Ten Thousand a Year He's Rich!
by John M. Grund
"Mr. Darcy soon drew the attention of the room by his fine, tall person, handsome features, noble mien; and the report which was in general circulation within five minutes after his entrance, of his having ten thousand a year." — Pride and Prejudice, Jane Austen
In Jane Austen's pre-industrial age, the early 19th century, only land produced income that was steady, predictable and recurring. And land, plus the rent from tenant farmers, was undoubtedly how Mr. Darcy came to acquire his "ten thousand a year" — about $450,000 in today's money.
Adam Smith said income comes in only three types: profits, wages and rents. It seems safe to conclude that we have passed from Austen's age of rents, progressed through the age of wages and are now into the era of profits. More and more people hold tech stock on which they hope to make their fortune.
What's really happening is that successful families are discovering the wisdom of splitting their income between the three routes to riches so they can build stable, secure and growing net worth for the future. For decades, Americans have been primarily concerned with salary — we've worked for our money. But we're beginning to own financial assets as well — more than half of households own stock, for instance. We're letting our money work for us.
And in time, bigger numbers of us may get regular checks from our investments — stocks, bonds, real estate and retirement accounts.
In Cashflow Quadrant: Rich Dad's Guide to Financial Freedom, Robert T. Kiyosaki offers some tips on diversifying into ways to build wealth besides being an employee — namely self-employment, owning a business and making long-term investments in financial assets.
Self-employment adds the prospect of profit to wages. Owning a business can produce rent on the resources you put into it and profit as its value grows. Long-term investments in stocks can lead to profits, while bonds produce rent (interest) on the money you lend.
The bedrock of successful personal finance remains what it always has been — spend less than you have coming in — but now people have more options for adding rents and profits to their core wages. And that appears to be the key to turbocharging your net worth, the most common way of determining how wealthy you are.
How wealthy are you?
Page:How Wealthy Are You?
Want to Be Wealthy? You'd Rather Not?
Keys to the Financial Kingdom
I've Got It All... Including Anxiety
Email this article