How The Wealthy Stay Rich — & How You Can Make Their Money Tricks Work For You

I need to confess something. One of the reasons I wanted to write a book about investing was to get into rooms with experienced, wealthy investors, and the people who advise the uber wealthy, in order to ask them one question: What do wealthy people do differently that your average investor should know? Of course, I was hoping to unearth some secret code to easily and quickly build wealth (outside of developing an app and selling it to a tech giant for billions of dollars), but alas, there is rarely fast money. At least not if you’re playing within the parameters of the law and basic ethics.

But I did come away from some easy tricks that anyone can apply to their own lives. Ahead, four ways the rich build and preserve wealth that we, the common people, can actually enact in our own lives. This isn’t a "get rich quick" plan — it’s a "save a lot and make smart, sometimes daring, decisions" plan. But it still gets you to that ultimate goal of unlocking financial independence and wouldn’t you argue one day is better than never?

The time-tested routine

While interviewing Jill Schlesinger, CFP and author of Dumb Things Smart People Do with Their Money, for my book Broke Millennial Takes On Investing, she says the dirty little secret is that building wealth is not complicated. People either inherit a lot of money and don’t squander it by living within their means, or they simply start saving early. On her podcast, Better Off, Schlesinger asks guests about the best financial decisions they ever made. Many of her guests respond with some variation on “I started saving early” or “I opened an IRA and kept contributing each year.”

Those of us who won’t be inheriting immense wealth have to use the boring method of starting early (or if not early, now) and being consistent about investing money into the stock market. It’s really easy to start: Just set up a 401(k) or Roth IRA and have money automatically deducted from your paycheck each month.

Of course, it’s just a dash more complicated than being consistent because you also have to occasionally rebalance your investments. Rebalancing is the (theoretically) simple act of getting your investment portfolio back in sync with your asset allocation. Let’s say you’re comfortable with 70 percent stocks and 30 percent bonds based on your risk tolerance and time horizon (fancy way of saying when you'll need access to the money), but your stocks did really well this year so now it’s an 80/20 split. Well, you need to sell 10 percent of your stocks and purchase 10 percent more bonds to balance it back and stay in alignment with your risk tolerance and overall goals.