What financial mistakes can lead people into poverty?
The largest of which is:
1. The more you earn, the more you spend (inflating quality of life). People cannot live forever like students. However, countless individuals indeed increase their expenditures as they earn more. This is one of the biggest reasons why even some high-income groups go bankrupt. Studies show that up to 20% of high-income individuals go bankrupt (spending exceeds income), with higher bankruptcy rates among the upper-middle class and the middle class. This is the main reason. People do this for two reasons - they develop bad habits or they want to "show off" to the world that they have already succeeded. If there weren't so many people wanting to show off, Instagram might not even exist!
2. Falling into credit card debt. Not all debt is bad. Almost every successful business has used it at some point. However, credit card and consumer debt are very dangerous.
3. Spending a large amount of money on depreciating assets, such as most cars, rather than appreciating assets:
4. Not taking risks seriously. Various things will always happen in life. However, many people still put almost 100% of their energy into one basket, such as a company, a house, or a stock.
5. Inadequate liquidity. If all your assets are invested in property or businesses, the risk is higher than investing in the stock market through ETFs or other investment tools.
6. Spending too much time with toxic people and not enough time with positive people.
7. Not engaging in lifelong learning.
Save rather than invest. In countries with huge exchange rate and inflation risks, this practice is particularly dangerous. Many people have gone bankrupt because of this in the past.
Ultimately, wealth and income are not the same. Cash flow is also a type, and the potential liquidity of some assets in emergencies is also a type.
Therefore, if someone's book assets are 5 million US dollars, but are all tied up in illiquid assets, it is different from having 5 million US dollars in a liquid ETF portfolio.
Similarly, if someone earns 500,000 US dollars annually but spends 500,000 US dollars each year, it is different from earning 70,000 US dollars and spending 50,000 US dollars.
In fact, this makes them poor in many ways, even though society generally considers them wealthy because they earn 0.5 million US dollars.
In reality, they are just living paycheck to paycheck. Any unexpected event, like falling ill, could plunge them into poverty.
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成熟投资者：格局，概率，取舍。没有格局必然急功近利。不计概率会把运气当技术。不懂取舍，有所不为，最后必落入陷阱和圈套。
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