Curt Degerman spent his adult life collecting plastic cans from the trash bins. A ragpicker, he never paid for any of his meals. He ate whatsoever unconsumed food he found in the bins of restaurants. Neither did he marry. With no family of his own, he lived a solitary life. For forty long years, he cycled across his town in Sweden, picked up cans and exchanged them with a recycling plant for money.
At the age of 60, he died of heart attack. Many believed that he left behind nothing. But it was far and away from the truth. A can collector had died as a secret millionaire. Everyone in the town was left to surprise.
The assets that he had built during his lifetime were beyond imagination. Stocks and Mutual Funds worth 8m Swedish Krona. A bank account with deposits of 47k Krona. 124 gold bars worth 2.6m Krona. And his own house where he lived. A wealth that no one could see.
But how could a ragpicker potentially accumulate so much wealth? Was he a highly paid professional or business owner? No. Did he inherit any fortune? Not at all. And let me tell you, it wasn't even a lottery ticket that made him rich overnight.
If I happened to meet this guy for the very first time, the only fact I would accept is that he was a mere ragpicker. What I would not see is his wealth worth $1.4m that he had passed on as a legacy to his only cousin who used to visit him occasionally. What I would not see is the investing acumen that he had acquired by reading financial literature in a nearby library in his spare time. What I would not see is his conviction with which he continued holding his stocks even during the downturns.
Certainly, wealth is what we don’t see.
We often get impressed by the innumerable luxuries our counterparts enjoy. A garage full of fancy motorbikes. A wardrobe full of branded attire. A Facebook timeline full of vacation pictures. Knowingly or unknowingly, we assume that a life full of materialistic things has to be nothing but wealthy.
When I was in my early 20s, I used to see my neighbours living a lavish lifestyle. Driving high-end cars. Wearing stamped clothes. Holidaying every 3-months. I came to believe was that these were the true symbols of being wealthy. That was how rich people lived. Without recognizing the value-eroding nature, I started evaluating their wealth based on the number of depreciating assets they own. But it was further from the truth.
Behind their flashy lifestyles, existed countless 100% consumed paychecks. Instant pleasurable moments that produced quick results were always preferred to delayed gratifications.
In 2017, Pirates of The Carribean star, Johnny Depp, sued The Management Company (TMG) for his financial troubles. The attorney representing TMG wrote: “Depp lived an ultra-extravagant lifestyle that often knowingly cost Depp in excess of $2m per month to maintain, which he simply could not afford. Excessive splurges including $75m on 14 residences. $18m on a luxury yacht. And $30,000 per month on wine.”
Over time, I began to understand the genuine meaning of wealth. Wealth is the portion of paycheck that we put to work every month. Wealth is the financial or physical asset that we accumulate to achieve financial independence. Last but not the least, wealth should not be considered a depreciating asset that we love to flaunt on social media.
I was once reading Morgan Housel’s article: The Psychology of Money. Housel notes that investing is not only about the financial aspects, but also about how people deal with their behaviour when it comes to money. Further reading affirmed my perspective which I try to portray in this post.
One of the most important thoughts in his article is:
Wealth is what you don’t see. It’s the cars not purchased. The diamonds not bought. The renovations postponed, the clothes forgone and the first-class upgrade declined. It’s assets in the bank that haven’t yet been converted into the stuff you see.
Further, he adds:
If you see someone driving a $200,000 car, the only data point you have about their wealth is that they have $200,000 less than they did before they bought the car. Or they’re leasing the car, which truly offers no indication of wealth.
This pretty sums up the essence of this article.
I don’t endorse the idea of living the life of a stooge. Surely, one must earn and enjoy the present. But this shouldn’t be done at the cost of one's future goals. Child’s higher education can’t wait. Neither will our retirement. But the instant gratifications really can. The moment we spend from our investment account to upgrade our Hatchback to a premium SUV or Crossover, we ensure that our wealth gets reduced by the same amount or even more when realized in terms of future returns.
A key use of wealth is using it to control your time and providing you with options. Financial assets on a balance sheet offer that. But they come at the direct expense of showing people how much wealth you have with material stuff.
- Morgan Housel
Shun the idea of flaunting fancy stuff. Cars. Jewellery. Frequent night-outs included. Instead, build monetary wealth to buy real wealth – Time. Use it to explore other options beyond your workplace. Pursue something that you love doing the most. And if you can’t figure something out, figure out how to figure it out.
As Jim Rohn has said:
Time is more valuable than money. You can get more money, but you cannot get more time.
Originally Published in RichifyMeClub
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