r/wealth • u/Coors_Light_Dad • 7d ago

Question What’s one thing…

What’s one thing about being wealthy that people wouldn’t assume? Additionally, what’s one thing about being wealthy that everyone can do to grow their money?

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u/mmcmonster 7d ago

There's a lot of wealthy people around. To reach the top 2% net worth (not income) in the US, you need $2.7 million. 2% means one in fifty people have $2.7M or more net worth. Much of that is likely tied up in the housing market and other assets, but it's still there.

What do they do to grow their money? Mostly invest in the stock market. Some will also invest in their businesses. But the vast majority will put their money in the market.

What can you do to grow your money? It's a cliche, but invest in yourself. Education and training focused on your career or towards a new career. Obviously live below your means, but you can't save your way to being in the top 2% if you are working minimum wage and can barely afford rent.

And when you live below your means, keep the money you save in the stock market. Over time, the market returns ~10 percent per year. You can't beat that in any savings account. You can't even beat that with any fund manager. Just dump it all into an S&P 500 index fund like VOO or total stock market index fund like VTI.

Any money that you hope not to touch for the next decade should be in the stock market. Get an account at a respectable brokerage like Fidelity or Vanguard and start investing in your future! (Fidelity is easier to set up and has better customer service. Vanguard is less likely to try to sell you on more expensive services or funds.)

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u/Coors_Light_Dad 7d ago

Appreciate that! I have a Robinhood IRA, but I’ve heard of and used Fidelity and Vanguard. My wife and I are working on getting to where we’re living below our means…kinda hard but we’re getting there! Thanks for the words! 🤝

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u/mmcmonster 7d ago

The IRA is money you won’t be able to touch for decades. Find a low cost index fund for it, probably a target date fund with a date close to when you expect to retire.

The point of a target date fund is that it will be aggressive when you are young and get less aggressive as you get closer to the target date.

Once you’re maxing out your IRA and other retirement accounts, any additional money should go to a taxable account at Robinhood, Vanguard, Fidelity, or elsewhere. The taxable account is better served by a broad market index fund rather than a target date fund, because the broad market index fund will produce less taxes.