If you ask how much Anil Ambani's wealth is, some people know that Anil Ambani has filed a bankruptcy suit, and Donald Trump has been told in court 8 times that he is bankrupt, but their standard of living is still high. What enables them to do this is the knowledge they have about protecting their wealth and the legal system. This attitude is not necessarily typical of middle class people, middle class is a way of thinking rather than a social category. In this case, there is no need to understand how to increase income or increase the number of sources of income. Let's take a look at 8 things to keep in mind to avoid falling into the class trap in the middle:

Risk Reward Curve

A risk reward curve is a chart that illustrates the principle that any income has a risk that is proportional to the reward received. Let's take an example: Rich people always keep their portfolio balanced while investing in the stock market. They invest their money equally in high risk and low risk, which helps them to deal with the market fluctuations without incurring losses. But the middle-class minded people do not understand this and put their entire investment in a risk-free option like FD or invest the entire amount in a new app or a high-risk stock in the name of social pressure. Both of these ways will put you in the middle class trap. Investments like FDs are not only long-term but also offer small returns. If you invest all your money in a new app with high risk, then all your savings will be gone in a day. So it is very important to understand the risk reward curve.

Buying a house

Buying a house is the dream of every middle class person. Most people have to pay home loan EMI for a large period of their life by keeping a house that is not in their budget at the first stage of earning. But in the early days when the rich started earning, they all lived on rent. By staying on rent in this way, the EMI is saved from falling into the trap and the money coming to keep the house is invested in many ways and gets income from it. They keep the house only when they reach the stage where they can keep two or three houses with their savings. It is not a good decision from the financial point of view to think about putting the house in the middle class trap at the first stage.

Decisions that destroy all savings

Let's take an example, you have got admission in two colleges, one is the best college in the country with very high fees, there is no scholarship here. Those who are in the middle class trap often think that if they study in the best college, they will get a good job, so they can pay the loan taken to pay the fees, so they can go to the high-fee college. But by doing this, you will be forced to pay the loan without being able to invest the income received after the study. In such a situation, it is important to make a decision that can destroy your savings. Also, it is foolish from a financial point of view to not take insurance to deal with unexpected losses. Insurance is a must to deal with unexpected things like job loss, accidents, and death.

Don't invest in real assets

The common perception is that investment is always in real assets, but that is not true. This can be elucidated by an example. If you ask a middle-class thinking person whether real gold or virtual gold like Sovereign Gold Bond is a good investment, they are more likely to say SBG. It is true that most people think that SBG is bad because it is difficult to store and handle real gold. But the rich who understand that the price of gold rises due to fluctuations in the global market will always invest in it. Similarly, the difference between real estate and the stock market is that while most people are attracted to the stock market, the rich always invest in real estate.

They don't understand the way money goes.

There are few people who haven't heard of hedge funds. What is Hedge Fund or Hedge Management Hedge management is the practice of entrusting someone else to manage your money. When the rich hand over money to an intermediary to invest in this way, they closely monitor where their money is being invested. The common people invest but they end their investment when they hand over the money to a fund manager. As a result, investors are not aware of the hidden fees or the ways in which the money is invested.

Personal loans

This can be explained by the story of Anil Ambani, which was told earlier. Anil Ambani has filed for bankruptcy but his personal wealth remains intact. This can only be achieved through business. Taking loans in the name of business without taking it in your own name will help you to avoid debt in the future. Avoiding taking personal loans in general will help you avoid being trapped in the middle class.

Don't know enough about investing

Recently, there have been many advertisements to invest in this start-up. Many times the middle class thinking people are ready to invest in it. But they don't know what to invest in or how to make money in the future. They may be angel investors who invest in the hope of getting high returns and are not even sure if they can sell these shares in the future. The rich invest only where they can understand the money.

Not having more than one source of income

At a time when inflation is on the rise, increasing income is more important than saving. It is important to have more than one source of income. The average person in the world has 8 sources of income. But the average person is always more focused on one task.