Does Money Make You Rich?
August 18, 2009 by Vagabond Investors · 1 Comment
For a decade, I’ve been obsessed with the question: What makes a person wealthy? I confess that although I think that in order for one to be truly wealthy, money comes after excellent health and deeply fulfilling relationships, I am a big fan of money. Philosophical attributes about wealth aside, I am going to talk about wealth in terms of the raw and almighty dollar (or any currency for that matter).
So does money make you rich? We all know people who work 40-60 hours a week, in other words they work hard for money, but fail to become rich. Ironically, many only get deeper into debt with each dollar they get their hands on. We have all heard stories of people who invested in commodities, stocks or real estate and lost it all. Maybe you are one of those people
Money alone does not make a person rich. Hard work does not make a person rich. Businesses, stocks, real estate, commodities or any investment does not make a person rich. You read that right. The explanation is very simple, yet something most people, my former self included, miss.
I’ve seen people win and lose with the same stock in the same market. I’ve seen people buy excellent investment properties and turn them into nightmares (foreclosed investors note). I’ve seen people own profitable businesses only to lose everything the next year. I bet we have all seen people who work hard and never get ahead financially.
So, it’s not the business, investment or hard work that makes you rich. It is information, knowledge, wisdom and know-how, in other words financial intelligence, that makes one wealthy. The asset is not valuable, it’s the information relative to the asset that is valuable.
Too many people invest with little financial education. Partly this is because they have to (remember, arbitrary low interest rates encourage speculation). Many people are also becoming to realize that Social Security and Medicare may not be around when they retire.
I think it is absolutely necessary for average people to learn the basics about money and investing. I am astounded that schools teach little to nothing about money and investing. Instead, people are funneled into jobs and encouraged to spend everything they make. If anything is left over (there seldom is), they are told to hand over their money to strangers who wear suits and sound intelligent. Most people work hard for money for 40 years and never learn the basics of making their money work for them.
It’s no use to blame others or justify the situation. It is time to take responsibility and get educated. Read books, attend seminars and learn the basic language of money and investing. You will soon realize that you know more than your financial planner and you are on a high-way to lifetime financial security, and if you dare, total financial independence.
I invite you to read our educational blog about financial intelligence and markets on our website: www.lessoninwealth.com
Best
Jaakko
