The Simple Definition of Financial Wealth

Mark Ford defines what it really takes to grow your wealth year after year. [Liberty Through Wealth]( SPONSORED ["This guy made me a lot of money." - Bill O'Reilly]( [Green Laughing w BOR]( BILL O'REILLY says he made a lot of money thanks to one person... And now they're teaming up... With one goal in mind: to help YOU get rich. [Click here to claim your wealth blueprint - before they run out.]( Tell Us... Do you have a good understanding of how the stock market works? [Click here to vote in our Twitter poll.]( [And click here to join the conversation on Facebook.]( Wednesday Wealth Recap - Investors hit the polls this week. And their wealth is at stake. Alexander Green underlines some [key factors that investors ought to consider]( during election season. - History doesn't repeat itself... but it does rhyme. Nicholas Vardy explains what [we can learn from the presidential election of 1896]( - and how, some 124 years later, things are both similar and different. - CBD - cannabidiol - has become mainstream. But the cannabis industry, like so many others, is [not immune to the impact of COVID-19](. Chief Trends Strategist Matthew Carr sits down with a cannabis executive to learn more. Note from Managing Editor Allison Brickell: Well, we made it through Election Day. But that doesn't mean America's future is certain. If anything, we have more questions than answers. That's where our friends at Monument Traders Alliance come in. This election will impact your wealth, one way or another. So Bryan Bottarelli and Karim Rahemtulla want to address investor concerns. [Today at 1 p.m. ET, they'll show you exactly how to respond to the election results](... minute by minute... 100% LIVE. If you want to learn how to use election volatility to your advantage, [tune in to their Election Survival Summit here](. THE SHORTEST WAY TO A RICH LIFE How to Build Financial Wealth Mark Ford | Founding Member | The Oxford Club [Mark Ford] Note: This piece was originally published on [Manward Digest](. To acquire wealth, it is helpful to know what it is... and what it is not. There are many sorts of wealth. This essay is about only one of them: financial wealth. Financial wealth can easily be defined as net worth - the sum of one's assets less the sum of one's liabilities. You'd think a concept so simple and straightforward would be easy to understand. But [surprisingly few people do](. Years ago, at an investment conference, I asked the audience to volunteer definitions of financial wealth. About a half-dozen were proffered, none of which was net worth. The two most popular were having a lot of valuable things and making a lot of money. Neither is true. Get What You Pay For I bought a Richard Mille watch years ago in Paris. It was new to the market then, and I was in some kind of spendthrift mood. I bought it on impulse for $35,000. A few years later, it stopped working. Getting it fixed cost me another several thousand dollars. A few years ago, it broke down again. That brought my total investment in the watch up to nearly 40 grand. It's a handsome watch, but it's not any better looking than several watches I've bought for a fraction of the price. And in terms of keeping time and reliability, it doesn't compare to a digital Casio I could have bought at the time for $35. I should be ashamed of myself for buying it in the first place. From a financial perspective, it was foolish. But I didn't buy it to keep time. I bought it to give me a dose of serotonin - i.e., the thrill of spending money foolishly. And the purchase delivered that. Since then, several people have complimented me on the watch. Those moments felt pretty good too. And somehow, the combination of that first thrill and those half-dozen compliments feels like a fair deal to me. On an ego-gratification basis, I feel like I got what I paid for. But from a net-worth perspective, I would have been better off buying a Casio and investing the rest in real estate. SPONSORED [Volume Spike]( See that volume spike? [Somebody just decided to buy a LOT of gold.]( And I think I know why... If you own gold (even just a few ounces of it), you've got to see what's happening. [Click here.]( Measuring Wealth When we acquire things for emotional reasons, we almost always pay more than they are intrinsically worth. And when [we exchange our cash for status symbols]( we generally make ourselves poorer in terms of net worth. Acquiring status symbols is a bad way to build wealth. And having lots of expensive things is not a valid indication of wealth. That kid driving the red Ferrari? The doctor with the oceanfront mansion? The woman wearing the Oscar de la Renta gown? The look says, "I'm wealthy." But you can't know that. The kid in the Ferrari might be making $40,000 a year. The lady in the gown could be in the middle of an expensive divorce. The doctor in the mansion might be worth less than nothing. No, you can't measure wealth by the things people have. What about making a huge income? What about your idiot college friend who is "pulling down 200 G's a year" selling life insurance? Or that jerk you met in law school who charges $700 an hour for his services? Alas, that is no indication of wealth either. Earning a big income is certainly a very solid step in the right direction, but it is useful only if a good percentage of that income is saved. What commonly happens when our income increases is that we reward ourselves by increasing our spending too. The temptation to do this is almost impossible to resist for most people. And the serotonin hit we get from spending more becomes addictive. Before we know it, our spending has matched or exceeded all that extra income. Once again, we end up poorer, not richer, despite the appearance - and even the feeling - of gaining wealth. We cannot escape the simple truth of personal economics: Wealth is net worth, and net worth can be grown only by making more than we spend. Best, Mark [Leave a Comment]( Get more of Mark's secrets to living a richer, more fulfilling life by [signing up]( for Manward Digest. 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