6 Unique Financial Habits of Rich People

Many of us are surprised to see the rich getting richer. Everything they touch turns to gold. Like King Midas, have they received the gift of turning everything they touch to gold? No. Rich people follow five main cash flows to multiply their money. Let's see what those money habits are.

6 Financial Habits of Rich People and Millionaires

1. Rich people don't Panic

Rich people often don't get nervous about anything; They will not hurry. In particular, they will not act impulsively. Due to the spread of the Corona virus, in March 2020, the international markets, including the Indian stock market, experienced a fall of almost 40%. Most investors were nervous. In fear and panic, many investors sold stocks at low prices. But rich investors were not the only ones who calmly did not sell stocks and invested fresh thinking that this is a good time to buy. Today the Indian stock market is up 90% from its March 2020 low. Those who sold shares in panic are upset that they have made a mistake. Those who bought stocks on the dip without panicking are now happily 'booking profits'.

2. Rich people avoid bad debts

We have good debt and bad debt. Good credit can multiply your money. For example, business loans are available at 11 - 13% interest. By taking this loan and using it for business development, they earn 18 - 20% income. Instead of spending more on things that depreciate in value, they invest more in things that increase in value. For example, lifestyle gadgets are not bought on credit. Don't buy things with a credit card. All of these are depreciable assets and therefore dissolve cash. Most cash buyers buy a car with their own money. They never take credit for that.

3. Rich people protect their assets and manage risks

Often, rich people do not take endowment policies that provide maturity benefits. They know that these types of annuity policies do not return an average of more than 5 percent per annum in the long run. They take a term plan that offers more coverage at a lower premium. That too they have taken a policy for coverage worth crores of rupees. Similarly, they have taken adequate health insurance policy for themselves and their family. The rich are always in the habit of spending less and getting more.

4. Rich people Diversify their Investments

They say "don't put all your eggs in one basket". This illustrates two things. One, if the basket falls, all the eggs will break. Next, don't always rely on just one thing for one thing. When it comes to investing, the rich don't put a lump sum into any one asset class. Their assets are spread across stock market, gold, real estate, bank fixed deposits, mutual funds. Diversification is the basis of wealth creation. Rich people always keep their investments under their control. They don't always put their entire money into assets like real estate that are not easily liquidated.

5. Rich people take Quick Decisions

Rich people never postpone or delay their decisions. If they are committed to a plan, they quickly implement it and succeed. Rich people know that procrastination can lead to money loss and are careful about managing money properly. Bad habits like smoking and drinking can affect our health. Similarly, bad money habits can make us poor. So, adopt the right money habits to add more money to your life!

6. Rich people plan their Taxes and Passive Income Streams

Taking full advantage of all tax incentives is a money habit of the rich. Because they have to pay more taxes on the interest income they get from their bank savings account, they shift the amount to stock market investments (corporate stocks, equity funds) that pay less tax on profits. Rich people rush to arrange passive income. That is, they tend to earn permanent income from a one-time expenditure or investment. For example, rental income from buildings can refer to income on investment.