Wealth: Deconstructing a complex subject
In the course of interacting with our Singapore Personal Finance community, we realise that one of the most important benchmarks that many people have is most often – wealth. More specifically, the current lack thereof and the perennial question on ‘How do I become wealthy?’.
While there is obviously no one clear path to ‘wealth’, there are certain traits that are seen in most self-made wealthy people. These indicators are based on research and studies which I will also quote in the article below. At the end of the article, we will share 3 ways recommended by our community to begin on your path to get better financially.
TL;DR: Here are the 3 key traits
- Delayed Gratification: Having the ability to be patient and practice Long-term thinking opposed to short-term gains.
- Avoiding Groupthink: Having a contrarian mindset and adopting the first-principle approach to problem-solving.
- Determination: Hustling to get something done separates you from the rest of the crowd.
Delayed Gratification: Long-Term Mindset
For this example, I will quote the famous Stanford marshmallow experiment.
- A test pool of 16 boys and 16 girls were tested
- To understand the control of delayed gratification, the ability to wait to obtain something that one wants
- The children could eat the treat immediately and get one sweet
- If they waited for fifteen minutes without giving in, they would be rewarded with a second sweet
Stanford Marshmallow experiment findings
- Only one-third delayed long enough to get the second marshmallow
- A follow up study in 1990, over 10 years later showed that the adolescents were more competent
- Also those who delayed, derived higher SAT scores (USA standardised tests).
If you apply this to wealth-building, it correlates closely with the idea where long-term investors often out-perform short-term investors or individuals who exhibit more of a trading mindset (buy-low and sell-high) where often without the right technical skills, fall short of the market expectations. This also applies to personal development, for example taking on a job with a higher near-term salary but lack potential upside on growth and development opportunities.
Key traits: Patience and Long-term thinking opposed to short-term gains.
Avoiding Groupthink: Contrarian Mindset
Also another interesting indicator of a person’s ability to critically assess a situation and come up with the appropriate problem-solving attitude. More often than not, individuals with such features often have these decisions to correctly determine how to solve the issue. Let us look at two individuals, both innovators and wealthy individuals in their own right.
Elon Musk: First principles problem-solving
A classic example showing how he fought through near bankruptcy and now on track to build interplanetary space-exploration. Alright, you may be thinking that this sounds like a stretch, but in all honesty, almost the whole human population thought so too. Referring to his biography by Ashley Vance, you will find that more than one occasion, with endeavours like, Tesla, SolarCity, and SpaceX, he was defying what was not possible before and bringing it to the masses at scale.
Tan Min Liang: For Gamers by Gamers
This one is way closer to home. Many Singaporeans may not have even heard about his name until recently where he has gotten much press coverage for his listing in the Hong Kong Stock Exchange and now one of the few self-made billionaires to call Singapore his home (for the most part). You may have thought the above example of Elon Musk was a stretch, but Tan Min Liang has shown that with the right tenacity and attitude, he created a market niche for himself in gaming equipment and now fast growing into the mass market. He explained in multiple interviews how much government support turned him down in his early days and no one believed a gaming company would work. Here’s to the haters. Just search: “1337 Razer IPO”
Key traits: Contrarian mindset and first-principle thinking.
Determination: The Art of The Hustle
The last indicator I would often correlate with success would be the willingness to carry on when no one else will. And that is closely related to the art of the hustle – Knowing which buttons to press, which strings to pull on the right occasions. More often than not, no one in their right mind will continue pursuing a certain cause if the above two indicators are not in your favour. But it’s where continuing where no one else is willing to, will make all the difference.
Jack Ma: Rejected by KFC multiple times
Again as quoted in the autobiography of Jack Ma by Duncan Clark, you will find that very often, he was faced with serious social pressures and weight to give in and quit. But he struggled through life, learning important lessons along the way and decided to fight head-on, pulling long hours because he believed that Alibaba could be serving an important mission. And today, they are serving as the world’s biggest connector platform for small businesses. What a journey.
Key traits: Hustle separates you from the rest of the crowd.
Conclusion – Wealth can be nurtured
The examples quoted in this article may seem like a far cry from where you may be sitting today. However, what I realized after meeting self-made entrepreneurs and higher middle-income earners in Singapore, is that they never stop improving themselves. We will follow up with the next part of this series to share 3 ways that people effectively nurture this mindset.