The underlying logic of wealth accumulation

Shen Translation is a translation team under 36Kr, focusing on fields including technology, business, workplace and life, with a core focus on introducing new technologies, new perspectives and new trends from overseas.

Editor's Note: You only need to succeed once in your lifetime to achieve wealth, but 90% of people burn out before getting the "admission ticket" as they spend all their energy proving to their peers that they are doing pretty well. This article comes from translated content.

Aristotle once wrote:

"A good beginning is half of success."

What he emphasized is that before you do anything, you must first solve the most core fundamental problems. The same applies to wealth management.

There is one thing that the vast majority of people have never thought deeply about:

You only need to experience the process of getting rich once in your life.

After that, your core task is to preserve and grow this wealth.

For this reason, wealth accumulation has become one of the ultimate games worth your full investment. Because as long as you master the correct rules, the returns it brings will benefit you for a lifetime.

However, after all, wealth accumulation is a game. Just like any game, you must devote yourself to it completely before you expect to win.

The following are the most basic underlying logics.

Whenever you feel confused or stuck, you can review this list.

1. Develop reverse thinking

Before talking about any tactics, investments or strategies, your mindset must be in place first.

Creating wealth requires a way of thinking completely different from that of the people around you.

Most people make choices to pursue the optimal solution for the "present".

Exquisite items, luxurious experiences, seemingly decent appearances. But those who truly accumulate wealth optimize for the "future". They give up the small immediate gains, and turn them into huge long-term advantages through the compound interest effect of time.

Therefore, if you are eager to accumulate wealth, you must have reverse thinking.

The reason why it is called "reverse" is that the habitual behavior of most people around you is exactly the stumbling block that prevents you from getting rich.

When your friends are busy changing to new cars, you choose to invest.

When everyone is talking enthusiastically about what to buy next, you are calculating what you can sell. When the market crashes and everyone is panicking, you are calmly looking for turning points.

This is not to be stingy, nor to deliberately isolate yourself. It is a well-considered and sensible choice you make — to play a different game, a game with a longer cycle and a bigger vision.

You must make wealth accumulation your top priority. This is not a vague intention, but a solemn promise you make to yourself, which requires you to practice every day.

2. Always keep your "burn rate" under control

Everyone knows that they should live within their means, but almost no one can do it consistently.

The reason behind this is social pressure. We are afraid of being left behind by our peers, and we always want to have something to talk about at work on Monday — such as a concert, a trip, or a new car we just bought. This is the normal life state of most people, and when you are surrounded by this culture, it is extremely difficult to get out of it.

But those who truly accumulate wealth must not follow the crowd, at least not in the initial stage.

When your foundation is solid, you can enjoy life as much as you want. But in the early stage, strictly holding the red line between income and expenditure is where all your winning chances lie.

My daily expenses today are indeed higher than they were ten years ago, but my income has also increased significantly in proportion.

The sense of surplus remains the same, and this is the goal we are pursuing.

As your income rises, resist the urge to upgrade your consumption at the same pace. Keep yourself in a state where you always have the ability to live a more luxurious life, but actively choose to stay put.

Wealth is bred in the gap between your income and your expenses. Defend this red line as you defend your future, because your future indeed depends entirely on it.

3. Wealth is not the same thing as money

Money is just a dry number, while wealth represents freedom and options.

People are extremely easy to fall into the trap of blindly pursuing higher salaries — better pay, more year-end bonuses, more impressive job titles.

These are certainly not bad things, but they are not the ultimate goal. Your real goal is to build something that can bring you absolute security and real options.

Always keep this ultimate goal in mind.

You come to the workplace not to earn more pocket money, but to build the cornerstone of your own wealth.

4. Keep investing, instead of pursuing the perfect investment

No one can accurately buy at the bottom and sell at the top. You can't do it, the experts on TV can't do it, and that guy in the group who looks full of confidence can't do it either.

Those who make a lot of money through investment rely on discipline and persistence, not petty cleverness.

They buy fixed amounts on a regular basis, reinvest the returns, and then let them grow.

They will not be disrupted by the so-called "get-rich-quick market" casually mentioned by others, nor will they blindly chase radical returns that multiply a thousand times.

They can stand loneliness and always stay in the market.

Time is the engine, persistence is the fuel, and everything else is noise.

5. The biggest enemy of wealth is your own inner demon

Fear, impetuousness, keeping up with the Joneses and blind confidence. These psychological defects are far more devastating to wealth than a bad investment project.

