Since people insist that being wealthy differ from being rich, any one would like to explain the differences?
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Since people insist that being wealthy differ from being rich, any one would like to explain the differences?
Being wealthy and being rich are not always two different things. But, the common way to look at the difference is a matter of liquidity.
When I say liquidity, I mean cash versus assets. For example, say you inherit $500,000 from a deceased relative. You are ecstatic but have no idea what to do with that money. You decide to put it in your checking account until you can think of something better. In this scenario, you are rich. You have half a million dollars in the bank but this money is not making more money. You could make a bed out of the stacks of bills and take pictures for your Instagram, or spend it on whatever you like. The smart thing to do would be invest, there are a thousand different ways to invest, but I won’t get into that on this answer. Say you decided to buy real estate. You put the entire $500k towards property that will cash-flow each year, giving you money to spend. In this scenario, you are now wealthy. You own an asset that will produce cash for many years to come and you have a high net worth. But, you are not necessarily rich because you spent all of your cash on property, leaving your bank account where it was before the inheritance. In summary, wealth refers more towards your net worth and rich refers to the cash in your bank account.
Rich is more about how much money you have, But wealthy is the combination of power, status, reputation and class. Becoming rich is faster, you could become rich overnight although the chance is small, but it’s possible. Becoming wealthy takes longer, and is through accumulation. It is all about how much resource you have, how much people you can influence, and mostly importantly, how much are you in control of your situation. Which concludes to how powerful you are as a human being. You have to be rich first in order to be wealthy, but if you’re rich, it doesn’t necessarily mean that you’re wealthy. Wealthy is like the next level of rich.