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Monday, 02.06.2012 |
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| The New Elite: Inside the Minds of the Truly Wealthy |
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Product Details
Notes
"the gravitational pull of money" - money attracts more money
in this book, wealthy means top 1% of Americans
usually have $5M in liquid assets and $500k income
affluent means $1M liquid assets and $125k income
the public thinks wealthy live lavishly and inherit their money
but most wealthy are self-made, and have middle class values
most entrepreneurs make a decent living
then they have a "liquidity event" like a sale or IPO
they work on their passion, and the money comes as a side effect
"stealth wealth" is rich people who hide their wealth
they don't buy a lot of luxury status symbols
they want to be treated like normal people
wealthy people spend more on things they would do anyway
like eating out, travel, exercise, shopping, movies, theater, events
they also pay for personal services
like a spa, gym trainer, housecleaning, lawn maintenance
so far, this profile is similar to the Millionaire Next Door book
rich people buy high quality, not just status symbols
they spend more to get high quality products
they also learn to distinguish sublime value
so they appreciate a better piece of art, for instance
and therefore, they spend more for more expensive fine art
because they've learned about it and can appreciate the details
the arc of maturation is interesting with 3 stages
most wealth starts as a big event on a single day
STAGE 1:
the "apprentice" is cautious about losing their wealth
they also have to adapt to social relationships
having people ask them for money for the first time
they don't spend too crazy yet
which makes sense because they're not sure if their money will last
STAGE 2:
the next stage is "journeyman"
after multiple liquidity events and greater net worth, they can spend more
now they start building collections of art, wine, antiques
STAGE 3:
next is "master" where they are older and wiser
they are happier now and they can spend a lot
they don't think of themselves as middle class as much anymore
the next type of segment is flavors of wealth
which categorizes the rich into five different lifestyle segments
THE NEIGHBORS:
stealth wealth, they don't change when they have more money
they blend in with the middle class
they may own a small business that grew successful over time
so they have money now but their friends are all middle class
THE WRESTLERS:
they struggle with newfound money
they have a fear of losing their money
they buy luxury items to remind them of their success
they fear being judged or resented by others
THE MAVERICKS:
they are the creative entrepreneurs
they spend on their passions without reserve
they don't care what others think
this segment has a lot of variation because they are so individual
THE DIRECTORS:
they are the most like people who inherit wealth
they spent a lot of time managing their money well
they run their personal finances like a corporation
THE PATRONS:
they are older and they love philanthropy
they are happy and grateful for their success
they don't worry as much about protecting their wealth
globizens are global citizens
wealthy people have more in common with wealthy people in other countries
than they do with the middle class in their own country
they interact due to international business
the rich are worried about their kids being spoiled
they have four ways to address this:
1) preaching, and living, their values
2) using shopping as a training and bonding tool
3) taking a team approach to planning and spending
4) using philanthropy for moral and business development
they have advice for the next generation:
1) work hard
2) do something you enjoy
3) have a plan (but stay flexible)
4) have integrity
5) obtain education and keep learning
venture philanthropy, philanthrobusiness
transformational giving is the new thing
wealthy give $200M or $1B to a single charity
that transforms the recipient completely
an example is the Yale School of Music receiving $100M
they had to do a study to explore ways to use the money
America is a plutonomy
top 1% own 34% of assets
top 5% own 59% of the country's assets
this could lead to a revolution in old times
but Americans aren't bothered by income inequality
i actually have a problem with the graph in Figure 12-3
most people think the poor stay poor
and the rich get richer
but what if you track the earnings of each individual person?
take two people, both are poor
one person stays poor, so they confirm that the poor stay poor
the other person gets richer and becomes middle class
now they aren't counted in the "poor" segment anymore
they are now in the "middle class" segment
later, they earn more and switch to the "rich" segment
at that stage, they've practiced earning more so they continue
you start tracking them after they already got rich
so of course, they will keep getting richer
they've been doing it all along, but you call it the rich getting richer |
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