The one habit that all millionaires have is that they are not afraid to take a chance, even if it might cost money.
What allows them to take the risk? They are set up for the fall out.
If an opportunity costs money, they are comfortable spending money to see the outcome. For example, every year the financial community comes together during the annual Fincon event. A typically ticket costs just below $200 and a pro pass can be around $500. Now the pro pass seems, to some, very expensive. But to a millionaire, they would determine what that $500 would get them before evaluating the cost.
If they can determine that the opportunity out ways the cost, they will take it. In this example, if the millionaire wants to heavily network, get great information on their hobby or expertise, and meet up with sponsors, the $500 might be a deal during this conference. Plus, in this case, the cost will also become a tax write off. They won’t let the initial cost of the opportunity be the reason they say no.
How they are prepared for the fall out:
Before millionaires take on risk, they protect themselves. Essentially, you want to make sure that your money will continue to work for you and that this one opportunity wont heavily impact your net worth. Each situation is different, but the main things millionaires will already have taken care of (or are in the process of) are:
- Millionaires have either funded their 401k or the like for the year already or they have automated the process to complete the full contribution by the end of the year. If they are wanting the tax write off and want to put away even more money, they will do it as a Roth and make sure that they contribute to their Roth IRA as well.
- An emergency can happen at any time and millionaires are prepared for it. Some not only have a rainy day fund (every day to day emergencies) but also an emergency fund that could kick in if they lost their job or a major occurrence happened. More specifically, they continue to fund these accounts even if they are past the minimum. How do they do this? Though automatic and reoccurring deposits. They set it up and forget it.
- Diversified Portfolio. Chances are most millionaires continue to amass their net worth by keeping part of their income in investments. The easiest is the stock market, whether it is through individual stocks, mutual funds, or robo advisors, like Betterment. Their money will continue to grow even if the opportunity does pan out. Additionally, most millionaires also assess whether the opportunity will help them make more money in the long run. Whether it is an investment in another business or real estate, for examples, they will assess how much additional money they could make or if the investment could help them make more money in the future.
- Tax Write Offs. Millionaires will minimize the impact through tax write offs. In the previous example, anything geared towards investment or personal finance can be considered a tax write off, so from buying a book or for attending the previously mentioned conference, you can try and recoupe as much of it back through your taxes as possible.
Most millionaires will never let the price be the initial factor that will stop them from saying no to an opportunity. The one habit that all millionaires have is that they are not afraid to take a chance, even if it might cost money.
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