Wealth, Money, Status
I’ve been fortunate to have met many physicians and other high-income earners across this great country in my travels and investment dealings.
As I’ve gotten to know these professionals and been able to observe them, I’ve noticed that they are all playing one of three games that popular social media financial commentator and blogger Naval has outlined in a series of tweets:
- The Game of Money (work).
- The Game of Status.
- The Game of Wealth (assets that make money while you sleep).
Not many professionals know this, but there’s only one game they can win at and achieve the type of freedom they truly seek: The Game of Wealth. The other two games can’t be won – falling short of providing the type of financial freedom everyone is inherently seeking.
According to Naval:
Besides not having the set of principles and foundation necessary for achieving wealth, some people have the wrong idea about wealth. Some think it’s about money (salary) while others believe it’s status. Neither one will achieve true freedom through wealth.
Here’s how the Game of Money and the Game of Status fall short:
The Game of MONEY.
Many individuals confuse high salaries for financial freedom. Doctors, athletes, CEOs – all make good incomes, but if they think they’ve won the game, then they’re sadly mistaken. All it takes is an accident, an injury, or a hostile board of directors to kill the income golden goose. I have found that as long as you’re chasing income, you’ll always be chasing income. That means you’ll always be working for your money.
With doctors, athletes, and CEOs, they are never in control of their schedules. The doctor is constantly on call. The athlete is constantly in danger of being traded or cut. The CEO is constantly answering to a Board of Directors.
The Game of STATUS.
Those who play the game of status mistakenly believe that having showy things and titles equate to wealth. These people will accumulate “status” symbols like big houses, fancy cars, toys, expensive clothes, country club memberships, and private school admissions to show off their perceived wealth.
The problem with status symbols is none of them build the wealth of the individuals who possess them. On the contrary, status symbols only deplete wealth. The interest expenses from the debt used to acquire these assets deplete resources that could be better used elsewhere. Assets like houses, cars, and toys also require upkeep – draining money on a monthly and annual basis.
The Game of WEALTH.
The Game of Wealth is the game everyone should be playing to achieve financial freedom.
Naval put it more succinctly this way:
If you’re playing the Game of Money, you will always be trading time for money. If you’re playing the Game of Status, you will always be incurring debt to maintain your position on the social hierarchy. Debt will prevent you from building up your assets. It will only deplete your resources – preventing you from achieving wealth.
Wealth is not having destructive assets; it’s about having productive assets that make you money while you sleep. The type of assets that make you money while you sleep are passive investments – hands-free investments that work for you 24-7. That’s why the winners in this Game of Wealth are heavily allocated to passive cash-flowing assets like private equity and real estate.
There are two distinct advantages of passive income investments essential for creating and maintaining wealth:
- The income can be reinvested to compound growth.
- The passive nature of these investments enables scaling across multiple funds, asset classes, and geographic locations for supercharging growth and diversification.
There is only one true type of wealth, and it has nothing to do with salary or status.
A factory worker who plays the Game of Wealth right, can walk away from her job on her terms is in a far better position than the doctor who will always need to pay his bills or the status monger who constantly incurs debt to maintain prestige.
Wealth is having passive income that can meet your needs.
The person with this type of passive income never has to worry about losing their jobs or not working. That is true wealth.