As with human health, human wealth also has many forms and many meanings. We’ll cover the one we generally associate with wealth – ‘financial wealth’, and talk about the other forms of wealth more on our page covering Wisdom, because it is there that we can properly consider more esoteric ideals like love, morality, spirituality, right and wrong, conscience, human rights, cultural norms and traditions and how all these things interact with and are impacted and changed by financial wealth, either the abundance or lack of it.
For now let’s limit our scope to wealth in terms of your personal equity in property, stock & business and focus on the best way to accumulate it, without regard to questions of health, wisdom or nobility. If you have something to add please don’t hesitate to contribute constructively on our blog.
How do individuals get wealthy? Five main ways: inheritance, salary/wages – working for someone else, luck – gambling, theft and personal investment including owning your own business offering distinguishable goods and/or services (the closer to unique the better). While we are not considering morality on this page, we will only be discussing the last item on the list here, just solid and by the numbers personal investment, using relevant knowledge from proper research and proven method, the only legitimate way to become wealthy and stay wealthy. There’s no way to accomplish it overnight. It has to become a way of life, a new way of thinking, planned and practiced with skill and patience for the rest of your life. Success in this also requires resilience – a willingness to get it wrong, adjust your plan and remain loyal to your goal. It also depends on constant self-education, constant business environment research, and a good sense of timing.
What is financial wealth? While the whole point of getting it, is being able to spend it, no one ever got wealthy by going on a spending spree for non-investment items – consumables like furnishings, clothing, motor vehicles, luxury yachts, expensive holidays, jewelry, electronic entertainment devices and the like. The reason the wealthy tend to get wealthier is because they channel the returns they make back into additional investment, compounding their wealth. In terms of spending for investment, if what goes out adds to what comes in, then consider it an investment. If what goes out is consumed or diminished in value over time, then it is not an investment in your long term wealth.
The trimmings like the home someone lives in, the car they drive, the boat they spend leisure time on and the holidays they take, may or may not result from wealth, but are never the source of it so cannot represent it. We need to understand that. Wealth comes from investing, not consumer spending, and is built over time (not over night) using things that increase in value.
In Australia, our government education curriculum has not valued tuition for our children in money management, despite the importance of this skill. The need to understand and action a saving plan for long term prosperity, a basic knowledge of business and economics for investment strategy planning and a full comprehension of the magic associated with compounding interest on investment, would serve to provide a better outcome to most families here. Instead we have a few super rich, a few well off, a majority of the population working hard for someone else and just scraping by for extended periods, always feeling like something is missing because it actually is, and at the other end of the scale, a population that is in real financial need and accepting government support just to get by. Sadly, the latter often resign themselves to their lot and become despondent or angry with the way things are. Some may resort to gambling or theft, feeling this is the only way out. Subsequent generations may begin life with similar inherited attitudes adding to a growing social issue. Many countries face similar scenarios.
Don’t listen to voices that tell you that your time is so short that you’d better take some shortcuts to riches, offering you deals that sound too good to be true. Need can turn your hopes into desire so that you become blind to the truth even when it is not hidden. Don’t listen, because you become a victim to those who are stealing their way to wealth, gladly taking your cash whilst never really being willing or able to honor their promises. There are so many of them around – I’m sure you’ve come across them, and once they get your contact details, it can be a struggle to shake them off your tree.
A better plan, if you really are getting on in years and cannot hope to retire wealthy due to the time you have left, is to do your bit to turn the tide. Educate yourself and then your children and grandchildren on the proper way to wealth, starting from a young age with good financial habits that can make investment portfolios snowball given enough time and patience.