Friday, July 7, 2023

Do you own all six types of wealth?


When it comes to wealth, you probably immediately think of money. Money is indeed a type of wealth, but it is not the only form of wealth. Money is only a low-level form of wealth. If you put all your energy on pursuing this low-level form of wealth, you will lose the opportunity to win other forms of wealth.

When it comes to wealth, what do you think of? The top ten richest people in the world? Your relative in Australia has a bigger house, a nicer car, and a cottage on the hill? Or the billionaire CEO of your company? Professional athlete, musician or movie star?

Of course, all of these people are "rich" from a financial standpoint.

But money does not monopolize wealth. The definition of wealth is "a substantial amount of valuable material property or resource", but looking at this definition, money is not listed as the only valuable property or resource.

Which resources you consider valuable is as important as the abundance of the resources themselves. The key is to optimize for the right form of wealth.


Money is the simplest and most obvious form of wealth because it can be quantified.

How much is your annual salary? $100,000.

How much is your house? $500,000.

How much will your child's college tuition cost? $50,000.

How much is your portfolio worth? $250,000.

Forbes magazine keeps track of the world's richest people in real time, so everyone can see how much money the super rich have.

Because monetary wealth is so easy to recognize, it becomes a point of comparison. Money is the only form of wealth that makes you look at your neighbour and say "I'm richer/poorer than him".

Money can become a knee-jerk competition. Just like any other competition, we want to beat our peers. Earn more money. Get more property. Indulge in more fun. Do whatever it takes to win the game.

But there is a point that is often overlooked. At a certain point, money can become an attractive scoreboard, but a poor measure of wealth. Money has diminishing returns.

This makes sense if you stop and think about it. When income is low, extra money can make a huge difference in the way you live. Paying rent will be easier. You will have security. You can also afford to take a vacation or two.

However, as your income continues to increase, you can buy a bigger house, better car, better meals and better clothes, but that's it, you can't do anything new. You're just paying more for a more luxurious rendition of your current lifestyle. If you can pay your bills, spend your money on experiences, and save/invest the rest, then you're doing pretty well. Everything else is icing on the cake.

There's actually a nasty paradox associated with having a lot of wealth:

Some luxuries won't make your life better, but losing them after experiencing them will definitely make your life worse.

Some people put money and wealth first, and are desperate to pursue money and wealth. The biggest problem with this approach is the opportunity cost associated with it. How many hours did it take to increase revenue from $250,000 to $500,000? What about $1 million? What about $10 million? How much do you need to earn? What other forms of wealth would you have to sacrifice to achieve that goal?

Is this really the game you want to win?


Knowledge, like money, is a cumulative form of wealth. However, unlike money, the "knowledge" possessed by people is difficult to compare. A polyglot, a chef, a world-class investor are all knowledgeable, but not in the same form.

Different people have different ways of acquiring knowledge. Someone learned Spanish by not being afraid to speak it, no matter how bad it was. Someone became a master chef by trying a lot of disgusting recipes. Someone became a great athlete by being a rookie for a long time, trying to make a big business, playing a thousand games of chess, exchanging stories with others... all these can help you accumulate more knowledge.

You gain knowledge for working to develop your skills and expertise, and you earn money for using those skills and expertise to help others.

But knowledge is not just a tool used to create wealth, it is wealth itself.

Gaining knowledge should not be viewed solely as a means to help you achieve other goals. Knowledge is a worthy goal in itself.

Travel to broaden horizon


If money is the most obvious form of wealth, time is its opposite. Time is an asset you can't see. Time has no such things as expensive possessions and a good salary to show off. Time is so indifferent that you hardly notice it.

If monetary wealth is best shown through luxuries, the abundance of time is best shown through nothingness.

Money and wealth are shown to the world on scoreboards, but time is measured in an hourglass that no one can see, not even you. As we earn more and more money, monetary wealth increases but time becomes scarcer. When you are the poorest financially, you are the one with the most time, but when we have the time, we rarely notice.

We realize the value of time only when it is almost running out.

In theory, the currency has unlimited upside. The world's richest man, Elon Musk, is now worth more than $200 billion. But one day, someone (maybe Musk!) could be worth $500 billion, or even $1 trillion. There is nothing you can do about this possibility.

Time is just the opposite. Our time is strictly limited, our money generally increases with age, but our time decreases with age. You can't buy more time, and you never know how much time you have left.

If wealth is measured in increments of time, young people are richer than anyone. Of course it would be great to have $100 billion. But if you're young, how many years are you willing to sacrifice for Bezos' fortune?

