really be a little different than the rest of us, at least when it comes to how they think about their cash.
So if you want to be a millionaire – or just learn to treat your money in ways that will help it multiply – take a note from our list of ideas straight from the horse’s mouth. When you apply these lessons to your financial life, you’ll get on the fast track to stability and wealth.
1. Get Comfortable With Risk
World-class investor Warren Buffett famously advised his heirs to put their share of his estate in index funds with a 90/10 split in favor of stocks over bonds. That’s a somewhat riskier allocation than the 60/40 you’ll often see from other advisors, but Buffet knows that successful, long-term investing means accepting short-term market fluctuations – and, yes, losses. Millionaires see some losses as a bump in the road rather than a catastrophe.
2. Set It and Forget It
It’s important to note that Buffett’s advice assumes that those stock market investments will be diversified across the board. He recommends low-cost index funds that give you a little bit of everything being traded on the stock market to spread out your risk. In the long run, these index funds almost always outperform a human trying to second-guess the market – and they’re much, much cheaper since the fees are low.
3. Use Logic, Not Emotion
While the rest of us act out of fear, millionaires think about their money like a logical math problem to solve. In his book, How Rich People Think author Steven Siebold talked to a whole lot of wealthy folks and noted that their attitude about money doesn’t involve feelings at all. For example, the idea of paying down your mortgage early might make you happy, but if your interest rate is low, investing in the stock market instead can bring a much bigger return over the next 20 years. The lesson? Always do the math.