Wealth Creation and Investment Habits

The global financial system is showing cracks, and many are starting to question why money seems to work so differently for the wealthy compared to everyone else. From economic downturns to the devaluation of cash through excessive printing, the system often feels rigged against the average person. Drawing on foundational concepts from financial education, this article explores why money is broken, how different classes approach wealth, and where the rich strategically store their assets to preserve and grow their fortunes.

The Broken Money System

The modern financial system is built on fiat currency—money that has value because governments declare it so, not because it’s backed by tangible assets like gold. This system allows central banks to print money at will, which can lead to inflation and erode the purchasing power of your savings. During crises, such as the economic fallout from pandemics or recessions, governments often inject stimulus money into the economy, further diluting the value of cash. This creates a cycle where the average person’s savings lose value, while the wealthy leverage their knowledge to protect and grow their wealth.

Unemployment spikes, businesses struggle, and the “new normal” of reduced economic activity exacerbates the problem. Many people find themselves stuck, blaming external factors like government policies or political leaders. However, the real issue lies in financial habits and education—or the lack thereof. To navigate this broken system, we must shift our focus from blame to actionable strategies, learning from the investment habits of different socioeconomic groups.

Investment Habits

Financial behaviors vary significantly across socioeconomic classes, and these habits reveal why some thrive while others struggle in a broken system.

• The Poor: Those in lower income brackets often spend their earnings on immediate expenses like rent, utilities, or small luxuries such as vacations. While there’s nothing inherently wrong with this, it leaves little room for saving or investing, trapping them in a cycle of living paycheck to paycheck.
• The Middle Class: The middle class, including those with significant incomes, often fall into the trap of buying liabilities—cars, boats, or other depreciating assets. They may also entrust their money to wealth managers, investing in retirement accounts, fixed deposits, or stock portfolios. While this seems prudent, it often means their money is tied up in volatile or low-yield assets, subject to high taxes and fees, with little control over the outcome.
• The Rich: The wealthy operate differently. They prioritize assets—investments that generate income, such as real estate, businesses, or commodities. These assets create passive income streams, allowing their money to work for them. For example, owning apartment buildings generates rent, covering expenses and providing residual income. The rich also leverage tax strategies, like depreciation, to minimize their tax burden legally, keeping more of their wealth.

The key difference? The rich focus on the velocity of money - keeping their capital moving through investments that produce returns, rather than letting it sit idle or be eroded by inflation.

The Three Tiers of Wealth

To understand why the money system feels broken, we need to examine where wealth is stored. There are three tiers of wealth - primary, secondary, and tertiary - each with different levels of risk and stability.

1. Primary Wealth (Natural Resources): This tier includes tangible assets like land, oil, gold, timber, coal, and water. These are the raw materials that form the foundation of all wealth creation. For instance, owning land can yield income through rent or resource extraction, such as oil or timber. The wealthy invest heavily in primary assets because they are inherently valuable, less susceptible to market volatility, and provide long-term stability.
2. Secondary Wealth (Businesses): Businesses, such as those extracting or processing natural resources (e.g., oil companies or lumber producers), form the secondary tier. These entities rely on primary resources to generate income. While businesses can be profitable, they carry more risk than primary assets due to operational challenges and market fluctuations.
3. Tertiary Wealth (Paper Assets): This includes stocks, bonds, ETFs, derivatives, and even cash. Most people, especially the middle class, invest here because it’s accessible through financial advisors or retirement accounts. However, this tier is the riskiest. Paper assets are far removed from tangible resources, making them vulnerable to market crashes, as seen in historical events like the 1933 stock market collapse. Additionally, the overabundance of ETFs (e.g., gold ETFs outnumbering physical gold) creates a disconnect between paper value and real assets.

The wealthy prioritize primary and secondary wealth, investing in tangible assets like land or businesses that derive value from natural resources. This approach shields them from the volatility of paper assets and the devaluation of fiat currency.

Why Education Is the Key to Fixing Your Finances

The broken money system thrives on financial illiteracy. Most people lack the self-education needed to navigate it effectively. Formal education may secure a job, but as motivational speaker Jim Rohn famously said, “Formal education will make you a living; self-education will make you a fortune.” Self-education—reading books, watching educational content, seeking mentors, and learning from failures—lowers investment risk and empowers you to make informed decisions.

During economic downturns, the wealthy use setbacks as opportunities to learn and adapt. They study market trends, explore new asset classes, and refine their strategies. For example, reading books like The Great Reset or Crash Course by Chris Martenson can provide insights into economic cycles and wealth preservation. By embracing a growth mindset and learning from diverse perspectives, you can transform your financial habits and position yourself to thrive, even in a broken system.

How to Protect and Grow Your Wealth

To navigate the broken money system, consider these actionable steps:

1. Invest in Primary Assets: Explore opportunities in real estate, precious metals, or other natural resources. For example, owning land can provide rental income or royalties from resource extraction, offering stability and passive income.
2. Build Financial Literacy: Read books, watch videos, and find mentors who specialize in wealth-building strategies. Focus on understanding assets versus liabilities and how to leverage tax advantages.
3. Avoid Over-Reliance on Paper Assets: While stocks and ETFs have their place, diversify into tangible assets to reduce risk. Be cautious of handing your money to financial planners without understanding where it’s invested.
4. Embrace Transformation: Shift from merely gathering information to applying it. Learn from past financial mistakes, stay open to new ideas, and take calculated risks to grow your wealth.
5. Seek Residual Income: Invest in assets that generate passive income, like rental properties or business ventures, to create sustainable cash flow.

Conclusion

The money system may be broken, but you don’t have to be. By understanding the habits of the wealthy, prioritizing primary and secondary assets, and committing to self-education, you can protect and grow your wealth despite economic challenges. The rich don’t work for money—they let their money work for them through strategic investments and continuous learning. Use this time to educate yourself, break free from limiting mindsets, and start building a more secure financial future today.

Disclaimer: This article is for informational purposes only and not financial advice. Always consult a qualified financial advisor for personalized guidance.

To explore these ideas further, check out Chris Martenson’s book:

The Crash Course: An Honest Approach to Facing the Future of Our Economy, Energy, and Environment

The world is experiencing a series of crises. In The Crash Course: An Honest Approach to Facing the Future of Our Economy, Energy, and Environment, Revised Edition, veteran executive and strategist Chris Martenson delivers an incisive and eye-opening exploration that explains why the reader needs to understand that it is the interconnectedness of the various crises that matters most. From energy shortages to climate instability, financial crises, supply chain disruptions, pandemics, war, and crop failures, you’ll discover the common factor that is driving them all and how to adapt to volatile new realities and safeguard your own personal wealth, health, and community.

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