Summary: True wealth is best kept quiet; it avoids awkward conversations, requests for money and possible kidnappings for ransom. The joy of buying expensive things is also fleeting and what you own ultimately belongs to you. And the way to stay quiet is simple: don’t talk about it.
When I read The Millionaire Next Door by William StanleyI was amazed at how many millionaires were living in plain sight.
When you think about the people’s exposure to wealth, it’s pretty ostentatious. We have been trained by television and social media to think that millionaires lead lives of excess. Big mansions, expensive cars, lots of jewelry and non-stop parties. The reality is much more nuanced.
There are very rich people who live lavishly. They get a lot of publicity because it’s interesting.
There are many richer people who are not flashy at all. For every Kardashian, there are hundreds of rich people living modest lives.
At the risk of citing one extreme example to prove a point, I’ll point to one of the richest men in the world: Mr. Warren Buffet. He’s north of $160 billion and lives in a modest house. His only vice is drinking high-calorie Coca-Cola.
We know of Warren Buffet’s wealth not because of his flashy lifestyle, but because his company, Berkshire Hathaway, is a publicly traded company. You could easily drive past that house and have no idea that the man who lived there was worth more than the annual GDP of many countries (source).
There is a name for this phenomenon: Stealth Wealth.
And there’s a reason why so many people hide their money…
Table of contents
Wealth is stealth until you reveal it
No one has any idea how much you earn. Unless you reveal bank account and brokerage statements (which would make you a socially awkward lunatic, and frankly, a target), they can only guess. They can only guess based on what you reveal in your purchases.
When you think about who is rich versus who is rich, the only signals are what they show you.
There’s a reason real estate agents drive expensive cars.
They may be rich, but they want to project success even if they are not financially stable because you choose real estate agents based on their ability to sell. A real estate agent only makes money when he sells a house.
In that scenario, driving an expensive car has a purpose beyond vanity.
When I suggest that you be secretive with your wealth, I do not mean that you should conceal it against your own interests. I’m not suggesting you hide it because everyone is out to get you. It’s just better to be inconspicuous about it.
Benefits of Stealth Wealth
You avoid uncomfortable conversations and situations. Money makes people weird. If it bothers you, especially when it comes to people in need, you can create strange and uncomfortable situations that you don’t want.
Do you want friends and relatives to ask you for loans or to invest in their new (probably bad) project?
Do you want to have to tell them no?
What if they are in a dire situation and need “just a little” help to get out? What if you think that little bit of help doesn’t help, but actually makes it possible? What if it’s your brother or sister? Or your parents? Or a childhood friend?
If it looks like you have wealth, people think they can get some of it. In some cases it is innocent, like an old friend looking for investment in his new project. But some aren’t, like an old friend looking for investment in his new project – do you know the difference?
No one can see your bank account unless you show it.
You do not pay driveway tax. The “driveway tax” is the surcharge that contractors add to a job when the driveway is super long and super beautiful. With services that don’t have a fixed price, people know how rich people can pay more for the same things (they are price insensitive). It’s human nature.
They are not being dishonest when they do this, they are just responding to market forces. It’s no different when you compare the price of services in Manhattan and Omaha. Is it fair to charge more prices in an area with a higher cost of living when the work itself will be the same? Naturally. Your expensive home comes with a higher cost of living.
Do they like you or do they like that you have access to money? Imagine the recently wealthy lottery winner who goes to a bar and meets a potential partner who they think is “out of their league” – are they interested in him because he is great or because they have a great amount of money?
What about the tech entrepreneur who meets an old friend and discovers he’s perfect for this new business venture?
This is a common concern for individuals who have wealth. It’s hard to know who likes you because of you and who likes you because of your net worth.
There’s a reason why LeBron James’ entourage and business partners are made up of friends he’s had since childhood. These guys, like Maverick Carter, were initially ridiculed as business partners because they lacked experience. Since then, they have proven themselves to be more than capable of the task.
Some of that is loyalty and a ‘don’t forget where you come from’ attitude, but a lot of it has to do with trust. How can you tell the difference between a legitimate operator and Bernie Madoff?
You can’t.
You won’t be kidnapped. Kidnappers don’t kidnap poor people.
This is a morbid way of saying you won’t become a target. Whether it is a target for kidnapping, fraud or other malicious intent; if you are flashy, you are a target and that can be for a number of reasons.
Don’t give them a reason!
You won’t feel the pressure to maintain that look. Stealth wealth is very affordable. If you throw your money around, whether it’s for good or for attention, you should keep throwing it around. That attention is like a drug and the only way to fuel it is to burn money. New stuff becomes old stuff and you will have to buy more stuff.
When you provide financial support, it leads to more financial support. How many stories have you heard where someone gave someone else $500, got up, paid it back and everything went well? Not too much because it is rare. $500 is usually a precursor to more. Or it’s a precursor to an awkward conversation.
Once you separate your wealth from the number, you realize the truth about money. Money is not about what you can buy with it, but about what it makes possible: your freedom. So many people are looking for financial independence, so much so that there are dozens of great FIRE blogs showing people the way. Early retirement and independence comes down to having enough money not to work.
As children, we focus so much on grades and doing well in school because it sets you up for the next stage in life. Good grades in high school lead to good college. Good grades in college lead to a better job. A better job means more money. But once we leave school, there is no obvious next phase. The next phase is not in your career, but in your life.
Achieving financial independence so that you can control all your time is the next step. You can keep working if you want, but wealth gives you options. Collecting more stuff and converting that wealth into material possessions limits your options.
Disadvantages of stealth wealth
No.
Seriously – name me one and I’ll add it.
Okay, maybe there is one. And I would say this answer is a lot like the BS people say when an interviewer asks about a weakness.
The downside is that you don’t like to be the center of attention. There will always be someone who wants attention, and they may think that being flashy will attract attention.
They’re right. Being flashy will attract it.
So if you practice stealth wealth, you will go unnoticed and rarely looked at by others who want to get a piece of the action. 😄
How to become financially invisible
Let’s say I’ve convinced you that stealth wealth is the way to go: how do you keep your money secret?
There are guides telling you to do this or that, but it all comes down to one thing: shut up.
Unless you are a civil servant, your income is unknown.
If you don’t share your address, no one can look up how much your house cost in property tax records.
Even if they did, there are plenty of people who own hugely expensive homes, who are not wealthy and are on the brink of financial ruin…just look at what happened during the last housing bubble.
If you want reminders of your net worth, let it be when you track your net worth or when you log into an aggregator tool like Empower Personal Dashboard, not with the things you own.
There’s an old saying, “All hat, no cattle.” The people who show off the most often have little to back it up. All talk and no substance.
The reason some people talk all is because it gives the appearance of wealth and prestige. If you drive a modest car, live in a modest house and wear modest clothes, no one will have a clue.
The real signs of wealth are very obvious. It means greater control over your time and the emotional power to use it on the things you want, rather than the things you feel you should be doing. It goes with you on all your children’s excursions. It is ordering meals in a restaurant without looking at the price. It’s taking a walk or going to the gym in the middle of the day when the only people around are retirees. These are signs of wealth that reveal nothing.
If you want to stay rich, be stealthy. 🙂
#Stealth #Wealth #real #wealth