Stealth Wealth – The Covert Life of Being Rich and Not Famous
Your road to financial independence is a boring one. Earn money, cut spending, and invest the difference. No one knows that every month you buy more shares of the S&P 500. No one cares that you track your spending and cash flow in a spreadsheet. One day you’ll hit your crossover point. The point when you become financially independent. To the outside world, it will look exactly the same as the day before and the day after.
This humble journey also called FIRE, is a quiet one. It’s impossible to pick out a FIRE seeker at the grocery store. None of your coworkers can guess that your career path doesn’t exist. While they dream about fancy cars, big houses, and cool stuff. You dream about owning assets that pay you dividends. Assets that increase in value and secretly make you rich.
What is stealth wealth?
The art of being rich but not looking rich. This approach helps you build wealth faster as you avoid all the fancy stuff that drains your wealth.
An example from my personal experience
I worked with a friend for about a decade at the same company. We worked on many projects together that helped our company grow. We climbed the ranks and held similar executive-level roles within the company. We earned similar amounts of money each year through cash and stock bonuses. We both earned millions of dollars along the way.
Our colleagues and team members like to joke with both of us. All in jest but there’s truth there.
His nickname was Moneybags. He loved to talk about his fancy vacations. The new watch he wanted to buy. The renovation underway at his expensive NYC apartment. Everyone knew he made money and liked to spend it.
I get made fun of for dressing like a camp counselor.
That’s stealth wealth.
Stealth wealth cars
Moneybags and I both bought new cars last year.
He bought a Mercedes Benz. I bought a Subaru.
That’s stealth wealth.
The Subaru is a great example of the stealth wealth car. It’s affordable, reliable, durable, and not flashy. In fact, I suspect people think I’m poor because I drive a Subaru and can’t afford a nicer car.
We both earned big bonuses last year.
Moneybags bought a $20,000 watch.
I bought $20,000 shares worth of the S&P 500.
That’s stealth wealth.
How to spot stealth wealth
It’s really hard to do because that’s the whole point people! A person who is practicing stealth wealth is likely a humble high achiever. They are also very likely to be disciplined people.
These individuals seek value. They seek value when buying things. Everyday things like groceries and household items. They seek value when making large purchases. Like a car or a house or even a vacation house.
These individuals also value their time. A person who has stealth wealth may exhibit traits or habits that show the importance of their time.
Okay, let’s put together some other common clues for someone that may have stealth wealth.
This person has a job known to have a high income. Or this person is working in an industry known to pay above-average incomes. If this high earner does NOT own flashy things. That’s a clue. If they don’t splurge on expensive luxuries. That’s a clue. If this person is frugal there’s a good chance this person is building stealth wealth.
Another common clue that I’ve seen is the splurge on a very particular item or category. People practicing stealth wealth create an outlet for egregious spending. It acts as a pressure valve in the modern world of consumption. For example, I know a male in his mid-thirties worth tens of millions of dollars. The average cost of his wardrobe is in the ballpark of $50. But he finishes off his ensembles with a very expensive watch average worth around $25,000. The watches are not flashy. There are not littered with gold or diamonds. They’re collector items so only fellow enthusiasts would even know their value. Sneaky stealth wealth.
Why stealth wealth
So why do this? What’s the point? The simple financial habits of being frugal awful and investing your money is how you build wealth in the first place. I suspect these good habits do not change even after wealth has been acquired. These individuals practicing stealth wealth are merely living the life that got them to where they are. I find this to be true my personal life after decades of humble living and diligently saving and investing my money I see little reason to change. There’s nothing that I want today that’s that different from years ago.
There’s great pleasure and peace of mind when you know you have more money than you’ll ever need. When the income from the assets you own can pay for your lifestyle you live with no fear and great peace. Over the top spending on houses or cars or other things that make you look rich threaten that safety and peace of mind. No opinion of you from others is worth risking that peace of mind.
No Judgment or Opinions
If people know you’re wealthy or that you have a lot of money they will look at you differently. They will conjure up opinions about you not based in fact or reality. Feelings of resentment for jealousy, common and anticipated feelings from friends, family numbers for common acquaintances. All this can be avoided by simply being humble and not bragging or flashing your money around.
