Wealthy? Or Rich?
What does it mean to be wealthy? More importantly, what does it mean to be rich? This is a question that a client asked me just last week.
There are a lot of financial advisors that refer to themselves as wealth managers. If you drive around town, you will see the words “wealth management” on dozens of signs, but it’s not actually wealth management, it’s asset management.
Fuel vs Burn
The difference between wealth and being truly rich is like a rocket. It’s ready for liftoff down in Florida. It’s ready to shoot into outer space. The fuel in the tank would be the assets that you have available to you in order to lift off into retirement. The burn is what sustains your orbit or your trajectory. It’s what you need to have on a month-to-month basis. Have you made sure that you have enough fuel to sustain your burn? When you have enough fuel to sustain your ‘low-earth orbit’, that is when you are rich.
The Wealthy Farmer
You may look at a farmer with a large operation and think that they have a multi-million dollars in real estate assets because of the acreage of their farm. However, I know a lot of farmers that have taken part-time jobs on the side to be able to pay their bills. On paper, they are multi-millionaires. Yet, their assets are not spinning off enough money to be able to take care of their burn.
If your assets are able to produce enough fuel to sustain your burn, you can retire any time. But, if your assets aren’t producing, you may end up as a 85-year-old greeter saying “Hello, welcome to W______”.
If you want to be rich, it’s not always just about the assets, but it’s about having the resources to take care of your burn. You don’t want to start dropping out of your low-earth orbit or be on a trajectory to the moon and all of a sudden be saying, “Houston, we have a problem” …and the problem is you’ve run out of fuel to take care of your burn.
Do you have enough fuel available to sustain your burn?
