When it comes to money, itâs not only an extremely taboo topic and personalized to the brim, there are a variety of factors that play into oneâs net worth that most of us donât count on. If you asked me what my current net worth is, it wouldnât just be a simple estimate of profitâââexpenses = revenue.
As with businesses and individuals, taxes, deductions, charitable donations, possibly tax havens, side hustles, inheritance, pension, 401k withdraws, and bonuses to name a few play the add and subtract game to fluctuate your yearly income and as a result, your net worth may be difficult to pinpoint.
Yet what matters isnât truly that exact number pinpointing your net worth because more often than not, a farmer could easily be wealthier than a hedge fund jerk splurging on yachts and women. Itâs hard to deny the image that we see but what if I challenged you to look at a person in the way they behave, their ethics, values, and people they spend their precious time with? Skip the aesthetics, will you? I guarantee you, you will be surprised with what you find.
Whether you have a net worth of $1m or $1.5 your life doesnât truly change after a salary of $75k per year anyway which is the number for peak happiness. More just brings temporary bliss then everything becomes stagnant.
Just think about it, you wouldnât be able to buy much a whole better house taking out more cash and or scoring that better rate on your mortgage with an extra 500k to your name because after allocating your assets to cash, emergency savings, a possible ROTH IRA, 529C for your kids, car, home life insurance, the list can go on and on for expenses, you then will have only a certain amount of money, hence a budget to allocate for real estate which wonât allow you to buy much more square footage with a bit more nor would you ever really need to.
The biggest hurdles we have about managing our net worth and allowing it to keep growing is that majority of us forget, especially those starting out with a credit card, fall into the trap of forgetting the key pillars of wealth.
Spend less than you make
Itâs not about how much you earn but rather how much you keep.
With the rise of electronic trading, Apple Pay, and plastic dingy credit cards with endless balances, it is easier than ever to purchase whatever we want whenever we want to disregard the future consequences to our net worth.
We all know the crazy benefits of compound interest through a ROTH IRA. Delaying your monthly contributions or by simply opening up one a year later, can result in over 50k of a loss down the road! Time is your biggest asset, prioritize it!
So Who Really Are These Exceptional People?
When we talk about these types of folks, Iâm sure youâre already getting the picture of a Harvard Alum and their 3 white poodles living in Florida. No. Iâm not even getting into the ultra-elite billionaires, .001% of the world because no one should compare themselves to them unless you want to be miserable and unrealistic. But if you choose to do so, and by all means make yourself unhappy and weâve all been there daydreaming at times, what truly differentiates them versus 85% of Americans is that they are either business owners, work in the finance, tech, or are lawyers or hold high positions at once again those 3 industries: business, tech and law firms. Doctors arenât even part of the picture because, with the immense amount of medical debt most go into, itâs NOT an investment that pays dividends quickly.
The reason being these industries do so well frankly regardess pandemic or not, you guessed it, they are always in demand, bring the most innovation to our world, and solve people problems to make our lives easier. Now everyone wants taht.
They produce not consume, except books, podcasts, and that jazz of course. TikTok and social media garbage are banned in their lives. They will much rather hire someone to waste their time promoting themselves on there than do it themselves.
Health care workers absolutely fall into the category of essential and great leaders but with the overwhelming amount of money that medical school and residency robes from your time, mental and physical energy, and of course, bills, it takes about 3 decades to fully pay that off so becoming an exceptional investor out of medical school is not the case until a few years into retirement.
Just think about that for a moment. There is only one main thing in life that we would go into so much debt for: Education and if you are really careless, luxury goods to show off for no purpose.
What Exceptional People Prioritize That Average People Lack
-Those who believe education is the best investment and prioritize good work ethic, their time and commitment to achieving good grades, making their parents proud and starting their own endeavor or dive into a fast-paced business
-Has no outstanding debt looming around for decades to come
-Never spends irrationally more than they make
-Would see them in their free time educating themselves, promoting a healthy work-life balance, staying mentally fit and strong or quality time with people they love
-Consistently contributes funds to their 401(k) retirement savings system
-Doesnât mind spending frugally as a partial minimalist but also makes sure to have fun wisely
-Believes everything in moderation
-Doesnât seek titles, fame, or luck, they build it
-Believe cash is king, always necessary, plan for the worst, hope for the best
-Weighs risks carefully to make sure they donât go into debt but not afraid to make mistakes
-Still tend to follow the traditional âsafeâ path of a lucrative job working 10+ hours a day but soon finds their way out into something more meaningful and healthier
-Takes advantage of as many free tools on teh internet as possible to leverage opportunities, save money, and promote a financially free life. Free doesnât mean cheap in many circumstances.
-Know how to work smarter not harder
-Value connections rather than numbers or stats
-Prioritize their time and understand how valuable it is as an asset. Limit social media and media to reduce bombardment and lack of productivity
-Believes in the stealth wealth life doesnât strive nor care to show off
-Invests in the future, always investing long term never short term gambling type trades in speculative trendy retail apps such as RobinHood or DraftKings (sports gambling)
-Has a diversified net worth which includes stock, bonds, real estate, dividends, and alternative interments of their choosing
Feel free to come up with your own thoughts on what you perceive an âexceptional investorâ and person to do and hold in their portfolio. There is no such thing as perfection anyway.
Average Net Worth By Age In The US
According to the Federal Reserveâs Triennial Consumer Finance Survey, updated each year, the average net worth for the following ages are sure to surprise you, in possibly an alarming way for most Americans:
Under 35: $76,200
35â44: $288,700
45â54: $727,500
55â64: $1,167,400
65â74: $1,066,000
75+: $1,067,000
Average Net worth for American: $692,100
Median Net Worth: $97,300
*Stay tuned for the average net worth of an exceptionalist!*
An exceptional= Above Average Person
So you may be asking as a Millennial, why these numbers are so high as someone who thought they were ahead of the gang since the average net worth of a 30 something is actually -$10k. Donât be disappointed with yourself. The reason these numbers seem to be too good to be true is that they are skewed by the super-rich whoâve added more to the economy and created more jobs, leading to a more influx of cash to be distributed overall.
