If financial independence were not complicated enough, let’s talk about large scale wealth. Wealth, in any amount is comparative. In some societies, a thousand dollars is a lot of money. In some others, it is not. We previously defined financial independence as having enough money that you can live off of the interest it produces. That is, you have enough money that you do not need to work if you don’t want to. Instead of you working for money, Money works for you and produces an income that you can then use for your day to day life. Financial independence came with its own perks and challenges. At that stage you already have to take measures to preserve your net worth and keep it generally quiet.
Now let’s explore what happens when financial independence turns to large scale wealth. Some large scale wealth is larger than others. We need some definitions. In the western financial world there are three types of large scale wealth: High Net Worth, Very High Net Worth and Ultra High Net Worth. To qualify for these groups in North America, as of 2020, you must have liquid assets (investable cash, not houses, cars, and other tangible stuff), in excess of $1 million, $5 million or $30 million USD respectively. This definition does change a bit from bank to bank, but it is generally used at these levels across the investment banking and startup investment world.
There are well over eighteen million such individuals in the United States of 2020. It is not at all unusual. As an individual, this makes you a High Net Worth Individual (HNWI), a Very High Net Worth Individual (VHNWI), or an Ultra High Net Worth Individual (UHNWI). If you have more than $100,000 USD to invest but less than one million in assets you would be considered merely “affluent” or you might even be saddled with the somewhat derogatory sounding “sub-HNWI”. These terms come out of the investment banking and venture capital worlds because these are the people who want your cash for themselves. In other words, they are the wolves at your door and they have categorized their prey to optimize their approach.
But the comparison is not all on the side of those who would steward your precious capital. The psychology of large scale wealth is fascinating to observe. When the wealth is yours, you run the risk of believing that you are smarter than everyone else. Because… just look where you are! Look at all the money you have. You must have done everything right. You can do no wrong! You are brilliant! You start to perceive yourself at top of a hierarchy based on net worth.
But as much as you may be looking down your nose at those unknowing fools with no money, you are feeling, at the same time, lesser than those with more money. Poor me, I am only worth a few million, but Jennifer down the street just made UHNWI status, and look at all these billionaires. I am nothing.
The problem here is in tying your perceived intellect, or worse, your worth as a human being, to the total in your bank accounts. When we are young, we see people with yachts and big parties, buying pricey bottles of champagne and we think they must be doing something right. We think that they are smarter or better than us, or both.
These comparisons – the ones you draw between yourself and others, and the ones others draw between themselves and you, or between you and others, are all false.
Funny enough, as you reach increasing stages of wealth and have more time, you might also be working on your self development. And you will come to realize that you are worthy of love, regardless of money. You internalize the fact that your money is just an extension of you, not a measure of you. You realize that how you spend your money is an expression of your self-perception. And quite often this leads to setting up charity efforts, over yacht parties. Overall, you make different choices.
You can spot the ”new” money a mile away by these mistakes of comparison. New money is hierarchical. It does not know the danger of its own flamboyance. It is holier than thou. New money wants to tell you how to live. It is smarter than everyone. Your high net worth might be “new” for quite a while.
Seasoned money, as I will call it, behaves differently. Seasoned money is quiet wealth. It does not assume to tell people who to vote for. Seasoned money is focused on giving back, appreciation and some form of charity efforts. Although individuals with seasoned money might live in a beautiful house (or several), they do not show it off. They avoid the headlines, in general. They understand the dangers inherent in their wealth and have taken steps to protect themselves. Living rather quietly is one such step. They might also have set up trusts, investments, wills and estates documents, nonprofit organizations and other means of ensuring their wealth is used and transferred in ways that make them feel purposeful and secure.
