We as a society are obsessed with the lifestyles of the rich and famous. That is why we’re interested in the lives of athletes, actors, singers and other celebrities. Part of it can be attributed to envy. Some of us want to have the lifestyles that these public figures project onto their fans.
At the core, I think many people want to have the money that celebrities have. They think it would be the solution to all their problems.
- Ulysses S. Grant.
- Michael Jackson.
- MC Hammer.
- 50 Cent.
- Lisa Marie Presley.
- Johnny Depp.
- Mike Tyson.
What do all these famous people above have in common? All of them went broke or filed for bankruptcy after reaching the heights of their careers.
Our public fixation on celebrities is that many of us confuse having fancy things like mansions, fancy cars, and expensive clothes with wealth.
What many people don’t understand is that your possessions don’t measure wealth. If they understood that you don’t have to have the same luxuries and toys as the rich and famous for being wealthy, they would look to other sources for inspiration to escape the rat race other than the rich and famous.
So if wealth isn’t about having lots of money and lots of toys, what is it? Is it the mansion you live in? Is it the Ferrari and BMW in your 5-car garage? The Tom Ford suit on your back? The private jet?
It’s none of these things. Nicolas Cage had all of these things and lost them all. Any of these things does not define true wealth. So what is it?
To answer the question of what defines wealth, let’s start with a question.
“If you stopped working right now, how long could you continue your lifestyle?” -R. Buckminster Fuller
R. Buckminster Fuller was a renowned 20th-century inventor and architect who was once asked to define wealth. In response, he defined wealth in the form of the question posed above.
And therein lies the key to wealth: If you stopped working, do you have an independent source of income that would allow you to continue your current lifestyle?
If an athlete suffered a career-ending injury, a surgeon severed nerves in his hands, or a lawyer was disbarred, how long would they continue to live the high life if they have no other source of income?
Anyone – no matter how famous they are or how many material possessions they own – who has only one source of income and when that source of income dries up can no longer sustain their current lifestyles IS NOT WEALTHY.
Having money to spend is not true wealth. Having enough passive income that allows you to do whatever you want indefinitely no matter what happens to the economy IS TRUE WEALTH.
True wealth is freedom – it’s the ability to live a life untethered – unbound by anybody else or anybody else’s schedule. It’s working because you choose to work and not because you have to.
A person living in a simple home, driving a simple car but having enough passive income not to punch a time clock has no less freedom than Warren Buffett. They choose to spend their time differently.
The wealthy are financially independent, and financial independence is when your passive income exceeds your expenses. At that point, you no longer need your job.
Passive income is the key to wealth. Consistent, reliable income streams uncorrelated to Wall Street are what the ultra-wealthy have long relied on for seeding and germinating wealth. And the ultra-wealthy don’t settle for just any passive income investments.
Treasuries, CDs, savings, and money market accounts are all passive income investments, but their returns don’t keep pace with inflation – making them wealth killers, not builders.
The ultra-wealthy avoid dividend stocks because they are just as susceptible to market volatility as common stocks. And in a downturn, the underlying companies of dividend stocks are known to suspend dividend payments. If you lost your job, you would not want to depend on dividends to sustain your lifestyle. Instead, you should consider alternatives to Wall Street.
The ultra-wealthy favor passive investments in asset classes backed by hard assets like real estate and private income-producing businesses (private equity) over stocks. That’s because these assets offer reliability and consistency shielded from market volatility – ensuring continued cash flow appreciation even during downturns.
Without passive income streams, you will never achieve wealth and the financial independence to live life on your terms. It doesn’t matter how big your house is right now, how many cars are in your garage, and how big your boat is, if you lost your job tomorrow and wouldn’t be able to continue your current lifestyle, you do not possess true wealth.
If you seek true freedom, aspire to attain true wealth and not to acquire possessions.