I have a rich friend who is a genius. However, he says that the smartest thing he did to become a millionaire is hire people who are smarter than he is. According to a recent Yahoo Finance piece, billionaires may just be smarter than the rest of us. A new study out of Duke University shows a strong connection between wealth and cognitive ability. The study shows 45 percent of billionaires are in the top one percent of brainpower.
While my two sons were blessed with "genes" that give them an edge with the sciences and math, I've spent my life more consumed with the size of my "jeans." If it weren't for calculators and online trading sites that do the math for me, I'd be in trouble with my investing and personal finances.
In my quest to become wealthier, I haven't relied on my own brain power, but I have paid attention to what has made my smarter and richer friends more successful.
Making easy money
According to the study, billionaires who make their money from technology and investments are more likely to be in the top one perfect of cognitive ability. I think smart people know the odds are highly in their favor if they invest over the long run. My millionaire friend, who I met in college, encouraged me to start investing in dividend-paying stocks in my 20s. In recent years, he explained to me how to make money options trading with covered calls. Although it's "easy money," it also requires patience.
Being lucky also helps
I think in some cases luck also plays a role in building wealth. Some people are lucky enough to inherit money that they can invest in the stock market when it's "down." But it takes prudence to known when to take profits and move into more conservative investments. I know people who were too stubborn to sell their gold when all the signs pointed to a crash in the gold market, but my millionaire friends had his money in a diverse portfolio.
Investing in real estate
My genius/millionaire friend began investing in real estate in his early 20s before the housing bubble. Instead of trying to flip homes, he purchased inexpensive homes that could be converted into rental properties. People who took a more short-sighted approach got burned when the houses they intended to flip went down in value. Perhaps a study would show that intelligent people are also longer range thinkers who are patient. My friend inspired me to invest in real estate when I can find a property that is being sold at a bargain.
Although there is a debate about whether or not rich people attend college, the study showed 88 percent of Forbes billionaires graduated from college. I know a lot of people with high IQ's that are impatient with college classes. However, most intelligent people know that a degree can help them meet goals on their path to riches. Statistically, people with less education more often end up in poverty. In my case, I only have a liberal arts degree with a major in English. When I want to make money, I get advice from my friends who didn't have a "fluff degree."
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