Why reading is the most crucial factor in getting rich?
Humans regardless of race, language and religions, pledged themselves as one united people when it comes to money.That is, we all want to become rich. Of course, the definition of rich is different for each one of us.
For my case, as long as I have acquired enough assets to generate enough income to cover my living expenses along with wants clearly defined like a completely paid off Japanese brand car, housing loan in some prime district and vacations in exotic locations once every year, etc. Then I considered myself rich. I don’t really need to found companies like Microsoft or a web 2.0 site like Youtube. But it will be ideal if got since it will also means that I am rich.
There is a Chinese saying that a book holds a house of gold and a book holds a house of beauties.
This is not to say that books really contain beauties and without wearing clothes as in magazines like Playboy.
The inspired and far sighted forefathers of Chinese people are trying to tell us that to accumulate wealth in great abundance, one need to acquire ideas, insights, concepts, multiple mental models, data and knowledge. Most of which are to be found and can only found in books (or in today terms, various online and offline media), though networking with people is equally important.
After you have accumulated great wealth, would you be unable to buy gold houses and beauties?
Although the words luxurious houses and beauties are used, the intention behind advising future generations to read books is not to simply acquiring wealth but wisdom and to use the wisdom to help other people.
This is like the Chinese word for martial arts are actually made up of two words, one is stop and the other is war. The original intention of martial arts is to stop warring.
It has been said that reading is the habit most common to rich people while poor people have the latest LCD TV, rich people has a shelf of books.
They read to learn, read to gain additional insights to issues, read to unlearn, read to look for ideas to apply to their businesses, most importantly read to gain multiple mental models to look at this world.
It is important to look at the world through multiple mental models because that is the essence of wisdom.
For example, when there is Ponzi scheme likes Sunshine Empire, most invested their whole life savings after receiving back their capitals one year later.
Simply because, they only look at this investment with only one mental model – I got receive back my capital with the high returns so it cannot be a scam. A scam means that I will lose my first investment with them immediately.
But what rich people knows is that they have business and finance concepts, they look at it from cashflow point of view, even the business being claim is true, funds should be tied up in developing the projects and not pay out high dividends so early. In addition, the repeated issuing of shares to anyone with $10 000 basically means that existing shareholder interests is being diluted.
With more mental models like being aware that anyone can check the registration date for a domain name of a website simply by using whois, and that is the company website is only being registered yesterday. Then it is hard to believe that the company is not a scam.
If concluded that something is a Ponzi scheme beyond reasonable doubt, still want to invest because of greed, having multiple mental models also helps in the sense that you are aware of a concept called modern portfolio theory which teaches us that diversification reduces risk without reducing returns.
One can diversifies the original $100 000 intent to invest in Sunshine Empire across other various Ponzi schemes.
Concepts from value investing and statistical probability also help in this case, keeping other variables constant; a Ponzi scheme that is 1 year old is safer to invest than a Ponzi scheme that is more than 3 years simply because based on historical data, Ponzi schemes seldom last more than 3 years due to high payouts involved and the fact that only a certain percentage of population within a geographic location will fall trick to scam. (Consistency in percentage, just like only a fixed number of people will contribute revenue to casinos)
Once it reached the limit and/or operators are satisfied with what they have earned, finally run off with the money to a remote Caribbean Island and hire 30 hot chicks to dance Macarena for them.
Remember what mentor of George Soros said, that all life is problem solving. Creative problem solving, including doing well for business, means taking ideas, insights, concepts, multiple mental models, data and knowledge found elsewhere and sees how it can solve the problem at hand.
That is why rich people read, and why you should too.
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It agree, very good piece
Nice post. Your really do great research. I shall agree that reading is very important to getting rich. But for myself, I am not really into reading books. I’m into reading myself – that is reflection. But of course, we can always get golden thoughts from reading books. Thanks for sharing this insight. Keep up the great work.
Magnificent idea
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I do agree, you ought to have knowledge, and one form of getting knowledge is reading through books. And we all heard that knowledge is power. But Applied Knowledge is Real Power.
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