Aim to get wealthy, not rich

Jul 22, 2019

In Lessons from a Millionaire Tramp, Dhruv Girdhar of RichifyMeClub backed up his perspective with two stark examples.

A tramp called Curt Degerman.

Curt spent his adult life sauntering through a small coastal town in Sweden on an old bicycle. He rummaged recycling bins for cans and bottles, which he sold to a recycling plant. And ransacked the bins of restaurants for leftover scraps of food. No dependents. No family. No loans. No debt. Minuscule expenses.

When he died of a heart attack at the age of 60, his estate was estimated at an eye-popping $1.4 million. (You read that right). It included a house, 124 gold bars, stocks, money in the bank and cash at home.

A versatile American actor, producer, and musician called Johnny Depp.

His ultra-extravagant lifestyle often cost him in excess of $2 million per month. His residences included a 45-acre chateau in the South of France, a chain of islands in the Bahamas, multiple houses in Hollywood, several penthouse lofts in downtown Los Angeles, and a fully-functioning house farm in Kentucky. Then there was a luxury yacht, 45 luxury vehicles, 70 collectible guitars, and $30,000 on wine flown in from across the world.

So Johnny Depp was rich, without a doubt. But Tin-Can-Curt was wealthy. Don’t conflate the two terms; knowing the difference between being wealthy and being rich is the difference between living a secure or a fraught life.

I got a much more clearer picture of this in the book The Thin Green Line: The Money Secrets of the Super Wealthy.

My perception is many people who are not wealthy think that the key to getting rich is making a lot of money. But look at all the movie stars and athletes who have made endless amounts of money and are dirt-poor. They’re making 10-15 million dollars a year, and they get to 45 years old and they’re flat broke.

What’s seen is the money they made, but what’s unseen are the choices that they have made. It’s what allows them to continue to be wealthy (or not). Look at the implications of the choices you have made relative to the success you have had.

- Michael Sonnenfeldt, founder of Tiger21

The author Paul Sullivan has some very interesting advice. It’s better to be wealthy than rich, even if you’re poor.

You could be rich – driving a Mercedes and own a huge apartment in the best area in town. But you could also be heavily in debt. You may have a lot of money in the bank, but your lifestyle could be so extravagant that your finances would be fragile.

Wealthy is having more money than you needed to do all the things you wanted to do. It is not a number so much as a psychological feeling: you aren’t worried about running out of money because you have more than enough, even if it might be less than someone who was worried about going broke.

Rich is a number, and as we saw in the Global Financial Crisis, one that does not equate to being financially secure. Wealthy could be a successful corporate attorney; it could also be a teacher who lived on her pension and savings.

He further explains the difference between being wealthy and rich in this podcast.

You could be at the very tippy top, making a ton of money each year, but you’re really rich. And the difference is freedom. People who are wealthy are able to make all the decisions and choices that they want to make with their money. They’re in control. They control life.

The people who are rich – in the simplest context, you can think of somebody who is wildly over-leveraged. They may make a million dollars a year, but they have $5 million in debt obligations that they’re trying to service every year. Life is going to control them.

You could be a schoolteacher who saves her money in the state-sponsored pension for teachers, saves a little bit of extra, likes to go on hikes, maybe take an annual vacation. That person can be far wealthier than the corporate titan who’s making $500,000 to  $800,000 a year, but is so leveraged that he’s one or two paychecks away from being broke.

Wealthy is not necessarily a figure in your bank account. It’s basically the control that you have with the wealth that you’ve created. And the ability to make those choices you want. Whether those choices are to go for a hike with your grandkids or to hop on a plane and jet over to London for a weekend. It’s all about having those choices and knowing that when you make them, you’re not endangering some of the essential things in your life.

In that sense, a person without encumbrances who has $100,000 can be wealthier than one leveraged to the hilt and worth 10 times that on paper. So being rich does not translate to being financially secure. Nor does it necessarily mean having successfully captured huge swaths of the market.

Paul Sullivan suggests that you keep this in mind:

  • Spend less money on eating out and channelize it into your retirement fund. It would be healthier from a physical perspective, as well as financial. Over the years, those differences become enormous.
  • Don’t rely on borrowing for things you cannot afford, such as clothing, footwear, trips, expensive cars, and lavish dinners at upscale restaurants. Opt for discipline with occasional indulgence, instead of vice versa.
  • The choices you make are more important than the money you make. Therein lies the secret to security.
  • Wealth and Money aren’t synonyms.

Investment involves risk of loss

Add a Comment
Please login or register to post a comment.
anand kumar
Jul 25 2019 11:11 AM
Your articles are so simple and joyful to read. Even without any complex financial lingo you are able to communicate a million dollar idea in simplest of words.
aneel madhavan nair
Jul 23 2019 03:27 PM
Well, start with a meager 10% of your next monthly income and gradually take it up by 10% year on ywar. 10% year 1 and add additional 10% to it making it 11% of the net income to the 2nd year and in 10 yrs it will be 24% in 10th year. If you start at 10% of 10 lacs PA and your income just meets inflation of say 6% then the 10th year saving would be 24% of18 lacs that's like 42% of the 1st years income and the value of the savings would be 4 times your 1st years net income. Further if your income beats the Indices by 20% i.e. @15% pa, then the savings would be saving as much as your 1st years income if not more and the value of the total savings would be 6.5 times the 1st years net income about 65 lacs. The 8th wonder called power of compunding.
© Copyright 2024 Morningstar, Inc. All rights reserved.
Terms of Use    Privacy Policy
© Copyright 2024 Morningstar, Inc. All rights reserved. Please read our Terms of Use above. This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
As of December 1st, 2023, the ESG-related information, methodologies, tools, ratings, data and opinions contained or reflected herein are not directed to or intended for use or distribution to India-based clients or users and their distribution to Indian resident individuals or entities is not permitted, and Morningstar/Sustainalytics accepts no responsibility or liability whatsoever for the actions of third parties in this respect.
Company: Morningstar India Private Limited; Regd. Office: 9th floor, Platinum Technopark, Plot No. 17/18, Sector 30A, Vashi, Navi Mumbai – 400705, Maharashtra, India; CIN: U72300MH2004PTC245103; Telephone No.: +91-22-61217100; Fax No.: +91-22-61217200; Contact: Morningstar India Help Desk (e-mail: in case of queries or grievances.