Here’s why stealth wealth is the new black, and how you too can be part of this undercover elite group
Have you ever wondered about the financial situation of your neighbors or your friends? Not in a mean way, but just curious? I mean these days anyone can live almost any lifestyle they want by borrowing on credit. You can fake being rich fairly easily, although it will have dire consequences in the long run.
But what about the reverse? People who are wealthy (secretly or not) and living a regular middle-class life. But you wonder, why would anyone with money not live it up? Interestingly enough there are a lot of reasons; good reasons. We’re going dive right in, share the details, the benefits and show you how you can practice stealth wealth while still living it up!
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- Here’s why stealth wealth is the new black, and how you too can be part of this undercover elite group
- What does stealth wealth mean?
- How much money makes you rich?
- Some real life examples of stealth wealth
- The benefits of being stealth wealth
- How to live a stealth wealth lifestyle
- How to get secretly rich
- At the end of the day
What does stealth wealth mean?
The term “stealth wealth” is used to describe people who are rich, but don’t show it. They are not flashy or ostentatious with their money. They are humble and simple in their actions, yet they’ve reached financial independence.
People who are practicing stealth wealth may not be actively trying to deceive you; they’re just not sharing everything. Which is totally their choice. No one has to broadcast the fact that they have a lot of money by having an expensive car, designer clothes, or an exclusive credit card.
In fact, when you see those things, that might just be conspicuous consumption – buying luxury goods in order to enhance your perceived wealth and public image. This is unfortunately very common too. But today, we’re focusing on those flying under the radar, those being regular people, just like us.
So don’t feel hurt or betrayed if you come to find out that your Aunt Lucy is really a wealthy person, or your neighbor for the past 10 years, good old Fred is really a multimillionaire.
How much money makes you rich?
Being “rich” is subjective from person to person. Also, it depends on where you live and the cost of living there. GOBankingRates used IRS data to conduct a study of the top incomes as they break down by state.
For example, in West Virginia – the lowest state
- The average adjusted gross income of the top 5%: $296,75
- The average adjusted gross income of the top 1%: $667,368
In Oregon – in the middle
- The average adjusted gross income of the top 5%: $469,205
- The average adjusted gross income of the top 1%: $1,193,735
While the highest state is New York –
- Average adjusted gross income of the top 5%: $844,193
- Average adjusted gross income of the top 1%: $2,739,623
Now this report, while it says a lot about the cost of living and income, it doesn’t include the whole picture of a person’s net worth (assets minus liabilities), which is a truer reflection of true wealth.
“Schwab conducted a Modern Wealth survey in 2021 and found that Americans believe you need an average personal net worth of $1.9 million in order to be considered wealthy. This would mean that the value of the property you owned, minus everything you owe, would need to add up to almost $2 million.”
Some real life examples of stealth wealth
There are many people in the world that have stealth wealth. Some of them are quite famous, like Warren Buffet and Ronald Read. But for every celebrity or millionaire with stealth wealth, there are countless other people who have quietly amassed a large fortune without anyone knowing.
But let’s dig into the two we mentioned.
Ronald Read isn’t your typical famous person, but he certainly made headlines.
“As one-time Vermont-based janitor and gas station attendant Ronald Read demonstrated, you can reach the seven-figure mark on a modest salary. Unbeknownst to everyone around him until he died at age 92 in June 2014, Read had quietly amassed an $8 million fortune, thanks to smart spending and investing habits.”
He saved his money, didn’t buy anything fancy, frequently went without, and happened to be a good amateur stock picker. At the time of his death, his portfolio had 95 stocks in it, many of which he held for decades. He bought tried & true American standard large-cap stocks – Procter & Gamble, GE & Dow Chemical to name a few.
Upon his death his community found out about the fortune he amassed, and that he donated about $6 million of it to the local library and the hospital.
The Oracle of Omaha is one of the most famous investors in the world, and he has a net worth of over $80 billion.
What’s even more impressive than his wealth though, is how he got there. He started with nothing but a few thousand dollars and made it into being one of the richest men in the world.
One of the main reasons for his success was his aversion to spending money on things that wouldn’t make him more money in the long term. He conspicuously drove an older car, lived in the same house (that he bought in 1957) for about $31,000, and reinvested his earnings.
Just how rich was he? Think $115.5 billion to be exact.
