Site icon Kairos – By Brian Niemeier

Hiding Wealth

Hidden Wealth
*Disclaimer: The following is not intended to be, and should not be taken as, investment advice.*

Perhaps the greatest disservice done to inmates of the American educational system, besides teaching them to hate themselves, is keeping them ignorant of wealth.

This ignorance isn’t limited to the means of wealth creation. Most people have a false notion of what being wealthy really means.
Here’s a test to see if you’re one of them.
Andrew earns a salary of $250,000 a year at his corporate job. He leases a new Nissan Murano and rents a 3,000 square-foot house. Subscriptions to Disney+, Netflix, and several MMOs keep him entertained. He orders from Uber Eats most nights. After rent and student loan payments, credit card bills, utilities, insurance premiums, and video game DLC fees, he has $400 in cash at the end of each month.

Bill makes $48,000 a year as a writer. He doesn’t earn a wage but draws royalties from his 21 published books each month. He cooks at home, only buys new clothes when the old ones wear out and doesn’t have Disney+ or Netflix. Unlike Andrew, Bill drives a 10-year-old pickup he paid cash for, owns a house valued at $60,000 that he bought for $45,000, and makes regular contributions to an indexed mutual fund and a Roth IRA. Like Andrew, Bill ends up with $400 in his pocket after monthly expenses.

Who is wealthier–Andrew or Bill?

Most people, upon first meeting Andrew with his fashionable clothes and cool ride; and Bill stepping out of his decade-old Tundra in a Wal-Mart jacket, would assume it’s the former.

And they’d be dead wrong.

Because except for the clothes on his back and a collection of rapidly depreciating home electronics, Andrew doesn’t own anything.

Cue the objection: “But Andrew pulls down 250K a year!”

Yes, and he’s got no more to show for it than a coke dealer who funnels all his money up his nose.

Rule 1 of accumulating wealth: Don’t get high on your own supply.

Rule 2: Know the all-important difference between wealth and income.

  • Income: Cash flow derived from some activity
  • Wealth: Appreciating assets that generate passive or semi-passive income
In the two examples above, Andrew’s work gives him respectable cash flow. Too bad for him, he spends that cash on perishable consumer goods, recurring charges that don’t create equity, and depreciating liabilities.
Bill, on the other hand, has multiple sources of wealth. His books, once published, continue to earn royalties which constitute a modest but passive income stream. They also include bundles of rights which Bill could license for additional royalties, residuals, etc.
Note to authors: Do you think of your books as long-term investments? If not, start now.

Vehicles depreciate, so Bill’s truck isn’t his biggest asset on its face. He could still borrow against the pink slip if he gets desperate or sell it for a little quick cash. More importantly though, it’s a truck. As Nick Rochefort says, if you’ve got a truck, you’ve always got a job. 

Say Bill’s friend needs a load of tools hauled across town. Bill can take the gig for gas + 50 bucks. People need stuff lugged around even in the hardest of times. Absent other income, Bill won’t be putting on the Ritz, but he won’t starve, either.

You are not allowed to go car shopping until you watch this video:

Then there’s Bill’s house. It’s probably his most versatile asset. For starters, he’s got equity in it. Let’s get creative, though. Say he decides to rent the place out for $1000 per month. That alone increases his cash flow by 25%. That’s not all, though. The house’s value increased by $15,000 since he bought it, raising his net worth. Maintaining a rental property affords him certain tax breaks, as well.

In light of the preceding, it shouldn’t be surprising that home ownership is the single biggest contributing factor to household wealth.

If you’ve been following this blog for a while, you probably aren’t surprised that Generation Y has the lowest home ownership rates of any extant cohort, either.

Gen Y were the first test subjects of the global elites’ current indoctrination scheme. That long-gestating plan is now coming to the fore as our rulers unveil their aim to prevent their subjects from owning anything.

Mass media and the schools spent decades hiding wealth creating knowledge and conditioning everyone to mistake conspicuous consumption for wealth. Hence the disturbing lack of opposition among people under 40 to being reduced to neo-serfdom.

All the more reason to learn about and start obtaining wealth while it’s still relatively easy. Author David Stewart expands on these concepts in his recent video. Give it a watch.

If you’re an author, publishing your own books is an often overlooked way of generating wealth that’s now totally within your control. If you’re ready to go pro, take advantage of my professional editing services. I used the same skills to write and publish my own best selling books.

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