Or how about we turn the question around? How much do you think Bezos is willing to give to trade places with someone like me who is 25 years old and will never become a billionaire? Maybe all of them. He has pledged to invest billions of dollars in life extension technology.

We tend to be unaware of the presence of oxygen when it’s plentiful, but when it’s scarce we desperately want more, and our sense of time does the same. Once the money is spent, you can earn it again. When your time runs out, it's game over.

Opportunity cost is everything, how much is your hourglass worth?


Health is the cousin of time. Like time, health is seldom thought of when one is healthy. When we are young, we tend to have a lot of health. So we eat and drink, never exercise, it's okay, you're young. We will rejuvenate quickly no matter what.

For example, in college, no matter how hard you mess with your body, you'll probably be fine.

But decisions have compound effects.

In finance, compound interest is a powerful force. Someone who invests an extra $200 a month may not see a difference in the early years, but after 30 years they could be hundreds of thousands of dollars more than someone else.

The clock keeps ticking.

But the power of compound interest is not limited to finance. In fact, its most valuable application is in health.

Inattentiveness to your health when you are young may not notice any effects early on, but as you get older, taking a laissez-faire approach to your well-being can be disastrous. What you eat starts to matter more and more. Whether or not you exercise starts to matter more and more.

As you age, your complexion darkens, your metabolism slows, and underlying health problems become more serious. At this point, the decisions you've made about your health start to snowball.

Like time, we rarely think about it when we have it. But what about when you lose it? Health will become the only thing you can think about. There is a saying that goes, "A healthy person has a thousand wishes, but a sick person has only one wish."

And that patient rarely gets his wish.

When you're broke but healthy, you have countless options. What's the point if you're rich but bedridden? What's the use of having a billion dollars if you have nothing to enjoy?


If you lack relationships, all other forms of wealth become irrelevant. What's the use of asking for the money if there's no one to share it with you? Of course, you can go all the way to darkness on the road of single material enjoyment, but this will not bring you a sense of satisfaction.

The value of time and health depends on your ability to spend time with the people you care about. Otherwise, you're wasting your unscheduled schedule and capable body on frivolous distractions.

It's good to have a lot of knowledge, but it's best to share that knowledge with others. The only difference between a master and a hermit is whether there are students or not.

Humans are social animals, and relationships are vital to our psyche. We need people who can laugh and cry together. People were able to share their dreams, stories and fears. You can fall in love and suffer the baptism of falling out of love. Can create new memories. You can drive 1000 kilometers on a road trip together, across the east coast of the United States.

Every little thing we do comes back to relationships.

The greatest value of health is that it gives you choice.

A life rich in all other respects but devoid of relationships can be at best empty and at worst depressing. What's the point of having the world if there's no one to share it with? If it means living in one's castle, do you really want to be king of that castle?


"The purpose of life is to experience something that you will be nostalgic for later."

I generally agree with this view. Life is about a 90-year period of experience defined by various other smaller experiences. We are fortunate to live in a time when experiences are readily available, more accessible than ever.

You can travel anywhere in the world in 24 hours for less than $1,000. From learning a foreign language to learning exotic recipes, you can learn anything on the internet. For the first time ever, we can literally do anything.

If wealth is for consumption, what better way to spend your wealth of money, wealth of time, wealth of knowledge, wealth of health, wealth of relationships than doing cool things with people you care about?

At the end of the day, our experiences are all we have.

Experiences are our chances to cash in other forms of wealth for something memorable.

Some experiences cost money, but the most valuable experiences are not defined by price tags. I don't remember how much it cost to visit Tromsø, Norway. But what about seeing the Northern Lights? Priceless.

An evening spent with cold beer, loud music, a roaring fire and surrounded by friends is priceless.

Going on road trips across the American West with my best friend was priceless.

Of all the trade-offs a person can make, you will never regret exchanging financial wealth for experiential wealth. But what about missing out on experiences because you're "too busy at work"? It's hardly worth it.

As a resource, money is unlimited, but experiences, like time, are finite.

How often do you have dinner with your grandparents? What about going on a ski trip with your best friend? How many times have you had the chance to visit a new country on a whim? What about learning a new skill you've always been interested in?

Communicating with Argentines in their native language is invaluable.

Money is best used to fund the experiences you want. Go try something fun. The kind that lights a fire in your heart.

Imagine if you spent 40 years maximizing your lower forms of wealth (money) at the expense of minimizing some higher form of wealth (experiences), and waited until your twilight years to recapture the experiences you had missed, it is only in vain.

Our goal should be to have a lot of money and a rich life experience.

When you come to the end of your life, would you rather be able to fondly recall the good times you spent with the people you cared about, or would you be satisfied that you didn't "waste time and money" on these "trivial" pursuits ?

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