What made him so smart and so rich? It was his investment philosophy. Buffett said in one of his letters to shareholders that “when trillions of dollars are managed by Wall Streeters charging high fees, it will usually be the managers who reap outsized profits, not the clients”. In 2007, Buffett made a bet with numerous managers that a simple S&P 500 index fund will outperform hedge funds that charge exorbitant fees. By 2017, the index fund was outperforming every hedge fund that made the bet against Buffett. (source)
He’s pledged to donate the majority of his fortune, about 83% to the Bill & Melinda Gates Foundation, as well as other charities.
Now, everyone knows Warren Buffet is rich because he’s famous for what he’s doing. However, if you didn’t know his name or his face, you wouldn’t assume he’s rich by looking at his lifestyle. That’s stealth wealth.
If you’re interested in learning more about the stealth wealth community, you should read Thomas Stanley’s The Millionaire Next Door book. The research he and his partner did encompasses decades, with hundreds of interviews, detailed data tracking, etc. It’s truly a fascinating read! It made it on the list of the best financial literacy books that can change your life!
The benefits of being stealth wealth
It’s hard to imagine that anyone would want to live far below their means but many do it. There are many benefits to practicing stealth wealth
When you have a lot of money, people tend to judge you. They expect you to do things a certain way and they can be very critical. You don’t have to worry about someone saying something to you like “you can’t be poor and drive that car” or “how do you not have a job?”.
In fact, if someone starts judging you for your wealth accumulation strategy, they’re probably just curious about how it’s working. Don’t give them any information though – let them think whatever they want!
When you’re wealthy people want you to spend your money, all time. Buy new cars, go on flashy vacations, etc. When you have money, people want you to foot the bill for things, they feel you “can afford it.” Or, they may have more noble ideas, such as donating to nonprofits, but still, the fact remains that people want a piece of what you have.
When you have stealth wealth, no one knows how much money you actually have so there is no pressure to act or behave in a certain way. You can just be yourself and no one will expect anything different.
When you’re a nobody, no one really cares about what you do (for the most part). But when you’re rich or famous people want to know what you’re doing and why. They wonder if this is the “real” you or just a facade that you’ve created for show.
There are lots of stories in Hollywood where people have gone broke because they spent money on extravagant things like yachts, private airplanes, or large mansions. People want to know everything; maybe as an escape from their own life, just to dream, who knows. The point being, everyone is in your business.
This one is similar to the other benefits but I feel it’s the most important of the benefits of stealth wealth. True wealth is freedom; you can do what you want to do when you want to do it. It’s like the stories of famous people wearing disguises to go out in public to be “unseen.”
You don’t have to worry about people taking your picture or following you around. You can go out and enjoy life without having to worry about someone trying to sell your story to the tabloids.
Sincere in relationships
Have you ever wondered if one of your friends is your friend because they want something from you?
When you have wealth, people want to befriend you because they know you can help them in one way or another. They are just using your money to get what they want – that’s not friendship! When you’re stealth wealth, you know that people are your friends because they like you, as a person, not because of your money.
While money is never 100% secure, having a lot of it can help a person feel secure. Security brings peace of mind, which some consider worth more than the value of their bank account. Some people who grew up extremely poor may feel that everything could fall apart at a moment’s notice. But the more they have, the more unlikely it becomes that they will be homeless in retirement age.
This can progress into a phobia (have you ever heard of bag lady syndrome?), or even worse mental illness. However, that’s the extreme end. But any person will tell you that they feel better when they have an emergency fund safe and secure.
How to live a stealth wealth lifestyle
It’s a lot harder to keep your finances a secret when you’re new money (vs old money). As people already know; you could move across the country and try to be low key. You get the general idea of how to be rich undercover, but let’s go through the rules of stealth wealth.
Stealth wealth rule #1: Don’t drive flashy cars
When you see a fancy car, what do you think? You wonder who the owner is and how they got so much money. If your goal is to live on stealth wealth then drive an average car like a Honda Accord or Toyota.
Mark Zuckerberg drives an Acura TSX, valued at around $30,000. He says it’s safe, comfortable, and not ostentatious. He’s not the only rich person driving a regular car. The Waltons (Walmart founders) drive Ford’s, Warren Buffett drives an old Cadillac. Multi-billionaires drive regular average cars, not a luxury car like a Mercedes.
Why? Well, in addition to flying the under-the-radar factor, the rich know that a car is just a depreciating asset, it basically loses value every day. And the rich don’t throw money at something that loses money.
