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  • Dan Gaskin

Do you want to be rich?

Don't worry - this isn't some dodgy internet-based enticement. I'm genuinely interested..


Everyone does. No, seriously, let me explain....


The first thing to accept is that being 'rich' is a subjective measure. What is rich for one person is not necessarily 'rich' for another. The standard definition of 'high net worth' is someone who earns £300k in annual salary and/or has more than £3 million in assets.


Sir Michael Caine was once asked whether having money makes you happy. His reply was typically grounded:

"I've been miserable without money. I've also been miserable with money. I know which one I prefer."

Being rich means being able to do the things that are important to you - and never needing to worry about money.


Money obviously gives you options that you might not otherwise have had. Earning it is one thing...keeping on to it is a different matter. Saving means storing up financial energy - sacrificing experiencing things today in order to enjoy things tomorrow.

  • In an environment of near 0% interest rates, your currency will not gain value over time.

  • In an environment of money printing, your currency will lose value over time.

  • In an environment of high inflation (or any inflation), your currency will lose value.

So, if you want to maintain your wealth, you need to be invested in assets and/or funds that at least beat the net depreciation of your currency's value - that will be a certain threshold of return known as the 'hurdle rate'.


It means that if you do not have your wealth managed by a professional financial planner who actually knows what they are doing, you are going to have to do it yourself - IF you want to maintain your wealth.


For example, £1000 in 2013 was worth what £1208 is worth today in terms of the things you can buy. Bluntly, your money has lost just over 20% of its buying power in 8 years.


So, you have to think about how you're going to preserve your money if you want to be able to live a similar lifestyle in the future. That is the only meaningful measure - can I do those things in the future that I like to do today. Will I be able to afford it and not worry about the expense?


So...maybe the question should be:

'Do you want to be rich forever and what are you going to do about it today?'
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