Wealth In A Nutshell

The truth is that very few people understand what wealth even is. So let me define it for you: wealth is the ownership of assets. And assets for most people, including myself, are simply real estate and stocks. And the key word is ownership. And this is the key part of understanding wealth, someone who holds lots of cash or has a pile of money in their bank account is not wealthy. Because money is not an asset, and the value of money will only ever go down. So a person with lots of money should invest that money into an asset that will produce more money, or the purchasing power of their money will only ever decrease over time.


And that's it, that's the whole principle of wealth in one paragraph. Why should someone become wealthy? Because having an income, especially a high income, is fantastic, but that's not being wealthy. Having all of the money come in is a fantastic feeling because your purchasing power has increased so you have the ability to buy more and more things. However if you only buy things that go down in value, or buy nothing and let your money decrease in value itself, then eventually you will lose your purchasing power. But assets such as stocks and real estate have the potential to rise in value, which will not only protect you if your income ever stops coming in, but it'll also add to whatever income you are making to produce even more money. And when assets grow continuously the gains begin to compound, growing faster and faster.


Once someone has enough assets that produce money for them, they usually stop working for money. And a person who no longer needs to exchange their labor for money is a person who is free.

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