What The Rich Really Collect
Everyone focuses on the stuff the rich people collect. Yet, the biggest secret is that the rich are really collectors of rents, royalties, dividends, and interest. Whether song rights, hotel ownership, businesses, sales commissions, stocks, timberland, or patents, these are the things they truly amass. Instead, people read or watch television shows about the original works of art and the wine cellars, which are mere side hobbies that occupy very little time. Do not focus on what the rich buy for consumption, but rather, what they buy to generate more earnings streams. You’ll often find that for every $25,000 watch they bought, they purchased an $800,000 apartment building and that the watch came long after the assets were in place. This single shift in thinking can greatly enhance the probability of you achieving the same ability to live how you desire.
Dr. Thomas J. Stanley, an academic specializing in studying self-made millionaires in the United States, talks about this in one of his books, specifically on page 197 of Stop Acting Rich. He writes, “The problem is that people, particularly younger people, have come to focus on the trappings of wealth over everything else – including the work or savings to accumulate the wealth to be able to reasonably afford luxury brands. When we think about “rich,” we think about acting rich over being rich.
The Mercedes Millionaire worked hard to achieve success. First it was about the success, and then came the high-consumption lifestyle – which is congruent with their level of success. Buying a Mercedes hardly puts a dent in their financial statement. Contrast them with the acting-rich actors who work to acquire brands with which to imitate the consumption lifestyles of the Mercedes Millionaires. Not surprisingly, wannabes in general are less satisfied with their lives and have lower levels of job satisfaction than do millionaires. Driving a leased Mercedes, wearing an expensive watch, or filling up a heavily mortgaged home with Grey Goose will not make one rich or happy.
When an aspirational looks at a Mercedes Millionaire, he only sees what is on display. He focuses on the leaves of the oak tree, not its roots. But the values and work habits of millionaires, like the roots of the oak tree, are what support their lifestyles (the leaves), not the other way around. Who should the aspirational seek to emulate instead? The Toyota Millionaire. This advice may be painful for some hyperspenders. For them, a Toyota would never do. The very thought of a Toyota in the driveway makes them queasy.”
If you have to make your fortune yourself, you’re probably going to start out by selling your time to others, exchanging hours of your life for cash. That cash is your seed money. Instead of eating it (consuming it on things that don’t produce more money), plant it in the ground (buy assets that will generate more cash that you can then spend without having to sell your time). If you spend it on things that not only lose value but require you to spend money to upkeep, you can lock yourself into a cycle of wage slavery, always having to sell more and more of your life to maintain your position.
It can be a tempting trap, especially when social proof results in you seeing everyone around you behaving that way so you can begin to believe it is how things are done. You don’t have to live like that. Be patient. Be disciplined. Play the long game. The rewards are worth it. With each dollar you plant, you are effectively buying your own freedom.