Money can make you dumb.
When you get too much of it, there are two paths:
- Wealthy: This means you’re quiet about it, don’t buy stupid stuff, and seek to go on adventures. Family plays a big role too.
- Rich: This is where you buy luxury stuff, seek to explode your status, talk down to people, become an a-hole, and generally prioritize selfishness.
The second category is the problem. As a banker I spent a lot of time with rich clients. Many of them had figured out the cheat codes to money.
They hated when normal people found them out. They never wanted their path to fame and riches to be revealed. They’d do podcasts and attend startup events, but rarely talk about the stuff that made them money.
When someone asked the question directly to them they’d brush it off with comments such as “it takes years of practice and a lot of good luck.”
Well, as their banker, here are the things they quietly told me that they didn’t want us normies to know.
The biggest wealth generator made to sound complex
Many personal finance books and TikTok gurus have no clue about money.
Rich people want you to think investing in “the index fund” for the next 50 years is a great idea. So when you’re 80 years old and your skin is wrinklier than a shriveled-up rotten apple, you can finally afford that holiday to Florida and to rent a Lambo for a day.
The truth is owning a business is what makes people the most money in the fastest amount of time. Everything else is a dog and pony show.
Not once in my banking career did I ever meet a rich client who didn’t own at least one business. Think about that. Zero index fund investors. Zero day traders. Zero lottery winners. Zero sports gamblers.
Making money slowly is a lie told to stop people thinking big.
Trading time for money doesn’t make you a lot of money
Your time doesn’t scale well.
For years I worked different jobs in finance, hoping to make a decent living. I felt like a rabbit with a carrot dangled in front of its eyes.
As soon as I fell for a higher-paying job, my time would disappear. At any moment a boss could load me up with more work to fit into the same number of hours. There was nothing I could do.
I tried saying no but the boss would say “Well someone’s got to do it and right now you’re all we have. HR will keep looking to recruit someone.”
The extra resource would never arrive. There’d be a hiring freeze or a down quarter in revenue or another colleague would move on.
So I’d get stuck trading the little time I had to earn the same money.
It’s an illusion because technically that shouldn’t have been the case. In reality it became the case because no workplace ever has adequate human resources. The goal is to get the maximum out of each person to extract as much profit from them as possible. Few understand this.
Capitalism is designed to push employees to the brink, not make them rich so they can own their time again.
One type of debt is extremely good
Real estate creates leverage.
You put down a 20% deposit on a house and borrow the rest. As the price of the property slowly goes up over time, your deposit — plus the bank’s money — rises too.
That’s why every rich person is obsessed with property and they make average people their tenant slaves.
The other reason is so they can use the property to pay less tax. What makes them different is they can afford the 20% deposit. And if a recession strikes and the property value goes down short-term they can survive.
Cash enables debt to be bought and held through risky times in history.
My rule is to not invest in real estate because it stops me sleeping at night. Rich people think I’m stupid as a result. Best of luck to ‘em.
A job is as risky as entrepreneurship
Job security is supposed to be the greatest benefit of the employee life.
Rich people know that’s BS. All it takes is a health crisis to lock us in our homes or a 2008-style housing crisis to create a recession. Then jobs get axed faster than the amazon rainforest gets cut down.
No employer gives a fudge about job cuts.
The people axing the jobs are purposely one step removed from the outcome.
I worked with one such person. They sat there with a spreadsheet of employee ids, job titles, and the cost of each person.
By not having a name next to each row they had no idea who was who. All they had to do was suggest to management which people to fire to reinflate profits again.
Starting an online business is hard too. But there’s zero risk. Why?
- You can start a business as a side hustle after hours.
- Or you can quit your job to go all-in on a business, and if you fail, you can always get another job again. Then you rebuild your savings at a job and have a try at another business in the future.
Jobs have the most risk because you have no control. Spreadsheet monkeys and leaders with profit KPIs run the corporate clown show.
The stock market makes money over 10-year periods
When stocks go down people panic.
They’re right down as I write this, yet rich people don’t care.
They buy and hold stocks to own for 10+ years. The one-year performance isn’t a problem for them. They stay clear of a short-term outlook.
Lesson: Don’t day trade.
This will play a huge role in the new financial system
Traditional news channels want you to think crypto is a scam. Or they at least want you to doubt it a helluva lot.
There’s a reason: smart money knows cryptocurrency will be the future. Why? Let me oversimplify.
Everything in finance is basically nothing more than a contract. Stocks, property deals, foreign exchange, derivatives, businesses, owning gold, vaults, etc.
Cryptocurrency has one brilliant feature: smart contracts.
These contracts make every transaction faster, cheaper, and — most importantly — automated. That’s why blockchain technology that underpins cryptocurrencies will become the norm.
The dog coins with smiling faces on them are all a distraction, the same way most websites in 1999 were a distraction from the winners of the web such as Google and Amazon.
1% of a new technology makes it in the future. The rest is a sideshow.
All one has to do is look at what Wall Street is doing in the industry right now. They’re all releasing crypto products to their rich clients.
Don’t be fooled by rich people. Watch what they do, not what they say.
IPOs aren’t what they seem
When a company goes public and lists on the stock exchange, it’s the rich investors’ chance to cash in using retail investors’ money.
The angel investors, venture capital, and high-net wealth investors get in early. The public is excluded using clever accredited investor laws.
Then the rich sell during the IPO — when most of the money is already made — to the retail investors, so they can cash in. All legal. Yet obviously unfair.
Passive income is the goal
Rich people are obsessed with passive income.
They want us to think it’s hard or a get-rich-quick scam to scare us off. The truth is, it ain’t that hard.
Often, passive income requires active work to get it in motion. But once it’s in motion all you do is try not to disturb what Einstein calls the eighth wonder of the world: compounding.
Making money while you sleep means you work less. That should be the goal.
Most uses of money are rubbish
Consumerism teaches us to buy “stuff.”
The problem is 99% of things you buy depreciate aka go down in value. As soon you buy a tv it collapses in price. As soon as you buy a new car the price drops fast. As soon as you buy shoes they’re outdated with a new style.
Rich people don’t buy things that automatically go down in value. They buy financial assets that only increase in value the longer you hold them.
The difference between appreciating and depreciating assets is subtle. Yet the difference is what harshly separates the rich from the poor.
The lie that’s getting louder
A few years ago you never heard boo about inflation. Only those financial types that read Wall Street Journal gave a damn.
In the last few years (and especially this year) inflation has got loud. People are spending small fortunes in the supermarket and at the gas station. They’ve started wondering why.
Rich people already know.
Inflation is how, over the long-term, the rich siphon money from everyone else.
Poorer people can’t afford to buy financial assets and have little savings. So all they can do is buy their meat and potato and try to save cash. Meanwhile, 8.5% inflation crushes them year on year.
All the rich do is use their money to buy financial assets so the inflation tax doesn’t apply to them. This circus is misunderstood by most.
When you hear the word ‘inflation’ it’s code for ‘financial inequality.’ It’s the way money is taken from your bank account without any permission needed.
And the amount inflation drains your wallet is hard to calculate. The real number versus the reported number is wildly different. No one wants you to truly know how high the theft is, otherwise, you’ll protest.
Money is a game. Once you understand the rules it’s easier to opt out.
Don’t let rich people fool you. What they know isn’t hard to learn. Most of it is in this article for you to re-read and study further.
Use what rich people know to buy your time back and become modestly wealthy.
This article is for informational purposes only, it should not be considered financial, tax or legal advice. Consult a financial professional before making any major financial decisions.