So since weâve now compared ourselves to the ultra-rich skewed average estimates to make us feel less worthy still, letâs understand how this is constructed and why it is easier than ever to adopt these mindsets, especially while weâre all stuck at home scavenging the internet for side hustles, something I donât always recommend as there are more opportunities even if you educate yourself and seek within your full-time job, something most people donât realize.
It is most important to maximize your savings as much as possible for the long term. I donât care if you are 20 and are embarrassed planning for retirement, you will in fact be the coolest elder when everyone else is trying to save their pennies late to the game. Never be ashamed by the choices you make against the crowd, especially for retirement, the scariest and loneliest part of our lives with no steady income and needing to rely on our hard work from previous decades.
What the Exceptional Invest In
Besides the most common investments of stocks, bonds, real estate, possibly BitCoin if purchased prior to the massive overvalued peak and the most stable securities: treasury bills, to let money really work for you for life, not just a day in a passive way, you must be innovative, have an equal balance of risk and conservatism at times and not follow the crowd. If my parents listened to the trading experts at big investment banks and CNBC senior analysts on taking out all our money during the end of the 2008 crisis, we wouldnât have grown a surplus of 1.85m in investments today. This is the tricky part of investing whether itâs in companies or with your own money.
What is certain is always and only uncertainly. No one can predict the future and no one cares if you have an MBA or 60 years of experience, itâs whether you can weather out the storm, stick to your gut and get the job done. Research doesnât matter when there is too much of it. You have to decipher yourself and make your best-educated judgment plowing through it.
Before we get into the tactics, it is important to note a few things about the feelings subsciously implemented while investing as it is a very emotional rollercoaster to play:
-Do not risk what you cannot afford to loose
-Losing will teach you more than anything
-Losing no matter how little or large will always affect you more than winning
-Investing is always a long term approach, not a short term gambling game in Las Vegas
-Accept that you will always have some sort of regret: whether you didnât invest enough, too little, too cautious, too optimistic, you name it, they always happen!
-A financial advisor, 2nd opinion is always worth it
-Books wonât teach you much compared to experience
-Study and apply it or read it and waste time
-Buy things you use, know well, and have steady cashflows note: Tesla just became part of the S&P 500 in December because they didnât have prior steady consecutive cash flows for four quarters: a requirement to join the S&P500 and now is trading at values unheard of and unrealistic = skepticism = warry
Key Investments:
The average exceptional person always has a diversified portfolio not just with liquid investments but also in illiquid investments such as stocks and real estate and part of this is never having their money part of one individual asset class because if Amazon drops to 0, you donât want to risk going bankrupt because of them.
Many, Many Real Estate Options
Everything from an allegation of rape to money laundering in the Bahamas can trigger a stock collapse a.k.a bearish market so always be prepared for the unexpected, as weâve learned with cash reserves during this pandemic. This means that exceptional investors have on average 7â8 income streams, most notably in real estate, an investment that is costly upfront with maintenance and check-ins for the tenants, unless you have a management company doing that for you with multiple properties.
But the returns are consistently positive as long as you do those background checks, insurance and good area snooping for the property. There are pros and cons to real estate, but with everything in life, you must work hard to earn big returns. With real estate, as a 20-year-old in college, Iâm generating practically an investment banking managerâs salary each year through my property as I receive $8,500 for the New York townhouse. Of course, with insurance to taxes, maintenance, plumbing, construction, broker fees, that swept about 2 months of rent but still, you must put in the investment to see those returns.
The average investor would be too wary of putting in that money and wouldnât see the upside to all of it! It takes diligence, practice and positivity! Own a few 7 Elevens and you will be set. But it doesnât have to just be a $2.5 million dollar townhouse in NYC to invest in because letâs be real, not everyone can afford to be a landlord of a 1% property at that cost. Real estate could include your seasonal studio in Connecticut that you can rent out to a Uconn or Yale Student for $1500 who wouldnât care if they are living in a rustic den and cockroaches. Students are cheap and are forced to budget. Or even invest in REITS that are money pooled into investment properties via the stock market so you donât have to handle any property on your own! You could always go to real estate crowdfunding platforms like mega-cap companies such as Google whoâs investing $13 billion in heartland real estate. Look to the Midwest especially since those are the new places where WFHomers are relocating to. Sooner than later, you can lock in a decent rate before prices skyrocket due to unprecedented demand and lack of inventory.
There are many options and an exceptional person always keeps their eyes and ears open. They tell people what they do, listen to the trends but block out most to make their own decisions, and always live in a world of abundance, something our Econ teachers disagreed with and hence most are not exceptional investors.
Average Net Worth For The Exceptional Person
Drumroll pleaseeee.
The average net worth for the above average person by age is as follows:
$250,000 by 30
$429,000 by 35
$660,000 by 40
$914,000 by 45
$1,240,250 by 50
$1,684,000 by 55
$2,180,250 by 60
In their mid-40s, the exceptional person becomes a millionaire. To compare, the average American only becomes a millionaire between 55â64. This is 10â15 years later according to the Federal Reserve.
Where to start? Well, your best bet is to follow the tips and lifestyle changes above which most are free and not crazy time consuming. Your diligence and discipline should be drilled into the decisions you make. With a diversified portfolio and straightforward, logical moderately conservative investing routine, there is no doubt you can have your net worth grow wonders for you. So what are you waiting for? Time is of the essence after all, especially when dealing with money!