Why Do the Rich Keep Getting Richer While the Poor Remain Poor?

Why do we see some people in this era continuously getting richer? Looking at the statistics of the wealthiest individuals in Thailand, it’s evident that tycoons are increasing their wealth every year. Meanwhile, the grassroots and middle class, like us, continue to work hard, yet we struggle to save any money. This is reflected in the statistics on poverty. Furthermore, many Thais are in debt, with the level of indebtedness being among the highest in the world.

What divides the rich from the poor? Why do the poor seem to get poorer while the rich keep getting richer? Rabbit Finance will explain the reasons behind the growing poverty and the wealth accumulation strategies of the country’s top millionaires.

Reasons Why the Poor Keep Getting Poorer

There are several reasons why the poor struggle financially. The main reasons include:

Lack of Financial Discipline

The primary reason for many poor individuals is a lack of financial discipline. Most people know they should save money before spending, but many fail to do so. When they see something they desire, they often impulsively spend their money. Even if they set aside savings, they may find it hard to resist the temptation to spend when they see something they want.

Debt

Without financial discipline, the money they have is often insufficient, leading them to borrow money. Once trapped in debt, they face significant challenges with both principal and interest. Few can repay their debts in full and on time; most can only manage the principal, while interest accumulates, growing into a larger sum. Ultimately, without a serious increase in income, they cannot fully repay their debts.

Buying Unnecessary Items

Many people fail to notice where their money goes. For instance, some save on food expenses but spend excessively on drinks costing 150 baht each day. If they skip a drink, they feel something is missing from their lives. Others who smoke may feel irritable without a cigarette, leading them to smoke more, which adds up to unnecessary expenses. Cigarettes not only harm health but also represent a wasteful expenditure.

Reasons Why the Rich Keep Getting Richer

Knowledge of Assets

The rich understand assets, knowing which can appreciate and which will depreciate. They seek to invest in assets that have the potential to increase in value rather than those that will lose value.

Assets That Depreciate

A clear example is a car. When someone buys a new car, its value drops by 200,000 to 300,000 baht immediately. Owning a car incurs costs such as insurance, fuel, tire replacements, oil changes, and repairs. If the car is involved in an accident, its value decreases further. It’s evident how costly owning a car can be.

When selling an old car, it fetches a lower price due to its used condition. Therefore, cars are considered depreciating assets (this refers to regular cars, not classic cars with historical significance, which may appreciate in value).

Assets That Appreciate

I use the term 'potential for appreciation' because these assets can fluctuate in value. You may incur losses, break even, or gain profits at any time. However, the wealthy pay close attention to these appreciating assets, and their money is often invested in them.

Appreciating assets include stocks, mutual funds, gold, real estate, and collectibles that increase in value over time, such as certain amulets, vintage cars, and famous paintings.

In this article, we will focus on stocks, which are assets held in large quantities by the wealthiest individuals in the country. When we refer to the wealthy, we mean the top Thai billionaires, as evidenced by their stock holdings. If their businesses grow and profit well, there will be significant interest in buying their shares.

Stocks can appreciate in value because investors expect dividends that align with the company's profits, leading to an increase in the stock prices held by these billionaires. Thus, we refer to stocks as assets with potential for appreciation.

Knowing this, it may seem like just knowledge without action. We can't just let the rich get richer. We have the right to use the same system as the tycoons without needing to manage a business ourselves. This means we can earn like the tycoons without putting in the effort. How can we do this?

Invest in the Tycoons' Companies

Investing in the same companies as the top wealthy individuals is akin to putting your money in the same place as the rich. The tycoons have people managing their stocks to prevent price drops (unless they decide to sell). If those companies' stocks rise, we have the opportunity to grow rich alongside the tycoons. There are three prominent stocks held by famous tycoons that, once you know them, will make you say, 'Ah!'

CPALL Stocks

This is the company owned by the Chiaravanont family, where the wealthiest tycoon in Thailand, Mr. Dhanin Chiaravanont, holds a significant amount of shares. CPALL manages 7-Eleven stores across Thailand, which are frequented by customers almost 24 hours a day, offering a variety of essential goods.

In the first quarter of 2018, CPALL reported a profit of 5,416 million baht, compared to 4,764 million baht in the first quarter of 2017, indicating substantial growth given the scale of CPALL.

Stock price as of July 4, 2018: Offer price 76.25 baht

CPN Stocks

Many people recognize CPN from the Central shopping mall signs. CPN is the Central Pattana Group, which owns Central malls in Thailand. The main shareholders are the Chirathivat family, ranked as the second richest family in the country this year. In the first quarter of this year, Central reported a profit of 2,822 million baht, compared to 2,775 million baht in the first quarter of last year.

The slight increase in profit may be due to renovations at Central World and the sale of Central Pattaya Beach to a REIT. Nevertheless, Central plans to increase rental rates by no less than 3% each quarter, ensuring that well-known brands will continue to rent space.

Stock price as of July 4, 2018: Offer price 72.50 baht

BDMS Stocks

We often see BDMS on medicine packaging because it manages Bangkok Hospital, Phyathai, Paolo, Royal Bangkok, Samitivej, and BNH, which are large standard hospitals with many patients. The owner of BDMS is Dr. Prasert Prasarttong-Osoth.

He is ranked as the 8th richest person in Thailand this year (the reason for skipping the 3rd to 7th richest is that they hold shares in foreign companies or less popular stocks). In the first quarter of this year, BDMS reported a profit of 2,919 million baht, higher than the 1,973 million baht profit in the first quarter of last year.

Stock price as of July 4, 2018: Offer price 26 baht

It’s clear that all three of these companies have grown almost every year. Even if some companies don’t grow significantly, they dominate the market share, making them attractive investment opportunities. Each company requires less investment than most people think.

Now that you know this, make sure to have the discipline to buy these stocks when prices drop. You’ll acquire shares at a much better price. Don’t wait—invest now!

Thank you for the information from rabbitfinance.com.