How do different income classes think about “long term” investing?
Quite a bit differently, it turns out.
Let’s take a couple minutes and learn to think like the 1% and the types of people that have libraries and hospitals named after them.
For this thought exercise there are three groups of people:
1. The Broke (those struggling to get by)
2. The Trying (those with nice things and a ton of debt)
3. The Wealthy (those with financial independence)
What we understand from studies, books, and evidence, is that The Wealthy think very differently than The Broke and The Trying.
The Wealthy have an understanding, or a Wealth of Understanding–if you will, that helps them to see past this day, week, year; into the long-term.
Where most ordinary people are planning for the next week or even the next month, the ultra wealthy are planning for the next generation.
And there’s something about that amount of forethought and expectation that enables the wealthy (and those who think like them) to save, invest, and manage resources very differently than The Broke & The Trying.
In a 2016 episode of the FX TV show Atlanta entitled, “The Streisand effect”, writer and star Donald Glover highlight this perfectly. This YouTube clip sums it up beautifully:
It starts at 0:29 (that’s on purpose). And the kicker lines start at about 1:40
“See, I’m poor Darius, okay!? And poor people don’t have time for investments because poor people are too busy trying not to be poor. Okay?! I need to eat today, not in September…”
-Donald Glover’s character, Earn
As we gain a wealth of understanding, we learn that our time horizon effects our ability to invest and create resources for ourself and the people that depend on us.
When you’re poor, situations force you to take a $800 cell phone and sell it for $190 (major loss), because you need cash today.
When you’re wealthy (or thinking like them) you take an $800 cell phone and turn it into thousands of dollars.
Thinking with a long time-horizon is what causes the wealthy to build generational wealth.
On two different tracks, Donald Glover as his hip-hop persona Childish Gambino raps about building generational wealth:
“Got that generation money, my grandkids are [spoiled],
“Real Estate”, Childish Gambino
Stacking something dummy, every verse I got got cash flow,”
and
“People wrestle over petty cash
“Black Faces”, Childish Gambino
When we should be really crying’ over that one percent
Like we tipped a milk glass
[Forget] y’all, I’ma let my grandkids ball,”
If you want to create the sort of fortune that continues to grow after you’re gone, instead of being gone before the next paycheck; fix your vision on something farther away than just this weekend.
Set your future self, and your kids, and your kids kids up for success by changing the way you think. Stop thinking like you’re poor (even if you are broke) and start to think like those with a wealth of understanding.
-Wealth of Understanding