It’s been sought after and clamored for throughout recorded history. People are killed for it everyday, and some say it’s the motive for every war.
Though virtually everyone seeks it, I wonder how many have stopped to consider what it really is.
You may have joined the BiggerPockets community to find your own path to this often elusive goal. But have you taken the time to first define what wealth actually is?
This is really a simple article, and honestly, I could have summed it up in one paragraph. Maybe even in a sentence.
I’ll get to that one sentence in a moment, but first, let me tell you where I’m not going in this particular post.
Those of you who know me know that I am first and foremost a spiritual person. My faith drives everything I do. My family, my goals, my business, income, and giving are all defined by otherworldly priorities. (I’ve written on this topic before.)
I could make a case that true wealth is giving back. Like Ebenezer Scrooge learned on that fateful Christmas eve, most of us know that enriching the community and loving others will bring us the most fulfillment in this life.
I have chosen a path of investing my time, talent, and treasures to change the world for the better. I consider that a wealthy life.
But that’s not my point here.
I want to discuss the nature of true wealth in the material sense. And I believe that having this form of material wealth will provide you more options to attain wealth in the eternal sense. Options that sometimes elude those whose days and nights are consumed by merely making ends meet.
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What is Not True Wealth?
Whether we admit it or not, I think we are all susceptible to believing that those with fancy homes and expensive cars have attained true wealth. It’s easy to mistake the material trappings for true wealth, and while these may be an indicator of wealth, these symbols in themselves are not wealth. And we all know people who have faked it in an effort to look the part.
I recall the time I bought a late model Mercedes when I was in a particularly lean financial season. I was catering to those with wealth in my work role, and I reasoned that I needed to look the part.
I pulled into a private event (I was a speaker) with dozens of high net worth investors and assumed I’d fit right in. I was surprised to see that the average car on the lot was a Toyota. There were a few Volvos and BMWs, but more Chevys and Fords. (Was I at the wrong place?)
I noted the same thing in the parking garage at Google headquarters in Mountain View California recently.
Many (admittedly not all) who have attained true wealth have nothing to prove in the realm of showy material possessions.
And many BiggerPockets readers are aware that a pricey car and other tokens of wealth are often not assets anyway. They are depreciating liabilities.
Actually, in many cases, they are assets—of someone else: the local banker. They provide a profitable income stream for him, and so you become the means to increase his or her wealth. (How does that make you feel?)
Related: Millennials Are Poised to Be the Wealthiest Generation Yet: Here’s Why
So, What is True Wealth?
Like I said, this could have been a very short post. I can summarize this in one sentence. Even better, one short equation. For you, learning this equation may be more valuable than understanding E=mc2. Here goes:
Wealth = Assets That Produce Income
If you don’t read any of my other rambling below, I hope you will recall this simple equation. And I hope you think about its implications for your business and investing.
If you do wish to read on, I’ll develop a few more thoughts about my thesis.
Attaining assets that produce income means owning things that other people are willing to (actually must) trade a portion of their…