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 4th, 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.

Invest in your education

Seeking out opportunities to grow as an individual is an exhilarating and enriching feature of life. Regardless of age, income, or any other facet, educational attainment in all its forms can make for a truly enjoyable life. Investing in education is something that many wildly successful entrepreneurs and investors speak about regularly. Mark Cuban, Warren Buffett, and a bevy of other highly visible personalities talk at length about the importance of educating yourself and continuing to feed your natural sense of wonder, even into your adult years. Bill Gates is no different, and can often be found speaking about his hunger for new knowledge. Gates suggests that feeding the inherent craving for educational attainment is a great way to ensure that you're always up to the task when it comes to new challenges.

Prioritizing education isn't just a tip that involves money management. Whether it's an insatiable appetite for new information on stock market performance and individual asset indicators and data or a love of reading fiction that gets your mind moving, learning and exploring is an essential part of the human experience. It's worth mentioning though that while formal education in a collegiate setting can easily serve as this learning opportunity, Gates famously dropped out of Harvard in his junior year to focus all of his attention on Microsoft. MStill, many college degrees provide a pathway to middling earnings as a general rule.

Invest like an optimist but save like a pessimist

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.

Patience and bold action are two sides of the same coin

In the same way that Bill Gates matches optimism with a sensible dash of pessimistic planning, he also advocates for investors and business leaders to combine decisive, bold action with a notable pinch of patience. "We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next 10," he reminds anyone who will listen.

This is sage advice when it comes to strategizing around your long-term investment goals. When investing for your future, you need to maintain a patient attitude in order to enjoy maximally rewarding opportunities that come through long-term growth. It's well known that professional investors rarely beat the stock market's return over the long term. An individual stock picker might best the S&P 500 or NASDAQ indices over a year, but the longer the timeline, the less likely even experienced money managers are to consistently outperform the growth rate of the market. Time is such a valuable asset, especially for retirement planning, that savers should start as early as possible to take advantage of a long and successful investment term. Gates knows the value of long-term thinking like this, but he also is quick to remember that decisive action in the short term has a place. When the time comes to make a move, you need to have the confidence to act.

Always comparison shop

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.

'Heed the lessons of failures'

Bill Gates is a major proponent of self-reflection. Anyone who participates in modern society will run into some kind of setback from time to time. The measure of your strength of character isn't defined by how many problems you face or even their magnitude. A successful entrepreneur, investor, and individual will give their all to avoid mistakes whenever possible, but when one does occur, these people — Bill Gates included — look for ways to internalize those lapses in judgment and use them to their advantage.

A mistake is an opportunity to learn and grow. Mistakes create hardship and heartache, but they can be tremendous learning opportunities that help you develop new pathways of thinking to minimize future sticking points. Most directly, learning from a mistake allows you to avoid making that same choice in the future. However, the most analytical out there will be able to derive additional meaning from their mishaps. In the stock market, a bad investment might result from weakness in a company's supply chain, its sector or industry, or even as a result of certain financial metrics that can be measured and identified in future investment opportunities. Taking stock of the things you've gotten wrong can help you adapt and learn to do better in the future.

Set clear and measurable goals

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.

Seek out and listen to feedback

Whether it's taking lessons from your investment returns and learning to avoid new purchases that may be overly risky without the appropriate reward attached or listening to a friend or mentor, it's essential to keep an ear to the ground in search of feedback. Friends, family members, and colleagues can be a particularly valuable asset in this regard. Bill Gates is quick to acknowledge the support he received from his parents as he made the life-changing decision to leave college. They were in his corner even before this step, too, when his interest in computing grew into something more than recreational.

People you know and trust can be great sounding boards for your ideas and help you refine them in a safe and nurturing environment. However, familiar faces aren't the only resources that you should be seeking in this regard. Gates suggests that listening to professionals in your field is one of the most valuable assets available. With the ability to look up nearly anything online, finding someone willing to share their expertise in just about any discipline is easier than ever. Seeking out podcasts about money management, watching YouTube videos to hone your sporting abilities, or reading articles about the industry your dream job falls within can be potent learning experiences that kickstart a lifetime of passionate practice.

Diversify your portfolio

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.

Start investing early to grow your wealth

There's no getting around the reality that anyone who wants to develop a thriving retirement account will need to start investing early. This isn't just advice for retirement savings, however. The weight of compounded interest is truly immense and will work heavily in your favor if you let it. Bill Gates once said, "if you were born poor, it's not your mistake. But if you die poor, it's your mistake." What he's getting at here is the reality that anyone can set aside a burgeoning savings account — whether that be for retirement or general investment savings. Growing your wealth is a matter of discipline and time. The longer you let your money work for you, the more it will grow.

Gates hit the nail on the head with his assertion. No one chooses the circumstances in which they are born, but within reason, everyone can influence the trajectory of their life in large or small part. It's within virtually everyone's control to set aside at least a little bit of cash with every paycheck. It's unlikely that you'll leave this Earth with as much money as Gates has accumulated, but everyone can change their stars in one way or another. To do this, the most important tool at your disposal is time, so start investing early.

Don't read too far into your successes: Success 'is a lousy teacher'

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.

Stay passionate about what you do

Most importantly, Bill Gates is a passionate human. He suggests that the best way to succeed in your career, hobbies, or investments is to remain passionate about the things you're engaged in. For Gates, passion is a key feature of success. In addition, he notes that maintaining confidence in yourself and your plan is essential to creating consistently positive momentum.

In anything you choose to take on, finding your passion in the field or activity will make the effort enjoyable and fruitful. When it comes to investments, for instance, you might find increased success by focusing on assets that revolve around your interests. This is not only a great way to begin a voyage into investing, but a solid force for good when it comes to creating a lasting sense of passion. Combing through earnings reports and scouring lists for potentially hot companies can quickly become stale. But if you're focused on assets that fall within your interests, these learning opportunities can become fact-finding missions that bring you even closer to the action.