Wealth lessons from the world’s richest

Last week, Forbes magazine released its 29th edition of the world’s richest.

The 2015 list of wealthy men and women has an astonishing 1,826 billionaires with an aggregate net worth of Sh635 trillion.

Holding $79.2 billion fortune, billionaire philanthropist and Microsoft co-founder Bill Gates leads the pack. Mr Gates is followed by Mexican Carlos Slim with a $77.1 billion wealth, Warren Buffet comes third with a $72.7 billion fortune, and Amancio Ortega with a 66.4 billion sum.

Interestingly, newcomers whose businesses broke even were propelled to the 2015 list with Ali Baba founder Jack Ma, prominent among the group. Others are Africa’s richest man Aliko Dangote, who is planning an entry into Kenya’s cement industry.

Locally, Bidco Oil Chief Executive Vimal Shah’s father Bhimji Depar Shah and investor Naushad Merali made it to Forbes Africa’s richest at $700 million and $550 million fortunes late last year.

Other notable local billionaires include Chris Kirubi and Equity Bank’s James Mwangi.

Well, today Money looks at some of the key highlights you can borrow implement to better your personal finance journey.

ART OF SAVING

According to Warren Buffett, entrepreneurs who focus on getting rich quickly lose the plot by failing to save. “I think the biggest mistake people make is failing to learn the habits of saving properly early,” he told Forbes. “Saving is a habit and anyone looking to get rich must learn and act it.” Personal finance expert Waceke Nduati–Omanga agrees. While you may think you’re earning enough or the income your enterprise is giving you is sufficient, she says, you may very well be on the wrong path in wealth creation.

“You may know how to earn money, or be in a well-paying job, or own a good business; but this does not mean you’re creating wealth or know how to create wealth,” she says.

According to Mr Buffett, you should understand that the art of compounding riches doesn’t happen overnight, and neither does saving.

“Money doesn’t fall like manna; it takes a long time to build and anyone looking to save should have a long-term mindset.”

Interestingly, this art of saving and reinvesting savings was the fuel that propelled billionaire Li Ka Shing, who owns a fortune of around $28 billion to the billionaires club.

The billionaire observes that you should never save for the sake of saving.

“Save your money in your bank and grow it as your very first start-up capital. Then after saving it, engage it in entrepreneurial exercises that will double it. Even if you lose money while growing it, you will not lose as much as you would had you not saved,” he notes.

DIVERSIFY YOUR INTEREST

Shortly after billionaire Jack Ma was listed on Forbes with a net worth of $22.7 billion, his company Ali Baba announced that it had acquired 8.8 per cent stake in Enlight Company, a film production firm based in China.  Mr Ma, though is not the only top money-maker spreading his tentacles to net more wealth.

In Kenya, billionaire Chris Kirubi has been diversifying  his investments through Centum Investments where he is the majority shareholder. Centum has branched into coal-mining, banking, and bottling.

In the same vein, Bidco Oil under the watch of billionaire Vimal Shah is eyeing soft drinks market with a Sh1.7 billion beverage plant along Thika-Garissa highway.

According to Mr Kirubi, venturing into new markets requires bold decisions. “When I bought Capital FM, no one believed in the changes I wanted to make. In fact, I received letters from the audience grumbling that I would ruin the new station,” he wrote on his blog.

But perhaps no one portrays the essence of diversity in business than Africa’s richest man Aliko Dangote who holds around $14.7 billion fortune. According to audit firm, PwC, Mr Dangote has ventured into cement industry, salt and sugar refining, real estate, poly products, port management, flour milling, and transport.

“My business strategy is to diversify business, hence the businesses are well equipped to cushion each other. Some businesses will have greater or lesser profitability,” he told PwC.

TURN DEBT INTO REVENUE

Very few billionaires are free from debt. According to Patrick Wameyo, a wealth management coach, the difference is that many of the top billionaires have mastered how to reap the most of debts by leveraging rather than borrowing.

“The rich usually go to a bank to get capital for plans they have already laid out while the common man usually takes a loan to settle debts,” says Mr Wameyo.

He adds that while a billionaire would shape their debt to acquire income-generating assets, the common man will only amass liabilities.

“Similarly, learn to leverage on debt to grow richer, while cautiously staying away from debts that would just pile up your dues. This will keep you from consuming your future income to settle past problems.”

According to Warren Buffett, stay away from things you can’t pay for until you put yourself in a paying position.

“I have found that it is easy to prevent financial trouble than to get out of it. Staying out of debt is staying out of financial trouble.” He says.

START SMALL

Many of the world’s top billionaires such as Bill Gates and Mark Zuckerberg started small. For instance, Mr Gates and Mr Zuckerberg, who hold $79.3 billion and $ 35.7 billion fortunes respectively, birthed their business ideas and enterprises from their university hostels. Apple founder Steve Jobs started in a garage.  

LEARN FROM FAILURE

Billionaire Richard Branson, who is valued by Forbes at $4.8 billion, has endured insurmountable failures.

Among his famous failures include Virgin Drinks, social networking platform VirginStudent, wedding dress business Virgin Brides, online car sales outfit Virgin Cars, and lingerie store line Virginware.

According to Mr Branson, the failures have sharpened his business skills. “Mostly, people are likely to venture into wealth creation projects that go head to head with existing big corporates.

And while it may seem flattering to receive attention from a bigger rival, it quickly becomes clear you made a mistake venturing into a certain field and your competitor will wipe you out.

“Virgin Drinks wanted to go head-to-head with Coca-Cola and this was pure madness. But my mistakes gave me the chance to bounce back and make smarter choices in my subsequent moves.”