Every penny saved is a penny earned”. Well said. But what if the penny saved was worth a Pound, if well deployed. Let’s discuss.

According to Steve Siebold, author of “How Rich People Think”, the World Class is mentally attuned to making more money. On the contrary, according to Steve, the Middle Class are enslaved by worries of inflation, uncertainties and losses. The ‘World Class’ habitually thinks long term, while the ‘Middle Class’ habitually thinks short term.

Ever wonder, why across the 250 years of Stock Exchange history in USA, merely 5% – 6% of participants have made profitable portfolios, while the rest come to try their luck and earn losses, thereafter calling stock markets as nothing short of casinos.  A simple explanation to this phenomenon is that the winning 5% knows that they are actually investing in the businesses with proper research and professional advice, whereas, the losing 95% buys stocks with a lottery mindset.  Some may win the lottery, but not all !!  When economic corrections take place, the masses get into fearful mode and start selling their investments for short term survival. In such periods, the Billionaire Mindset investors operates out of abundance and exploit the situation for their long term benefit.

There’s a well-documented cognitive bias called (Dunning–Kruger effect) which states that novices tend to be overly confident of their abilities. This causes vicious cycles in investing, leading to losses.  A professional investor is less confident of his abilities to make profit in comparison to a naïve investor. As you know the field more, you will gradually start seeing the risky side of investments. The confidence level will keep dipping until you move towards becoming an Expert. But then too, you will never become over-confident.

“Efficient use of Capital” is tough and is very well adhered by the Billionaire Mindset investor. They pursue this art by working along with experts. That’s why they are rich, and not the other way around.

But the “Attitude of cost cutting” is ubiquitous and easy. I mean cutting down costs every now and then, which the masses are always busy doing. That’s how Big Bazaar kind of stores survive solely on “SabseSasta – SabseAcchha” slogan. Last month, it was beyond me as to why more than a hundred women from well to do families will stand in long ques outside Meena Bazaar outlet, even before the store opened in the morning, at MG Road Gurgaon. On probing, I could gather that this is an annual phenomenon and there is a flat 50% discount on offer. I can tell you for sure, none of them would have stood in a que outside ATMs during the demonetization phase. Another thing I can tell you is that all the ladies would have spent much more eventually under the perception that they are buying cheap. All in all, Meena Bazaar would be the happiest to receive so much cash in their bank within a fortnight, something that would have taken a six month or more. If Meena Bazaar was a listed stock, I would have considered buying that stock as investment. Consumerism is on the rise and there will be many more such opportunities in the future. I would like to benefit as a capitalist from the excess consumerism.  I know people who have travelled overseas incurring expenses beyond their means, with help of borrowings, just because they could find cheap air tickets and hotels. Ever wonder, why such discounts are not offered on investment options?

Who says investment options are not offered on discounts? Daily newspapers call them bloodbaths in stock markets, recession in real estate, and rusting in Gold.  God bless the newspapers and news channels, they scream terror and shoo away the masses / retail investors in no time. The investors with ‘Billionaire Mindset’ walks in and receive red carpet welcome to buy stuff no one is buying, even at half the price. And what happens when the markets recover, the rich become richer!!

So, while the masses were busy clipping discount coupons, the Billionaire Mindset investor was busy analyzing which business will benefit from such consumption and at what price to own them.

The Billionaire Mindset Investor is well aware of his consumption and investment needs and will not buy anything just because everyone else is buying or that it is on SALE. He/She prefers to live on a budget and uses his/her money wisely. But, he/she seeks quality in everything, even if it is relatively pricier. Yes, this is a concept of VALUE. He/She seeks VALUE and not the PRICE.

The Billionaire Mindset investor understands his/her own mental and physical limitations and therefore prefer to work with teams and mentors. He will pay for quality jobs that are important for his success but are not his core competence. You see, he doesn’t want to compromise on the quality of output at the cost of savings pennies. On the contrary, an average thinker focuses too much on discounts or cost savings, instead of BUDGETING. Such is the tendency to save cost that masses are compromising on health.  Self-medication has become a wide spread disorder across the world. The self-help content on internet is further aggravating the issue. Ask any doctor, and he will not stop giving examples where situations have gone out of control.

Since the Billionaire Mindset investor seeks quality in everything, he is conscious about his health in his food habits, work habits, and exercise habits. Annual health checkups are routine for him/her. However, the average thinker is binging on low cost burgers, pizzas, coke etc., and you can actually forget about health checkups. All because, the food is inviting, cost is low and everyone is doing it, so how can it be wrong. Annual health checkups are avoided as they will either yield to further medical costs or will lead to nothing (if the report is all OK). But actually they will blame the paucity of time for avoidance of medical checkups. According to Dunner – Kruger, a novice cum average thinker has less of an idea about his own abilities or the abilities of the others. This keeps them away from rising higher up in the social or economic rank. They are generally suspicious of the intent and abilities of the other guys whose help is needed for ascending the social and economic ladders.

The Rich becomes Rich by efficient deployment of capital and not by cutting corners from the essential. It is all in the mind. Any wish to become billionaire without the right mindset will not long way. Changing one’s mindset is not easy, and is not for all. But, this will be the single biggest factor that will take you to your dreams.


By Sameer Rastogi

18 years of experience, PG in Finance and has delivered Wealth Management lectures at IIM Lucknow, IBS Gurgaon and IIPM Delhi. Contributed to various newspapers. Strength – Application of Economic fundamentals to Investment

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