Misery loves company the average American is poor and struggling and they want a b**** about it. Blending in with your extreme frugality and stealth wealth guarantees those negative feelings and energy will be directed towards the man or the 1% and not you. A common and fictitious enemy is a great thing to bond over, join them and don’t be the thing that they hate. It’s just an easier way to make friends.
Opinions will begin to come out of the woodworks about how you got your money. Stories brood from imagination will be shared in the circle of your friendships. It is not reasonable to anticipate the morality or ethical decisions you made separate you from the have nots. You must have cheated or lied or hurt people in order to get ahead. People that know you are simply trying to rationalize why you have wealth and they don’t. You know the reason it’s because you earned saved invested and focus on owning assets versus buying stuff. It is not complicated, it’s just hard to do. It takes years of effort, years of concentration, relentless discipline in order to achieve wealth from nothing. You must also position your life to take risks so that you can magically get lucky when these risks pay off with an abundance of rewards. 99% of people will never do this so they will never have what you have.
Being part of a community and having close friendships brings great joy in life. It brings satisfying feelings of fulfillment and belongingness. These feelings can endure for years even decades.
Facilitate the creation of these relationships by being humble. Strengthen them over time by practicing stealth wealth.
You build tremendous friendships through shared experiences. That is easier to do without opinions of money causing tension or jealousy.
Less people bother you for money
There are many stories about people who have won the lottery and end up broken miserable. It’s truly sad and I have a hard time unpacking how that all goes down. There is one thing that you can almost guarantee when people find out that you have money. They’re going to ask you for money. They’re going to ask you for a loan or to invest in an idea.
Instead of practicing your no thank you speech. Or coming up with clever ways to say no I’m not interested. Prevent this all from happening in the first place. Look middle class. Act like you do not have excess capital.
Lending money to family members or friends never goes well. They are not borrowing your money, they are taking it. If you’re okay with that and never expect to see that money ever again. Then by all means let your friends or family borrow money from you.
Lower expectations for you to always pay
I love going out to restaurants or wine bars with my friends. Double dates, couple outings, or large parties are all great times.
Then there comes that awkward time at the end of the evening. The bill comes. Suddenly everyone has alligator arms when the check is on the table. Regardless of words spoken, if people around that table know you are wealthy, they expect you to pay. They expect you to pay more than your fair share. They may expect you to pay for the whole thing. Why, because you can “afford it.”
A Short Guide To Stealth Wealth
If you’re a high achiever seeking FIRE, then practicing stealth wealth will be easy. It will come naturally because of the lifestyle and decisions you’re already making. It’s prudent to maintain these good habits in early retirement so that you make the most of it.
Stealth wealth in early retirement will maintain the integrity of your relationships. It will ensure you don’t overspend your money. And it will help your capital grow so that later in your life when you’re feeling charitable you have more to give.
Don’t show off your wealth
The fundamental idea of stealth wealth, have money and don’t flaunt it.
- Never drive an expensive car. Fancy cars exist for one reason, to look fancy.
- Never wear an expensive watch. A rolex is beautiful and tells time. So does a Timex. So does your smartphone.
- Never wear fancy clothes. Buy high quality functional clothes. Good clothes protect you from the weather and look simple.
Don’t volunteer success stories
Nobody likes a bragger. It’s annoying and obnoxious. If you’ve been successful and built wealth you have stories. Don’t bring them up on your own. There are plenty of interesting things to talk about. You are not one of them. Don’t lie but don’t voluntarily share.
If someone asks, share what you learned from your experiences. Leave the details of the experience out. There is value in sharing how you earned a million dollars. That’s the story. The story is not that you earned a million dollars.
Stealth wealthy people share wisdom not stories about clever stock picks.
Always attribute your success to luck
If someone suspects you’re wealthy don’t panic. Admit you’re lucky and things are going OK. Downplay yourself, I’m just a big old dummy, and play up luck. Right place, right time. The investigator trying to figure out your secret will stop in their tracks. You can’t pick apart luck. It is what it is.
Humility will serve your before, during and after your working career. Being humble about your wealth is core to a stealth wealthy lifestyle.