Why do we see some people in this era getting richer and richer? The wealthy, such as tycoons, seem to have increasing wealth every year, as evidenced by statistics on the wealthiest individuals in Thailand. Meanwhile, the grassroots and middle class, like us, continue to work hard but often find ourselves without savings. Statistics show that many Thais are in debt, with the country's debt levels being among the highest in the world.

What divides the rich from the poor? Why do the poor become poorer while the rich get richer? In this article, we will explore the reasons behind the poverty of the less fortunate and the wealth-building strategies of the top millionaires in the country.

Reasons Why the Poor Keep Getting Poorer

There are several reasons why the poor struggle financially, but the main ones include:

  • Lack of Financial Discipline

The primary reason many poor individuals face financial difficulties is a lack of discipline in spending. Most people know they should save money before spending it, but many fail to do so. When they see something they desire, they often feel an overwhelming urge to spend immediately. Even if they set aside money for savings, the temptation to buy something they want can be too strong to resist.

  • Debt

Without financial discipline, the money they have is often insufficient, leading them to borrow money. Once you enter the cycle of debt, it becomes incredibly challenging to manage, with both principal and interest piling up. Few can repay their debts in full and on time; most can only manage to pay off the principal, while the interest continues to accumulate, creating a larger debt burden. Ultimately, without a serious increase in income, they find it impossible to pay off their debts.

  • Buying Unnecessary Items

Many people fail to notice where their money is going. For instance, some may save on food costs but spend excessively on drinks that cost 150 baht each day. If they skip a day without their favorite drink, they feel something is missing from their lives. Similarly, smokers may feel irritable without a cigarette, leading them to smoke more, especially under stress, which results in even higher expenses. Smoking not only harms health but is also an unnecessary expense.

Reasons Why the Rich Keep Getting Richer

  • Knowledge of Assets

The wealthy understand assets well. They know which assets can appreciate in value and which ones will depreciate. They focus on acquiring assets that have the potential to increase in value rather than those that will lose value over time.

  • Assets That Depreciate

A clear example is a car. When someone buys a brand-new car, its value drops by 200,000 to 300,000 baht as soon as it leaves the dealership. Owning a car also incurs costs such as insurance, fuel, tire replacements, and maintenance. If the car is involved in an accident, its value decreases even further. It’s evident how expensive owning a car can be.

When selling an old car, the resale value is often low due to wear and tear, making cars a depreciating asset (this refers to regular cars, not classic cars with historical significance, which can appreciate in value).

  • Assets That Appreciate

I use the term 'opportunity for appreciation' because the value of these assets can fluctuate. You might incur a loss, break even, or gain profit at any time. However, the wealthy pay close attention to these appreciating assets, and their money is often invested in them.

Assets that appreciate include stocks, mutual funds, gold, real estate, and antiques that increase in value over time, such as certain amulets, vintage cars, and paintings by famous artists.

In this article, we will focus on stocks, which are assets that many of the country's wealthy individuals hold in significant quantities. By 'wealthy,' we refer to the top Thai millionaires, as evidenced by their stock ownership. If their businesses grow and profit, it attracts more investors to buy shares.

Stocks can appreciate in value because investors expect dividends based on the company's profits, leading to an increase in the stock prices held by these wealthy individuals. Thus, stocks are considered assets with the potential for appreciation.

Now that we understand this, it’s not enough to just know. We can’t just let the rich keep getting richer. We have the right to use the same system as the tycoons without having to manage a business ourselves. This means we can earn like the tycoons without putting in the effort. How can we do this?

SOURCE:  rabbitfinance.com