However, this isn’t to say that you can’t have nice things or a nice house. But if you do, spread those purchases out and don’t flash them around. If you have a nice house, maybe don’t give people your address. Or if you go to the Maldives for a two-week vacation tell people that you’re taking a road trip to the Grand Cayon instead.
Stealth wealth rule #2: Don’t talk about your money or investments
First of all, no one likes a bragger. Secondly, if you talk about your money or Wall Street investments, especially to people who are not in the know, they will start to think that there’s something going on. Like why would you know so much about market trends and returns when you’re just regular Joe? Don’t make people curious about you.
It’s also interesting to know that most people don’t want you to tell them how to spend their money. People feel it’s a personal choice and none of your business. So even if you think you’re trying to help, people see it as you preaching & shaming them. So be safe and just don’t talk about money.
Stealth wealth rule #3: Don’t buy a lot of gifts or loan money to family
You might be comfortable with some of your family members knowing. But if you’re hiding it from them, this one is hard. You want to give your nephew a great gift for his birthday, but if you go overboard it could raise a lot of questions, questions you don’t want to answer.
Loaning money to family members is a hard pass for almost every person, it becomes even more important when you’re wealthy. When you loan money to family or friends; you need to consider it a gift. Why? Because you’re never getting that money back (usually). When they don’t pay you back, resentment grows and ruins the relationship.
If you’re able to loan cousin Lucy $10k to pay for back taxes, then your 56 other cousins might try it too. Don’t get me wrong, by all means, help them, but do so in a more average way.
Stealth wealth rule #4: Keep your day job
Now this one would be the hardest for me. If you didn’t need to work for money, then it’s awfully hard getting up early, to then sit in traffic, and deal with Rick in HR whining all day. Sorry, keep your job.
Now you don’t have to keep your same old job. There’s a lot of flexibility. You can go down to a less stressful job (you can say that your doctor advised you to do it for your health). Or, you can work in a field that you’re really passionate about, say a non-profit. Or you can work part-time. But if you decide to work as a barista then people will have questions. So be sure to have a vague but believable story.
Stealth Wealth Rule #5: Diversify & protect your money
This rule is a little bit different, it’s not about lifestyle, but it’s one of the most important things you can do to protect your wealth.
Diversify your assets – this is smart for a number of reasons, it lowers the risk of loss (think Enron collapse), and it helps spread your wealth out so people don’t see the whole picture. Trust me, if you’re the largest real estate holder in your area or the largest stockholder in XYZ company; people are going to find out.
Protect your investments – if there’s one place for you to spend a lot of money it’s with a really good CPA and estate attorney. Protecting your money should be a top priority, think wills & trusts. While a good CPA can help you pay less in taxes, always a bonus.
How to get secretly rich
Today, more than ever before in history it’s possible to achieve financial freedom. Especially if you plan ahead and are smart with your money.
It really is simple arithmetic – the earlier you start saving and investing; the greater your wealth will be later on down the line. The is the power of compound interest.
Remember, compound interest is the eighth wonder of the world (as it’s rumored to have been called by Albert Einstein). It’s when your money makes money, and that money makes money for you too. It’s what makes millionaires out of average people and it’s working for you whether you’re aware of it or not.
So what does this actually look like? Let’s run a fake scenario…
- Fake person: Becca
- Age: 24
- Annual Wage: $50,000
- Monthly take-home: $2,916 after taxes (assumes a 5% post tax 401k contribution with full match) = $145 + $145 match = $291 in Roth 401k
- Invests 15% of her take-home in Roth IRA: $415
- Totals $706 invested monthly at an average 7% rate of return (assuming no wage increase for the sake of simplicity)
At her retirement age of 65; she will have $1,997,578 in her accounts. Which is just a bit river what American’s feel is “rich.”
How to actually do this
This is all dandy, but telling someone to “save more” doesn’t always help. People want to know “how.” Because if saving money was easy, we’d all be rich.
Saving money is simple, but it’s not easy. My best advice for you is to follow a pay yourself first model and automate everything.
Paying yourself first means that you put money towards your financial goals first (then pay your bills after). Automating it means you set everything up once, and then it happens on its own. If we left to ourselves, we’d forget or we’d find another use for the money, or we’d lose focus. Automating it means consistent savings every single month.
At the end of the day
Becoming wealthy is not as difficult as one might think. If you make a commitment to your financial goals to save and invest early on in life, you can amass a sizable nest egg over time. While there are no guarantees, following the five stealth wealth rules we’ve outlined will put you in a much better position to achieve financial security and happiness. So what are you waiting for? Start saving today!