The Poor the Wealthy and the Middle Class

by Simon 44 Replies latest social current

• 

  Simon

  There's a saying, that:

  The poor spend
  The middle-class save
  The wealthy invest

  The unique circumstances of the lockdown and stimulus checks has highlighted these differences in stark ways.

  On one hand, you have jumps in sales and valuation of companies like Foot Locker and Nike, as people spend their "free" government money on sneakers. They blow it on useless tat. It's why they will always be poor.

  You also see a reduction in debt and increase in savings as people pay off loans and save for the future. Usually these are more middle-class concerns.

  Then there is the stock market reaching record highs. The wealthiest 10% of Americans now own 89% of all US stocks, the highest level ever. The rich know that investing is the best way to generate more wealth.

  In a years time the poor will have a year-old pair of sneakers and bemoan how unfair the system is. The middle-class will imagine they are a bit further ahead because their bank account will be a bit higher (but they forget about inflation and that it is stripping the modest interest rate they are paid). The rich will have accumulated more of the income-generating assets that will make them even wealthier over the following decades.

  The irony is that the poor could have set themselves up to have a new pair of sneakers every year for a decade if they'd thought to invest the money instead of rushing to get rid of it.
• 

  JeffT

  There is an easy route to increased wealth if people will take it: maximize your contribution to your 401(k). This is especially true if your employer matches your contribution. Once money is in the 401(k) it gets invested in (drum roll) stocks and bonds. The profits are also reinvested. And none of this money is taxable so you get to be one of those rich people that doesn't pay taxes on his money.

  The thing that stops most people is they fact that it takes twenty years or so for this to start showing significant gains. You have to be ready to play long ball, this won't show immediate results. Gratification is delayed, something Americans aren't good at.
  
• 

  DesirousOfChange

  The thing that stops most people is they fact that it takes twenty years or so for this to start showing significant gains.~ Jeff

  What I came to understand is that the first million is the hardest to save, but it gets easier each time.

  Thus I just gave up on the first million and have starting investing on the second million.

  [Cymbal clash]
  
• 

  JeffT

  Tip #2

  For god's sake, if you own a house stop refinancing it every time you read an article about prices going up. That is the biggest asset you own, don't piddle it away on vacations or whatever. That is the middle class version of buying sneakers.

  Don't own a house? Sit down with a banker (a real banker, not a mortgage broker) and work out a plan to get into a house.

  /change to joke mode/

  DOC: from my days working in real estate development:

  Q: How do you make a small fortune in real estate?

  A: Start with a big fortune.
  
• 

  pistolpete

  Another way to get rich is build a good business that is Covid immune. In other words do something that most people hate to do like unclogging sewer pipes when there is a pandemic hitting the world.

  My business made more money during the pandemic than any other year.
  
• 

  truth_b_known

  If you eat at least once a day, have access to clean water, wear clean clothes, have a roof over your head when you go to sleep you, have a dollar in your pocket, and a dollar in the bank you are rich. Most people on this planet don't have these things. People who make a big deal about wealth never ask how happy people are.
• 

  DesirousOfChange

  People who make a big deal about wealth never ask how happy people are.

  Because being wealthy does not guarantee you happiness. But then, neither does being poor.

  I recall a JW woman who divorced her very rich and successful JW hubby because their love had died so she could marry her "love child" or "soul mate" (another JW with whom she was infatuated) who was charming, witty and talented (but broke). As you would suspect, that infatuation didn't last all that long and she eventually divorced him too. She told a close friend that it had been much easier being miserable and rich than it was being miserable and poor.

  Just saying.......
  
• 

  Anony Mous

  Being wealthy does not make you happy, but it sure makes it easier to be.
• 

  hoser

  I’ve always had the habit of investing my overtime earnings from work. That way I don’t get used to spending more than I actually earn and I’ve had a few in between job times where I dipped into those savings until I could secure another job.
• 

  Simon

  Because being wealthy does not guarantee you happiness.

  Being wealthy buys you time and energy, to focus on whatever you want. Whether the things you chose to spend those in make you happy or not depends on you and them.

  Don't own a house? Sit down with a banker (a real banker, not a mortgage broker) and work out a plan to get into a house.

  Another option now is to buy tokenized real-estate, so you can get exposure to an asset class even if you don't want to or can't purchase a property outright.
  

  The thing that stops most people is they fact that it takes twenty years or so for this to start showing significant gains. You have to be ready to play long ball, this won't show immediate results.

  Yes, and the key thing is that instead of you working for the money, the money works for you.

  It's a real pity schools are so utter crap at educating people about the few basics that are needed to dramatically improve your life chances.