The second purpose of wealth is security: it protects your health, keeps poverty away, and absorbs shocks through income that does not depend on you. Part one covered wealth as freedom. This part looks at wealth as protection and a safety net, tied to the oldest instinct of all, shelter and survival.
The video walks through five kinds of security: physical, from poverty, through diversification, from black swan events and social.
Watch the full video here, or skip to the breakdown below.
The 5 kinds of security at a glance
- Physical security (0:34)
- Security from poverty (2:05)
- Security through diversification
- Security from black swan events (5:36)
- Social security
1. Physical security
Wealth lets you protect the health of everyone under its umbrella. That gives the bearer a slight edge that may let them escape death’s grip where others cannot. The clearest example is medical cost: you do not need a viral fundraiser to pay for a child’s surgery, you buy the best treatment your wealth can afford. Money buys a fighting chance.
The same logic is why rich people buy expensive SUVs, which give slightly better odds of survival. The wealthy also move families out of unsafe places, while the average person is stuck in the environment they were born into. You are responsible for your own physical security and that of your circle, so consider how much of your wealth to devote to it.
2. Security from poverty
Money does not buy happiness, but it can remove many sources of unhappiness. Wealth is meant to make sure you and the people you care about never go back to worrying about keeping the lights on, heating the home or putting food on the table.
That is the reason to build wealth separately from lifestyle. Greater wealth carries a greater lifestyle, but a lifestyle that outweighs the wealth makes everything crumble. The video asks what would happen if you could not work for 12 months, and how much of your lifestyle would be affected. Debt is the other worry: today’s society runs on it, and almost everyone has a dark cloud following them. A common mistake is thinking a well-paying job equals security from poverty. The video’s blunt line is that nobody gets rich working for someone else, and that to build wealth you need to own things that appreciate in value.
3. Security through diversification
Wealthy people in history were pictured with chests of gold coins, but the true purpose of wealth is to lift the financial burden off the individual. The only way to do that fully is to have several sources of income that are independent of you.
If you remember one thing from the series, it is this: if you create multiple sources of income that do not rely on your input, you will be free, rich and never worry about money. Diversification means your wealth bubble can take multiple cracks without breaking. It is not about avoiding failure, since no investment is entirely risk-free. It is about limiting the harm to your overall well-being, so the system endures even when something breaks.
4. Security from black swan events
A black swan event is statistically unlikely but happens now and then. The pandemic is the video’s example, and the poor were the hardest hit. It points to Ellen complaining about quarantine from a 27 million dollar compound with round-the-clock access to quality medication. Wealth lets you stay okay while everybody else panics.
The wealthy can also gain from these events. While the pandemic hammered markets and caused losses for many, others seized the opportunities that appeared in the chaos. Wealth insulates you from the worst effects and lets you acquire undervalued assets.
5. Social security
Not your social security number. The video says discrimination plays a nefarious role in society, and to some degree wealth can shelter you from it. Success, fame and wealth share one purpose: security through elevation.
Wealth goes beyond your skin tone, accent or birthplace and levels the playing field, since it is hard to look down on someone wealthier than you. It argues that the purpose of wealth is to protect you from hardship of every kind, mental, physical, emotional and spiritual. If you want your kids to be safe, become wealthy.
Be rich enough to be anyone
The video closes with a thought experiment: if you could flip a switch and become someone new in a new country with a new name, wealth lets you do that. It can open doors, get citizenships and build new homes, and wealth is welcomed everywhere it goes.
Its line: be rich enough that you could be anyone in the world and still choose to be yourself.
FAQ
How does wealth provide security?
The video names five ways: physical security, security from poverty, diversified income, resilience in black swan events and protection from discrimination.
Why is diversification important?
Multiple income streams that do not depend on your input let your wealth survive several hits. It does not avoid failure, but it limits harm to your overall financial well-being.
Is a well-paying job the same as security from poverty?
No. The video calls this a common mistake and says nobody gets rich working for someone else. Building wealth means owning things that appreciate in value.
What is a black swan event?
Something statistically unlikely that happens now and then. The video uses the pandemic as its example.
Why should wealth be separate from lifestyle?
Greater wealth carries a greater lifestyle, but a lifestyle that outweighs the wealth makes everything crumble if you cannot work.
Keep reading
