Saturday, July 16, 2011

What If I'm Poor?

The same road of success is available to anyone but if you are at the bottom you have to be ready to take the short and narrow.  For example if you are poor the contacts may not be there and the educational level you have received has been inferior.  But these are not excuses just obstacles.  The principle behind creating wealth is the same for a poor or middle class person. Let us suppose that a poor man has a great idea and wants to start an online business to sell his new product, he may not have the money to do so.  That may be true for the middle class person as well but in his case he is wondering if he should leave his job to pursue this venture and if he does so he may end up losing his home.  In that sense the middle class man has more to lose and the poor man has nothing but opportunity. 

The poor man can use a credit card to pay for the business to make it grow, he may work for a while and save and then start the venture on credit and have his saved money as a back up or to buy inventory.  The problem with this is that sometimes economically disadvantaged people don't feel comfortable with these ideas because they have never had much money or ever used a loan in a strategic way.  Some people are used to spending more than they can afford.  Most people don't feel confident with money because they have not acquired good money skills.  When I first started working I didn't view credit the way I see it now, the more money you have the more comfortable you feel with loans and using them in strategic ways.  The point is that although you have the money to pay for the venture you don't pay for it with your own money, you use credit and let the business pay for itself.

In the stock market credit this is called leverage you get a margin account and you utilize the firm's money to multiply yours and increase your position (amount of stock held).  In the stock market this can be dangerous if you do not know what you are doing.  From my experience traders that are wealthy don't have the same level of panic that a novice and underfunded trader has because the underfunded trader knows if something goes wrong he will not have the money to correct his mistake and his position will be closed before he has made money therefore it will lead to losses. Having money gives you confidence and experience to a point where even if you lose it you know how to make it back.  Each time it becomes easier to a point where people will help you because of the knowledge you possess.  Therefore if I wanted to create wealth I could do so with a job at burger king and a small loan. The knowledge is what gives me the ability to create wealth. But it took a lot of work and experience to get that confidence and knowledge. So if you are poor all you have to do is learn how to save and take risk.  Mimic the strategies of those that are wealthy build your confidence through other peoples stories and testimonies.  All you have to know is that it is possible.

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