wealth definition

Join The 1% By Earning 10%


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The concept of the “1%” vs. the “99%” caught a strong foothold in 2011. It was the means to express income inequality. It was championed by the Occupy Wall St. Movement, which originated out of the economic tatters of the Great Financial Crisis.

Many had faced financial woes and struggles for years due to poor financial decisions of major financial institutions and government inaction – or so was their opinion. They wanted Wall Street to pay their “due”. Often it was placed as a “us vs. them” mindset, believing the rich were unjustly enriched by the issues they helped cause.

It is well known that in a Bear market, or a market crash, those who have money to invest will make a massive profit off of the losses of those who can’t afford to invest. The 2020 COVID dip saw similar patterns, those who were financially stable and secure were able to buy securities at massive discounts.

While the Occupy Wall Street movement has fizzled out, the focus on income inequality and the terms 1% and 99% still are present to this day.


Fortune Magazine

Even as recently as a few days ago, authors in Fortune magazine are writing about the 1%!

The idea of the 99% vs. the 1% is an age-old “class struggle” idea.

What makes it so easy to get upset at someone or a group of people with better financial footing than yourself? Well, by calling them the “1%” you dehumanize them into a faceless group. Furthermore, jealousy and greed are among two of the strongest human emotions. Anger is often a secondary emotion, resulting from another one. So people get jealous and it makes them mad, which fuels hatred for “those people who benefit from my struggles!” Many feel powerless. They work hard, but never seem to get ahead, living paycheck to paycheck.

What Is a 1% “Lifestyle”?

If you want to be a member of the “1%” you’d need to earn a large sum of income annually. Using an IRS study, you’d need $597,815 in annual income in 2018 to be part of the 1% across the entire United States. The amount to reach this group varies greatly based on each state, for example, in Massachusetts you’d need to earn $810,256 – the highest threshold nationwide, beating out New York and California. While you’d only need $350,212 to reach that mark in West Virginia, the lowest threshold.

Very few of us earn this level of income. Even fewer jobs offer these pay rates as their peak income level! I refer to this as your cash flow or functional wealth. This is the money that’s coming in to meet your obligations, expenses, and spending. Your total “net-worth” or Static wealth grows when your functional wealth is positive or cash flow is positive when removing your expenses.

Infographic: U.S. Wealth Distribution - Who Owns the Most? (Details in article).

Federal Reserve Bank of St. Louis

Using the St. Louis Fed’s data from 2016 about wealth distribution, we can see the wealthiest among us are getting even more wealthy. This is strictly “net-worth”, meaning your assets minus debts. This does not factor in your annual income – cash flow/Functional Wealth – but only what you have right now and what you owe right now. If you sold every single possession and converted everything to cash and paid off your debts, this is what each group would have leftover.

If we think about it in summary, the 1% have two clear defining factors:

  1. A large stream of cash flowing into their accounts to cover life’s expenses and to spend on fun and enjoyment.
  2. A large number of assets to fall back on in times of need or when unexpected expenses arrive.

Those in this group may have more money than they can even imagine spending or know how to spend. How did they get there? By investing in businesses that drive the economy. You can get rich with a rare talent, hard work, and a good career. The very wealthy usually get there by putting their capital to work owning businesses.

You can achieve these same definitions for your lifestyle via income investing. I created the Income Method to meet the needs of retirees and investors. It allows us to have high levels of Functional Wealth which will also allow you to see your Static wealth grow rapidly as well.

Most of us won’t have billions in spare cash to spend on building rockets to Mars, but we can have an income that meets our needs, and provides us with a very comfortable life without the stress of stretching to get to the next paycheck, or working ourselves to death. We too can participate in the greatest wealth generator ever seen in the world – the U.S. economy.

How can you achieve this?

Change Your Mindset – The Launch Point

The big first step is to change how you think about finances, wealth, inequality, the whole lot. You likely will never achieve the Static wealth that the top 1% of the 1% has developed over years of passing assets down from generation to generation.

You need to create tangible and practical goals. This is where many of us fail. We think about retirement and dream big vague dreams. These are great ideas and concepts. They’re terrible goals.

Goals need to be something to can strive towards and measure your achievement of. Ideas can help you form your goals, but you can’t stop at just nebulous ideas. You need to be specific – how much income do you need to cover expenses, cover your wants and save more for the future? How large of an emergency fund do you need?

Be realistic, but don’t be afraid to stretch yourself!

This is where the Income Method comes in. It helps us have the framework to create a portfolio targeting 8-10% yields so we have income to invest to help it grow independently prior to retirement, as well as have excess to invest even during our retirement!

The 1% have income that far exceeds their expenses. You can achieve this with a portfolio generating strong dividend income for you. Choose companies that share their success with shareholders through dividends!

Failing to plan for income generation is planning to fail. Simply tossing dollars into a bin and hoping it will one day be a pile big enough to cover your retirement expenses and needs without running out before you do is not a good method.

Cut Your Debt – Trimming the Fat

While we’ve been focusing on the income side of things, I want to consider the debt side for a moment.

Static Wealth is your assets minus your debts. So any debt you have is a straight line reduction of your wealth. If you own a $5 million home but you have $4 million worth of mortgage or debt tied to it, you only have $1 million in Static Wealth.

Likewise, your Functional Wealth is filtered through your debt as well. Every dollar of debt must be serviced. Interest must be paid. So while you may make $500,000 annually, if your debt requires $200,000 to be covered, your overall expendable income is vastly reduced.

I love talking about cash flow because it fits the river analogy so well. If you have a river flowing from point A to point B, money in and excess money left over, then any debt is like a branch feeding off of the main river. It takes water out of the flow and reduces the overall amount of water getting to point B. Point B in this instance is your water reservoir to cover unexpected expenses. Any unspent income can raise the levels and give you more cushion.

If no water is making it to the reservoir, then you may need to tap into your reserves to cover life’s costs.

Debt is often one of the largest thieves of your income. It raids your income stream to satisfy past choices. It also greatly limits your future options.

Debt has an extremely powerful one-two punch effect on your wealth. If you have $100 in your reservoir but $200 in debt owed, your static wealth is negative. Meanwhile, if you have $200 of functional wealth flowing in and it takes $100 a month to service your debt, your end-game income is only $100 a month.

The reservoir of the 1% is enormous. They may have a large amount of debt, but their Static wealth is an enormous positive number! You don’t need to have all the properties, debt, and assets of the 1%. What you do…


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