Almost every financial mistake I have made comes from loss of emotional control, not lack of knowledge.

Blindly buying when you are over-excited, panicking and cutting positions when you are fearful; completely abandoning the established strategy just because you saw a sensational piece of news. Every time, the real enemy is hidden in the mirror.

First sort out your mental state, and the rest will follow naturally.

In addition, stay away from financial media, especially the influencers on social platforms. Everyone thinks they know everything, and is busy predicting the future all day long.

They sound very certain, but they are almost never right.

Keep your eyes on the road ahead and stay focused.

6. You cannot get truly rich only by saving money

Savings can help you lay the foundation, but it is not a wealth creation strategy in itself.

The money left in your bank account will shrink every year due to inflation. The real purpose of your saving is to give yourself the capital to invest.

The core logic is to let money work for you, so as to achieve passive income.

You can try your best to increase your income and reduce expenditure, but never confuse saving with wealth accumulation. The two complement each other, but are essentially different.

7. Don't fall into the trap of "status signals"

In specific situations, appearance does matter. If you are a consultant or a lawyer, you have to dress properly. This is the reality. But that's not what I'm talking about now.

I also won't trust a doctor who dresses like a fitness coach.

What I'm talking about is a deeper trap, a trap I fell into when I worked at a company in London.

At that time, I spent a lot of money buying suits, and all I could think about was buying a Rolex. Although I didn't have the financial ability at that time, if I had extra money, I might have bought it without hesitation.

This is where the trap lies.

Spending money to send the signal to the outside world that "you are rich". Designer bags, luxury brands, and all those external things you use to show off to others that you are doing well. It feels really good at that moment.

But in the long run, it is the invisible killer of wealth.

You might as well ask yourself frankly: Do I really need this thing, or am I just driven by possessiveness?

The answer is almost always the latter. And simply "wanting" something can never be a reason to buy it.

Use this money to invest instead.

8. Before pursuing multiple streams of income, stabilize one reliable income source first

Everyone is talking enthusiastically about expanding income channels, but almost no one mentions mastering one of them first.

Without a solid foundation, the so-called diversification is just a pseudo-proposition packaged as a strategy, which will only distract your energy.

I have seen people spread their energy across five different money-making ideas, and end up being a jack of all trades, master of none.

Do one thing well first, and use it as a springboard for further development.

9. Delayed gratification is the ultimate wealth game

Every rich person you admire has, over years and years, repeatedly sacrificed immediate pleasure in exchange for long-term benefits.

Not once or twice, not on a whim, but consistently, year after year.

There are no shortcuts on this path. The earlier you recognize this, the earlier you can get back on track and stop looking for the so-called hidden shortcut to success.

If you want to learn more about this, I once wrote a special article discussing the art of delayed gratification.

10. Make money with what you are really good at

This is the truth that took me the longest time to realize.

In the past, I helped out at my family's industrial washing equipment company, and later went to a large IT research institution, where I could see a promotion path. But that path was very tough for me, and I could not give full play to my strengths at all.

In the traditional workplace career, your goal is to fight for promotions, enrich your resume, jump to another company, and then be poached back, dreaming of becoming a vice president one day.

This path itself is not wrong. Over the past ten years, especially in the technology industry, many people have accumulated real wealth by taking the elite career path.

But it's not for me. I feel that if I take this path, I will never be able to truly unlock my potential.

This is also to realize the value of your life.

Find the thing you are truly destined to do, and then ask yourself frankly: Is there a monetizable path in this direction?

I can't give you a ready-made answer, after all, everyone's situation is different. But the core logic here is universally applicable.

Take your full-time job to the extreme.

• The stronger your ability, the greater the value you create.

• The greater the value you create, the more generous the rewards you get.

Don't just focus on your immediate salary, look at your long-term potential. Ask yourself if the path you are taking now can let you truly reach your upper limit.

If you can put yourself in a pivotal position — creating irreplaceable value, so much so that your departure will cause serious losses to the company — then it is only a matter of time before you accumulate real wealth.

Take a long-term view to catch big gains. Focus on what you are good at, and everything else will fall into place naturally.

These truths are very simple, no opportunistic tricks, no shortcuts to take.

But whenever you feel lost, review this list, and you will find that the answers to most financial problems have long been written in it.

The greatest truths are the simplest. These core common senses will not lose their power of truth just because they are often talked about.

Translator: boxi.