How people go from multimillionaires to being broke
View pictures in App save up to 80% data. Here's a few concepts that people fail to grasp that can wipe out a fortune:
Diversification: Any single business can go under. Chances are that it will if it's an upstart. You can put a million into a business idea or you can put it into a stock index fund that spreads it over hundreds or thousands of businesses that virtually guarantee you won't lose it all.
Leverage: You can put a 10% down payment on a house, which means you are leveraged 10–1. If the market corrects and falls 10%, you lose 100% of your equity!
Taxes: How many times have you heard of celebrities in tax trouble? My theory is people fixate on a total income or wealth number (“I HAVE a million,” or “I MAKE a million per year.”) Somehow they forget about the taxes and don't want to adjust their numbers.
Full life cycle costs: As an IT professional, I'm very aware that the cost of a system is much higher than the initial setup. The cost of a sports car or a mansion or yacht have incredible insurance, tax and maintenance fees too. The ongoing cost may even exceed the upfront cost.
There are more, like parasite “friends” and scammers, but these seem like biggies.