Tuesday, March 23, 2010

Do the wealthy know what 'recession' means?

Sometimes I get questions that make me scratch my head, like this one someone posted to formspring over the weekend:
Not all of us are living paycheck to paycheck and the word 'recession' ain't in some of our vocabs. How would you advise the significantly wealthy to increase their income and investments?

My answer: Who you foolin'? Truly wealthy people understand recession as well as anyone. The recession took a huge toll on investors in the equity markets and on business owners. Since wealth is measured by assets (the value of what you actually own), not income (how much you make), and since most wealthy people's assets are tied to investments or businesses they own, the idea that the wealthy don't have "recession" in their vocabulary is misplaced bravado at worst. At best it suggests a lack of understanding of the difference between assets and wealth, money and income.

Just because you don't live paycheck to paycheck doesn't mean you're not subject to the same economic realities that impact everyone else. They simply may not impact you the same way.

In terms of how to increase your income and investments, I'd need to know how you make what you make and how you invest what you have to give an informed answer.

*If you've got a question you'd like answered on my blog, tweet me here or post to my formspring here.*

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