What is wealth? Is it a store of money or is there something more to wealth?
While Apiary Fund is primarily focused on empowering our hive of traders with the knowledge, skill, and capacity to build a consistent and reliable income in the market, there is a greater opportunity than simply creating an income. There’s an opportunity to create wealth.
At the Apiary Summit in Salt Lake City last month, we discussed wealth. We presented a simple but powerful formula for building monetary wealth and demonstrated how you can build it on any income. There are two variables in the wealth building formula: income and expense. While most of us tend to focus on the income variable in the formula, we can just as easily focus on the expense variable and create a store of monetary wealth.
Here’s the simple formula:
Wealth increases when income is greater than expenses: Income > Expense
Alternatively, wealth decreases when income is less than expenses: Income < Expenses
Building a store of monetary wealth is just as easily accomplished on the expense side of the formula as it is the income side. Plus it doesn’t require a new job, a raise or winning the lottery. It requires a careful use of the income you have.
I remember working with a janitor who had accumulated significant wealth through her twenty years of service to a local school. Her wealth was created almost entirely through the expense variable. She saved. She chose where she wanted to spend her money and she was accountable to herself for the thrifty use of her income. Because of this her store of monetary wealth grew.
But I would argue that she was wealthy beyond the store of monetary means she brought to my office that day. There was something extraordinary to her wealth that has led me to better understand and appreciate wealth. Throughout her life, she had built a very pure and powerful and special kind of wealth.
Let me explain.
Money is only a means to acquire wealth. It is a resource - a form of capital. Instead of looking at wealth through the lense of money, consider that wealth might be called agency or the opportunity and time to pursue your life's work.
Some people associate wealth with a life of leisure and luxury. What I’ve observed, however, is that pursuit of leisure and luxury is actually a form of destroying wealth.
Imagine finding a hidden chest full of jewels, gold, antique vases, a crown (every treasure chest needs a vase and a crown!) You would think, “Wow, I’m rich! I can now live a life of leisure and luxury!” So you take it home and put it in a safe place and never open it again. The question is, “are you really wealthy?” No, you have a store of potential wealth. You have a resource that you can use, but if you never use it then it is as if it did not exist!
So you decide to open the chest, abandon your job, and use the treasure to pursue a life of leisure. Now, are you really wealthy? Not really. In reality, you are in a state of destroying wealth. If money is used to create a life void of income, work, and effort, your life is little different than someone who abuses social welfare programs. Using the metric of leisure and luxury is not really an effective measure of wealth.
However, if you open the chest to pursue your life’s ambition, then you have what I term “pure wealth.” People with pure wealth exercise agency, or the ability to make decisions. They choose to act in life and not be acted upon (a twig floating in the water that is constantly being moved one way or another by the tides and wind is an agent being acted upon.) If the contents of the chest enable or empowers you to act or in some way shape your world rather than passively await whatever circumstance delivers, then you have wealth - a pure wealth.
If wealth is measured in terms of your ability to act in a form of your choosing, then money alone is not the sole determinant of wealth. Character is a form of wealth, social networks are a form of wealth, experience is a form of wealth, knowledge is a form of wealth, etc. And creating a store of wealth in these forms is just as essential as "money.” In fact, you might call these characteristics forms of wealth capital - resources you use to create pure wealth.
This is the reason why so many people who win vast sums of money often end up broke and destitute. Similarly, this is why my janitor client was able to accumulate vast sums of wealth despite her small income.
It is also why so many people with vast sums of "money" who use it to pursue endless forms of leisure and luxury are miserable. Their lives are an endless treadmill of frivolous consumerism, neurotic pettiness, hypochondria, expressing their infinity of heartaches to counselors to try and alleviate the dead weight of a purposeless existence.
People are wired to be part of something greater than themselves, and to gain dignity and pride by doing useful work--whether they are paid "money" for this work or not.
Pure wealth doesn't require a vast horde of "money." It requires some money, but how much depends on how a person uses their agency, the opportunities they identify in their life and time. People with few needs, the right priorities, opportunity and time don't need a lot of money to create wealth.
The resources you need to acquire wealth are the same as what it takes to become a funded and successful trader here at Apiary: determination, self-discipline, organization, a voracious appetite for knowledge and work, an insatiable curiosity, a generous heart, a knack for friendship, the purposeful pursuit of goals-- these are the tools to acquiring real wealth: the opportunity to use your wealth capital to exercise agency in the pursuit of your life’s work.
This is why I considered my friend the janitor, one of the wealthiest people I know. Not only was she able to create a vast sum of monetary capital, but she has cultivated the capital she needs to pursue her purpose in life. The last I knew, her portfolio had grown and she had established a scholarship fund for children of school janitors. But the best part of it all? If you met her in the halls of the school, you would never know it!