Money Tips And Tricks You Can Steal From Bill Gates

A college dropout, and yet one of the most successful business innovators to ever walk the Earth, Bill Gates became a billionaire in 1987, just a year after taking Microsoft public. He then went on to become the richest person in the world for the majority of a run from 1995 to 2017. Today, Gates finds himself in 4^th, with a net worth of $141 billion. Gates has spent his time in the business world innovating and diversifying. From the first software products to come out of Microsoft to the modern slate of offerings, the brand has remained a pioneer through and through. Gates himself is certainly a groundbreaker, too. From his early days at Microsoft's helm to a contemporary investor and philanthropist who has almost completely stepped away from any ties to his creation, Gates is a great person to emulate.

His charitable work, for one thing, serves as a phenomenal example for anyone hoping to spend their life working for the betterment of others. But this isn't the only reason to study the example that Gates has set. When it comes to financial management strategies, he is a highly copiable investor and saver. Whether it be his insistence on keeping cash reserves for a rainy day or his efforts to diversify a portfolio that was once dominated by Microsoft holdings, these are some great tips and tricks you can take from his experiences.

At surface level, Bill Gates' investment approach might seem hard to square. The Microsoft founder prides himself on balancing roughly equal parts optimism and pessimism. When it comes to investing for the future, he is all in on the marketplace's ability to continually grow and produce meaningful returns over the long term. However, Gates is also famously shrewd in his view of the short. In the early days of Microsoft, Gates found it imperative to keep a full year of operational expenses in cash reserves. Rather than opting for a full-court press on the establishment and growth of the brand, Gates was pessimistic about Microsoft's short-term viability while believing with all his heart that the company would ultimately succeed.

He's been known to express concern for the people who worked with him during these early days, citing their reliance on the business and its viability for their paycheck and financial stability. He took his colleagues' commitment to the business and their financial security seriously, opting to maintain enough working capital to continue funding salaries even if profits couldn't support it at the moment. Individual consumers can take this example and apply it to their emergency savings fund. It's important to believe in your ability to never require savings for a difficult time, but ensuring it's there to support you all the same is a core financial competency.

Failing to compare prices operates as either a simple act of laziness or a rookie mistake made by someone who doesn't yet know the value of spending that extra time researching alternatives. Whether in purchasing a new item for yourself or your home, or investing in some kind of financial asset, comparison shopping is essential.

Bill Gates understands the value of comparison and research, and he points out the importance of this strategy as not just a financial tool but one that will serve you in all phases of life. Indeed, comparing products isn't just an exercise in finding the best bargain on something. When investing in a new pair of shoes or phone, for instance, not only will you want to explore outlets that carry the same product, but it's also worthwhile investigating alternatives to the item you have your eyes on. At their core, the newest Google and Samsung phones both run on Android operating systems and will provide roughly similar user experiences — even if the polished product looks and feels a little different. Each device will have its core strengths, but in the grand scheme of things, there isn't much separating the two. Similarly, when it comes to purchasing cheaply or opting for a product that will last longer, you're likely to derive more value from the better-made selection.

Bill Gates marvels at the progress of technology. As a pioneer in the microprocessor space himself, this shouldn't come as a surprise to anyone. But Gates isn't singularly focused on the technological breakthroughs and innovations that have driven change in the computing space and other industrial technologies. Instead, Gates is fascinated with the thought processes surrounding goal-setting and measurement tasks. He reckons that industrial progress hasn't come solely from the hands of intelligent and innovative individuals. Rather, the cog that has turned the wheels of progress lies in progressive goal setting and measurement. Clarity of purpose and outcome has ruled the days of technological development. As a result, Gates has routinely made goal management a priority in business and investments.

Setting yourself clear, attainable, and measurable goals will help you develop the kinds of financial and personal returns that you hope to achieve. When paying off credit card debt, for instance, there's no use in looking at the whole pie and theorizing how you'll tackle every balance on the table. Instead, set bite-sized intermediate goals that can be efficiently measured. This way you'll see your progress as you move from start to finish in clear and concise steps.

Considering that Bill Gates was for many years the richest man alive and the head of a truly dominant company, it might be surprising to learn that he advocates for portfolio diversity above many other investment features. Gates spent his entire working life singularly focused on building Microsoft into the force it is today. But when he ultimately stepped away from the company in 2020, he had divested so heavily from the brand that he only owned about 1% of its total stock volume. Over the years, Gates has not only donated Microsoft stock to his charitable foundation, but he has also sold assets to diversify his portfolio for greater long-term stability. Some of his holdings include AutoNation, Canadian National Railway, and even farmlands throughout the United States.

A diverse portfolio gives you natural protection against downturns in the market. Portfolio diversity can be achieved in any number of ways. What this means is that you'll own multiple assets rather than placing all of your investment funds into one company or a single market sector. You might even consider alternative commodities rather than placing all of your investment in stocks. Things like real estate, gold bullion, and even more obscure assets like fine art, old currency, or collectible cards can make their way into a diverse portfolio.

In the same way that Bill Gates suggests learning from your mistakes, he is also quick to point out that successes can act as a highly problematic teacher. He notes that learning from successes can cause you to double down on your confirmation bias rather than explore new ways of thinking and achieving. By learning only from your successes, you dig yourself into an entrenched position that leaves you open to significant vulnerability. Success is a double-edged sword in which the fruits can be plentiful but compounding achievements can make you complacent and blind to new threats that may present themselves.

Case in point, stock market crashes often take place after prolonged and extreme periods of growth. The dot-com bubble, for instance, saw a decade of rapid development in the internet space come to a screeching halt, largely without warning. As an investor, saver, and consumer, you need to be ready for things to change in an instant. More importantly, these changes can introduce prolonged and profound effects, especially if you haven't prepared for contingencies to handle them.