Eight (8) TRAPS that the wealthy avoid but the middle class does not

Rich people protect their wealth by diversifying their income and assets, living frugally, and using LLCs to separate personal and business wealth, while middle-class people tend to buy too early and pay too much in fees. Rich people understand the law and risk-reward curve to retain wealth, while middle-class investors are often trapped by modern financial traps.

• Rich people can retain their wealth despite bankruptcy by understanding the law and bending the rules without breaking them.
• Modern financial traps, such as guaranteed returns and investing in startups, are designed to benefit the rich and trap the middle class.
• Rich people understand the risk-reward curve and balance their portfolios accordingly, while new investors struggle to understand it.
• Investing in apps that promise high returns comes with high risk and should not be done with all of your money.

Rich people protect their downside by living frugally and renting before buying, while middle-class people tend to buy too early.

• Rather than buying a house in the early part of their life, business people typically invest their money in their businesses, while middle-class people tend to buy too early.
• Rich people protect their downside by living a frugal life and renting more before buying.

Protect your wealth by diversifying your income and assets, and get insurance to cover your downside risk with Ditto Insurance.

• Investigate the worst-case scenario and protect the downside to avoid decisions that can wipe off your wealth.
• Rich people protect their downside risk by creating a portfolio of different incomes and assets.
• Have insurance to protect your downside risk; use Ditto Insurance to speak with an insurance expert for free.

Investing in physical real estate and gold is a better option than REITs and gold bonds for hedging against risk in the event of a government default.

• Rich people invest in physical real estate rather than REITs, which are packaged investments with lower entry costs.
• You own a fractional ownership in a company when you buy shares, and when you buy REITs, you gain control over a property to rent out or do other things with.
• Investing in REITs gives zero control and buying physical gold serves as a hedge for risk.
• In the event of a government default, physical gold is the best asset to own, as opposed to gold bonds, which have no value.

Be mindful of the fees you pay when investing, as they can significantly reduce your returns.

• Rich people closely monitor the performance of hedge funds, while average investors typically give their money to mutual fund managers without knowing where it is going.
• New Age apps are automating investments, but two layers of permissions need to be considered.
• Be aware of the commissions you are paying, as 1% of your AUM can be equivalent to 10% of your profits.

Rich people use LLCs to separate personal and business wealth, avoiding personal loans to maintain a good credit score.

• Rich people take business loans and use them to take further consumer loans, illustrated by the example of Mr. Anil Ambani who went bankrupt but kept his wealth intact.
• Creating a Limited Liability Company (LLC) in India allows for a bifurcation between individual and company wealth.
• Avoid taking personal loans to maintain a good credit score and be able to take loans for productive purposes.

Investing in startups without proper research can be risky, so diversify your portfolio with multiple asset classes to build a portfolio of incomes.

• Normal retail investors can invest in startups by becoming angel investors with small amounts of money.
• Investing in startups without understanding the financials or having third-party commentary is risky and people are getting swayed into this ecosystem.
• Rich people invest in multiple asset classes to build a portfolio of incomes, understanding the pros and cons of each.

Focus on developing portfolio income to achieve financial and time independence, rather than trying to save small amounts.

• Inflation is rising rapidly, so focus on developing your portfolio income rather than trying to save small amounts of money.
• Generate multiple income streams to achieve financial and time independence and avoid modern-day financial traps.

There you go. Here are a few tips from TradeFxP. We hope this article will benefit you and open your eyes and think twice before falling to snake-oil pitches and false offers. If you have any doubt about anything, please ask us before signing into anything. If you ask them to wait a day, they will.

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