Weekend Investor: The Elderly Have All The Wealth
How can you get wealthy? The answer is revealed in this recent news report. The amount of average wealth is larger the older you are. Duh! Many people may think that some magic fairy hands it out, or my favorite phrase, “distributes it” by some governor.
This is not rocket science, no special study is required to conclude the obvious.
Wealthier people tend to be older because they have had the time to accumulate assets and build careers. As you age your productivity increases and if you are smart, you invest this excess capital above your living standard in other assets. How do you do this? There are many ways to do this and there are not really any secret formulas.
There’s no secret formula but there is a wealth estimator by age from that famous book, The Millionaire Next Door: Surprising Secrets of America’s Wealthy. Using this calculator based upon the book, it estimates what your wealth should be based upon income and age. It’s fun but I wouldn’t necessarily take it as gospel.
To get there, most people go down a few paths. Some people invest in stocks, real estate, collectibles while others start a business which can multiply productivity through the work of employees. The fact is that these investments take time to grow hence older people own them when they become valuable.
My first exposure to investing and making money over the long term was with my mother. She worked at jobs that were either retail or manual labor. In the 80’s she worked at a company called Jefferson Ward. This retailer was an attempt by ExxonMobil to diversify away from energy. Long story made short they failed. But my mother was able to buy and accumulate shares of Mobil (the predecessor to ExxonMobil).
It didn’t happen overnight, the longer she held the more money she made, but her initial start was very modest. Even with a modest income she was able to build a nice nest egg by holding her shares. If she can do it anyone can.