Prologue
Imagine you’re a wealthy individual, sitting in a luxurious office, a glass of aged whiskey in hand, overlooking the city lights. You’ve made money from your money, your wealth snowballing. Of course, you don’t want ordinary people to climb to your level and share in your pie.
So, you meticulously design consumer traps, like levels in a game, luring the poor into their trap. Each level holds a “candy” that glitters and is irresistibly sweet: 10,000 yuan for the latest iPhone, its screen gleaming like a diamond; 100,000 yuan for a used luxury car, its roaring engine making your heart race; 500,000 yuan for the down payment on a small apartment, making you feel like you’ve “finally got a home”; 1 million yuan for a lavish overseas trip, shared on social media for everyone to like…
These “candies” may seem like rewards, but they’re actually chains, keeping you from spending money as soon as you have it, never enough to build a strong foundation for a comeback. Today, we’ll uncover the truth behind these traps and teach you how to break out of this cycle and achieve true financial freedom.
How to Get Startup Capital
To break the rules of the game played by the rich, the first step is to save enough startup capital—your “battle gear.” This money is your ticket to the wealth game. Without it, you’ll only be trapped. There are many ways to get startup capital: you can grind through 996 hours, accumulating it bit by bit like an ant moving house; you can inherit an inheritance, like a lucky lottery winner; you can apply for startup funding and seize policy incentives; or you can borrow from a bank or friends and family, leveraging resources. The method isn’t important; what matters is determination and strategy.
So, how much startup capital is enough? Imagine you’re an adventurer preparing for an expedition. Your backpack needs to be filled with enough food and equipment to face the unknown. A simple way to estimate is to save three to five times your annual living expenses. For example, if your monthly expenses are 5,000 yuan and your annual expenses are 60,000 yuan, then the ideal startup capital is between 180,000 and 300,000 yuan.
This isn’t a random number; it’s a baseline calculated based on your living expenses and risk tolerance. This money isn’t for buying an iPhone or a fancy dinner. It’s your “seed” to plant and grow into a tree of wealth.
1. Controllable Cash Flow
Don’t be fooled by the term “financial freedom.” It’s not the TV drama of lounging on a yacht and drinking champagne. True financial freedom is more like resource management in StarCraft: your ore and gas (income) must be continuously produced to cover your barracks and technology (expenses), while also leaving some for emergencies like a surprise attack from an enemy (unexpected expenses in life). When your income consistently covers your expenses, and you can predict your cash flow needs over the next six months or even a year and adjust your resource allocation accordingly, you’ve reached the threshold of “pseudo-financial freedom.”
For example, Xiao Ming earns 8,000 yuan a month, pays 3,000 yuan in rent, and 3,000 yuan for living expenses, leaving him with 2,000 yuan left. Does he put this 2,000 yuan in the bank? No, that would never outpace inflation. Instead, he chooses to invest his money in a low-risk index fund, earning an 8% annual return, slowly accumulating his principal. At the same time, he carefully budgeted, cutting out unnecessary subscriptions and reducing his living expenses to 2,500 yuan, leaving him with even more savings. This is the essence of cash flow management: making every penny work for you, rather than being tempted to spend it by “candy.”
2. Make Your Assets Generate Value
Your assets aren’t just for show; they should be like machinery in a factory, running 24/7 to generate profit. Real estate, cars, savings, stocks, bonds, even that limited-edition action figure collection—they’re more than just “owned.” They can appreciate in value and be pledged to become a source of cash flow. For example, if you own a house worth 1 million yuan, don’t just let it live there. Besides renting it out to generate cash flow, you can also mortgage it for 500,000 yuan and invest that 500,000 yuan in a fund with an annualized return of 10% to earn additional income. Stocks and bonds can also be used to generate liquidity through securities pledge financing.
The key is, don’t be afraid of debt—it’s not a monster, it’s a tool. It’s a trap for luxury goods, but a springboard for investment.
But leverage is a double-edged sword. Imagine you’re playing a financial game of Tetris. If you stack too high, it could collapse at any moment. You need to plan for the worst: if the market crashes, how much loss can your assets withstand? Data speaks volumes, leaving a sufficient margin of safety.
Smart people use debt to magnify their wealth, while ordinary people use it to buy bags. This is the dividing line between the rich and the poor.
3. Delayed Gratification
The key to escaping the trap of the rich is learning to delay gratification. The biggest disadvantage of the poor is lack of capital to make their money profitable. Therefore, we need to tie ourselves to a “sandbag,” increase the weight, and build endurance, just like running training. When you save one million, don’t rush to buy a luxury car or a bigger house; those are just “candy” thrown to you by the rich. Instead, according to this article, consider that $1 million as your “fixed asset,” allowing it to take root and grow like a tree. You could invest it in an S&P 500 index fund (10% annualized return), along with 20% in US Treasuries (rock-solid), 10% in gold (inflation-proof), and even 5% in cryptocurrencies (high-risk, high-return options). This builds a robust investment portfolio and allows it to snowball.
What about spending? Don’t touch the principal; seek a bank loan. Don’t laugh; banks favor clients with solid assets like you. Suppose your $1 million investment portfolio has a maximum drawdown of 41.76% (referring to the 2000 dot-com bubble and the 2008 financial crisis). You borrow $400,000 at an annual interest rate of 4%, which is perfectly safe. With this $400,000, you still don’t rush to spend it. Instead, you use it as a “sandbag”: investing in high-interest products like QQQI (13% annualized), JEPQ (12%), or the more stable BKLN (7%). Assuming your portfolio returns 12% annually, minus the 4% loan interest, the net return is 8%. 400,000 x 8% ÷ 12 = 2,666 yuan—that’s how much you can spend each month! Add to that the 10% annual appreciation of your $1 million principal (approximately 8,333 yuan per month), and your wealth will be like an accelerating train, steadily moving forward.
Delaying gratification isn’t a life of asceticism; it’s strategic endurance. Every time you’re tempted to buy a new phone, remind yourself: It’s “candy.” If you eat it, you’ll fall into a trap. Invest your money and let it work for you. Time will yield unexpected returns.
Our Goal
Now, our goal is clear, guiding us like a beacon:
Continuously Increase Your Capital: Invest every penny of your surplus into your asset pool, from 100,000 to 1,000,000, and then to 10,000,000. Each increase will make your wealth snowball even bigger.
Supplement Your Income with High-Risk Investments: You can use 10-20% of your capital to try short-term trading or cryptocurrency to increase your monthly income. But remember, never touch your principal! It’s like playing a game: you can use minions to explore, but you can’t risk your main base.
Let Monthly Dividends Cover Your Living Costs: When your portfolio generates enough dividends and interest to cover rent, food, and utilities, you’ve escaped the rich trap. Your money is working for you, and you’re no longer a slave to your salary.
Breaking through the rich’s spending trap is like completing an extremely difficult game. It takes strategy, patience, and discipline, but every step you take brings you closer to the finish line. Start today by saving your first seed money, resist the temptation of “candy,” tie your “sandbag,” and let the snowball of wealth begin to roll!