Pick-Up 040: Filthy Rich
Hey friends,
Hope this email finds you well.
I loved reading The Psychology of Money. I’ve definitely learned a lot. It has redefined many notions for me. And again, I wanted to share an interesting definition I’ve found, this time, of the word “wealth”.
“Wealth is what you don’t see.”
Well, there you go! I actually thought it was what you can see! The fancy cars, the splendid homes, and spectacular trips. Literally, the prevailing Instagram scene. But no, it turns out the total opposite.
“Someone driving a $100,000 car might be wealthy. But the only data point you have about their wealth is that they have $100,000 less than they did before they bought the car (or $100,000 more in debt). That’s all you know about them.”
Housel explains how we have this tendency to judge people’s wealth through what we see, as it’s the only information in front of us. We can’t see their bank accounts nor their brokerage statements which is misleading.
“Wealth is the nice cars not purchased. The diamonds not bought. The watches not worn, the clothes forgone and the first-class upgrade declined. Wealth is financial assets that haven’t yet been converted into the stuff you see.”
He says that when people say that they want to be a millionaire, they’re actually saying that they want to spend a million dollars which is literally the opposite of being a millionaire.
He goes on to explain how not knowing the difference between rich and wealthy leads many to make poor money decisions.
“Rich is a current income. Someone driving a $100,000 car is almost certainly rich, because even if they purchased the car with debt you need a certain level of income to afford the monthly payment. Same with those who live in big homes. It’s not hard to spot rich people. They often go out of their way to make themselves known.”
It’s hard to spot wealthy people though because wealth is hidden. It’s the income not spent. The decision not yet taken to buy something. It’s what’s been kept (and invested) to offer more options and growth in the future
Hope you’ve found this useful.
Take good care. Byyye! Xx
🎥This months video
I have to be honest, writing the script of this video took more time than usual which annoyed me but I truly enjoyed the filming and editing parts.
I went a bit creative with the thumbnail this time. I tried illustrating a scene with the three words of the chosen title. That, I enjoyed as well.
Hope you like it. Let me know what your thoughts are by hitting that reply button.
💭 This Week’s Quote
“Not “growth” or “brains” or “insight.” The ability to stick around for a long time, without wiping out or being forced to give up, is what makes the biggest difference. This should be the cornerstone of your strategy, whether it’s in investing or your career or a business you own.”
― Morgan Housel, The Psychology of Money.
Thanks for Reading!
Thoughts and feedback on the newsletter or anything covered within are always welcome, just hit reply or leave me a public comment by clicking the little icon below the title. I enjoy replying to those as well.
As always, I appreciate you.
Stay curious and have a great week
Meriem.