Does Geographic Location Influence Success?

I was speaking to a relative of mine when this person (who shall remain nameless) expressed horror that after living near New York for so long, I would buy a house near my parents in the Midwest.  “I thought you were going places!” they basically decried in exasperation.

I was quiet for a moment and decided to try and lay out my reasons, hoping they “get it” so they stop using their location as an excuse for not having what they want in life.

Here is what I told them:

• I basically retired when I was 22 years old.  I never had to work for anyone else because my investments had been the focus of my life since I was a kid.  How would my location change the total profit earned by my investments?  Don’t I still own the same total shares of U.S. Bancorp?  Of Berkshire Hathaway?  Of General Electric?  Aren’t my operating companies still generating sales from the United States, Germany, Italy, Japan, and Great Britain?  Don’t my writings still generate the same royalties month after month?  The fact is, I could be sitting in the middle of the boondocks rocking on a wooden rocking chair and money is still going to pour into headquarters, waiting for me to do something with it.

• If I woke up tomorrow and wanted to have an apartment on Park Avenue, I would call a broker and it would be done.  It’s not that difficult.  Earnings would get paid out of the company as a dividend and I’ll have a pied a tier.  Likewise, if I wanted to work from the South of France, that could be arranged rather quickly, too.  Nothing is stopping me except for the fact that I am the type of person who would prefer to stay home reading by the fireplace and studying spreadsheets.  I like the Midwest.  Sure, I miss the culture of the East Coast, but that is why one of these days I’ll just secretly buy an apartment in a major city or a country estate in some place like Rancho Santa Fe, California and no one except my immediate family will know about it.

The only fool who would believe I would have some advantage in New York or Los Angeles is the type of person who sells their labor for a paycheck.  They have no idea how money, capital, investment, and compounding work.  And, honestly, it made me sad for them.  They are a good person.

Secret Millionaires are Everywhere

I mean, I know of at least half a dozen people in my old hometown with net worth ranges comfortably in the tens of millions of dollars.  You would never guess it if you ran into them.  One of them, as a matter of fact, had millions of dollars parked in a high-profile hedge fund despite living in an older house that is nothing special and driving an older model car.

You all already know that something like 1 in 25 people in the United States is a millionaire, and roughly 90% of those are self-made with no inheritance.  Look around!  You probably have some in your circle of friends but they are known “stealth wealth” because as soon as people realize what they’ve saved, they know they’ll be getting loan requests.

Do people really think you have to make your money in a major city?  Do they not read biographies?  Rockefeller built his fortune in Ohio and then moved to New York.  Carnegie was in Pennsylvania.  Gates was in Washington.  Buffett was in Nebraska.  Sam Walton was in Arkansas.

Frankly, I still don’t think they “got it” because if I were to buy a summer house in Connecticut tomorrow, they would somehow be convinced I was more successful than I am despite the fact nothing has changed.  Such a waste.  With that kind of attitude, they’ll never get rich.  It’s like people who buy a house but have no investments or who pick up a new car and have no savings.

They think the “stuff” is what makes you rich.  No, it is the assets that generate cash each month as you are sleeping at night. A total idiot could live in Podunk, Anywhere, USA and if he is the owner of a $6 million Hampton Inn hotel franchise, the odds are good he’ll be collecting $50,000 per month in cash earnings from the property.

He could drive a rusted-out pickup truck, wear blue jeans and baseball caps, be missing all of his teeth and be completely illiterate and he’d still be rich despite the fact that I know damn well some of the students that I graduated with from a private college would look down their noses at him because he was unsophisticated.  They would somehow be convinced he wasn’t deserving of his fortune because he wasn’t fortunate, as we were, to go to a school with a $40,000+ per year price tag.

Personally, I have much more respect for a local librarian that lives in a $120,000 house, drives a 10-year old car, has no debt, and has faithfully saved than I do a private-school-educated colleague of mine who makes $300,000 a year but has credit card bills and is a profligate.  I think it shows a character deficiency.  That’s just me.

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