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- What income is considered wealthy? I tackle this misconception that wealth and income are always linked.<\/li>\n\n\n\n
- How can you avoid the issues that come with sudden wealth, like an inheritance or lottery win? What makes people who have acquired millions in some cases go broke?<\/li>\n\n\n\n
- What is the most accurate test which can determine where you should move as an expat? Which languages you speak, your hobbies and interests or something else?<\/li>\n\n\n\n
- Is hustle culture, and “working hard doing something you love”, misleading? I speak about some of the many limitations of hustling, even though working hard isn’t a bad thing.<\/li>\n<\/ul>\n\n\n\n
Es posible que algunos de los enlaces y v\u00eddeos que aparecen en las respuestas originales no se muestren aqu\u00ed y, si es as\u00ed, tendr\u00e1s que consultar las respuestas originales para verlos.<\/p>\n\n\n\n
Si quieres que responda a alguna pregunta en Quora o YouTube, o est\u00e1s buscando invertir, no dudes en ponerte en contacto conmigo, correo electr\u00f3nico (advice@adamfayed.com) o WhatsApp.<\/p>\n\n\n\n
<\/div>\n\n\n\nWhat income is considered wealthy?<\/strong><\/h2>\n\n\n\n
Fuente: Quora<\/a><\/p>\n\n\n\n
It is a great question, as it gets to the heart of one of the biggest misconceptions people have.<\/p>\n\n\n\n
As Karlam says below, wealth is not completely dependent on income. Not sure, if you have a lot of income, you are more likely to have wealth.<\/p>\n\n\n\n
Yet net worth is a simple equation:<\/p>\n\n\n\n
Net income (including from inheritances and unearned income) – expenditures x net investment returns.<\/p>\n\n\n\n
Yet net worth is assets – liabilities, but the above will determine that equation for most people:<\/p>\n\n\n\n
<\/figure>\n\n\n\n
If you are earning 90k a year and invest 30k, for decades, into well performing assets, you will be extremely wealthy by the time you retire.<\/p>\n\n\n\n
We probably all know at least one person in our network who bought assets decades ago, and is now wealthy, despite never earning a lot.<\/p>\n\n\n\n
Think about those \u201chouse poor\u201d grandmas in places like London and New York, who have seen their house increase in value.<\/p>\n\n\n\n
In comparison, if you earn $1m a year but spend $1.1m, you will be in financial problems.<\/p>\n\n\n\n
You might assume that isn\u2019t common, but it is. 78% of former NFL stars go broke within five years of retirement, with 68% of basketball players facing the same fate.<\/p>\n\n\n\n
Then there are tens of millions in the world who are worth millions in retirement, even if they didn\u2019t even earn 100k in one single year.<\/p>\n\n\n\n
The following video from the Khan Academy explains the difference between income and wealth well<\/p>\n\n\n\n
![\"\"](\"https:\/\/img.youtube.com\/vi\/o5-T52bh-eQ\/0.jpg\")
<\/figure>\n\n\n\nOnce this difference is understood, it changes your mindset. Most people look at the person driving the super expensive car and think \u201cwow he\/she is wealthy\u201d<\/p>\n\n\n\n
If you understand the difference between wealth and income, and the average spending habits of wealthy people, you are more likely to think \u201cis this person really wealthy or in fact broke due to their spending habits\u201d.<\/p>\n\n\n\n
At least 50% of people in my network who have driven fancy cars have gone broke at some stage in their lives.<\/p>\n\n\n\n
<\/div>\n\n\n\nHow can you avoid some of the mistakes people often make when coming into sudden wealth?<\/strong><\/h2>\n\n\n\n
Fuente: Quora<\/a><\/p>\n\n\n\n
Studies that have been done on lottery winners show the biggest reason for bankruptcy is bad spending habits.<\/p>\n\n\n\n
<\/figure>\n\n\n\n
If we dig down further though, there has to be some root causes of that.<\/p>\n\n\n\n
The main ones are<\/strong><\/p>\n\n\n\n
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- Advertising wealth<\/strong>. If somebody does that, some hangers on will want handouts. Only people with high resolve can say no to everybody. A small percentage of people, usually within the person\u2019s circle of trust like so-called friends, will intentionally try to take advantage.<\/li>\n\n\n\n
- Lack of planning.<\/strong> If somebody makes $10million from the lottery, that sounds like a lot of money and indeed is a lot of money for 99.9999% of people. However, that is only about $400,000-$500,000 of yearly income for life si<\/strong> it is invested well. Yes, the stock markets and many other investments have done more than 4%-5% per year, but you also have to factor in inflation and have a conservative buffer in case the assets perform worse than historical averages. That is a maximum of $1,369 a day. That isn\u2019t enough to \u201cvivir como un rey<\/a>\u201d 365 days a year and never go bust. Now let\u2019s say somebody buys a house and loads of luxury items + gives some money to family, so they are left with $5million. That is $600-$700 a day. A bored lottery winner who has given up work could easily spend that online in an hour. A complacent lottery winner will also assume \u201cwhy is spending 2k a day excessive when I have millions\u201d?<\/li>\n\n\n\n
- Extremes when it comes to risk. <\/strong>Putting the money in the bank won\u2019t work for many people. We live in an era of 0% interest rates. Inflation will erode the money. You will run out unless you are very frugal as inflation compounds. Getting 0% in the bank when inflation is at 2%-3% per year is an indirect 28%-40% loss to inflation over ten years. Over decades? You could get wiped out if you don\u2019t have fresh money. By the same token, however, ultra risky investments into illiquid assets and friends\u2019 businesses isn\u2019t a good idea either.<\/li>\n<\/ol>\n\n\n\n
So, proper planning + the ability to say no + a realistic attitude to risk = a winning combination.<\/p>\n\n\n\n
I guess reading stories about how frequently these \u201criches to rags\u201d stories are, can motivate people.<\/p>\n\n\n\n
All too often people assume these stories are just 1% of the total, which isn\u2019t the case at all.<\/p>\n\n\n\n
Most studies show that at least 30% of lottery winners go broke, with some indicating over 50%.<\/p>\n\n\n\n
Former sports stars are even more likely to go broke by middle age.<\/p>\n\n\n\n
<\/div>\n\n\n\nWhat is the most accurate test on where one should move to?<\/strong><\/h2>\n\n\n\n
- Lack of planning.<\/strong> If somebody makes $10million from the lottery, that sounds like a lot of money and indeed is a lot of money for 99.9999% of people. However, that is only about $400,000-$500,000 of yearly income for life si<\/strong> it is invested well. Yes, the stock markets and many other investments have done more than 4%-5% per year, but you also have to factor in inflation and have a conservative buffer in case the assets perform worse than historical averages. That is a maximum of $1,369 a day. That isn\u2019t enough to \u201cvivir como un rey<\/a>\u201d 365 days a year and never go bust. Now let\u2019s say somebody buys a house and loads of luxury items + gives some money to family, so they are left with $5million. That is $600-$700 a day. A bored lottery winner who has given up work could easily spend that online in an hour. A complacent lottery winner will also assume \u201cwhy is spending 2k a day excessive when I have millions\u201d?<\/li>\n\n\n\n
- Advertising wealth<\/strong>. If somebody does that, some hangers on will want handouts. Only people with high resolve can say no to everybody. A small percentage of people, usually within the person\u2019s circle of trust like so-called friends, will intentionally try to take advantage.<\/li>\n\n\n\n
![\"\"](\"https:\/\/adamfayed.com\/wp-content\/uploads\/2025\/03\/Adam-Fayed-Contact_CTA3-512x288.jpg\")
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