Why the rich get richer and the poor get poorer - II

Hmm...

Hope the previous post was useful and that it gave you a new way of looking at certain aspects of your life.

Now time for the other reason...

Leverage.

A rich person knows that he using his own strength he can never multiply his own efforts and so he seeks means and ways to do so with not only what he has, but with other people's contribution as well.

Life is filled with examples where the 'best' thing/service/product almost always can't seem to survive while those that make it big time are those with average product/service but have the best systems in place...example:

Mcdonalds - They don't have the best burgers, however their franchise system is responsible for their viral like growth.

Toyota - Their stuff is never outstanding, but it is always good enough and affordable. Soon to take over as the biggest car manufacturer in the world.

Someone once summed it up by saying that he'd rather have 10% productivity of 10 men then 100% productivity of himself. That way he can get the same work done and still have resources to do other things as well.

So what are the things that we must leverage?

1. Money
2. Effort
3. Time.

Money -

In singapore, banks have a pathetic interest rate of abt 0.25%..

So, saving's a pathetically slow way to get rich don't you think?

Investing is one way to leverage on money to earn more money. Obviously there are the so called 'risky' investment vehicles, as well as the 'safe' ones. The point is that if you want your money to grow on its own and not only by adding to it, you will need to get it invested.

Time / Effort -

Why are large companies able to do things the way they do?

Why some people spend their entire lives running a business which doesn't seem to grow?

That's because they are able or unable to leverage on other people's time and effort. Businesses stay small when the owner insists on doing everything himself. That's fine in the beginning when costs have to be kept low, however once things start to grow, he ought to grow his manpower as well.

If you noticed, most people are rich because they own businesses, invested, struck lottery or gena a large inheritence. Obviously, most of us aren't lucky enough for the last 2 to happen to us.

So, for those of us who can't seem to strike lotteries at will and don't have relatives who are stinking rich, I guess the only way is for us to venture out and learn more about businesses and investment.

Nothing ventured...nothing gained.

Part I
Part III

Why the rich get richer and the poor get poorer - I

Why the rich get richer and the poor get poorer?

many reasons...

and one of them..that has been given too much negative coverage is this...

Insurance.

If you are unsure about savings or investment accounts, nevermine. Just get some blardy insurance for things like : personal hospitalisation, disease, car, etc.

Life of a poor man:

Save save save save....wow $30,000

Shit..gena some farny disease...$30,000 gone.

Save save save save...nice nice..now $30,000 again

Shit...some idiot banged into car...$ 30,000 gone.

save save save save...phew...$30,000!!!

Shit...roof leaking...$30,000 gone.


You get the point.

Think about it. One of the reasons the rich get richer is because even though they already have the money, they have insurance to ensure that they do not need to touch their own money when an emergency arises.

Does it cost a bomb to get insurance? No. $50/mth could probably cover you for almost $100,000 for major illnesses. I can understand why some people get the feeling that they should kill themselves even after the hardships of recovery from a serious illness. It usually happens when they see the bill.

And you know what? You can't bring down the costs coz 1. the machinary is expensive and 2. the personal is expensive. Yea you want cheap fees. For that you need cheap labour. Would you be willing to work for cheap fees after going through half your life and spending tons to get your MD?

There you go.

Go talk to an insurance agent and try to get the following covered:

Self - Hospitalisation (non major illnes)
Self - Major Illness
Self - Disability
Self - assets (car, house)
Others - death (unless u could care less for the people who took care of you)

--------------------
Personal experience:

I got a disease called Meningites out of the blue (go wiki it). It was a non-specific, probable bacteria infection (which is basically as good as saying 'unknown'). After 2 weeks of hospitalisation, the total hospital bill was almost $20,000. Thank god it happened while I was in the Army...they sponsored it. Out of all that, I only paid $90 out of my medisafe account.

Well, given my families' current financial status, I wonder what would happen if I wasn't in the army and I had no coverage for that at all. Wtf are they going to find that money? And for a hospitalised illness, $20,000 was already a pretty small sum. What if something worst happened to me?

I'm not going to find out...

Do yourselves a favor...if not for financial reasons..then for health..ok?

Part II
Part III