“We believe our associates know we’re not stupid. So if they see something that doesn’t make sense, they should question it. If their suggestion makes sense, we’ll change to accommodate it. We know how to move and change with the times.” (Arthur Blank, Billionaire & Home Depot Co-Founder)
It is a fact that earned income is the most tax-disadvantaged and other income types (dividends and capital gains for example) involving little or less strenuous work are tax-advantaged.
It is also a fact that the top 1% of the population – the ones who own 50% of the wealth through income producing assets – is laser focused on acquiring increasingly larger ownership stakes in various types of income producing assets.
1. Does it make sense to be focused on only on earned income from work (wage or salary or fee)?
2. Does it make sense for the middle class to neglect the acquisition of ownership stakes in income producing assets?
Is the middle class moving and changing with the times? Are you moving and changing with the times?
In 1985, the richest American (Sam Walton) was worth $2.8 Billion and the 400th richest was worth $150 Million (Link #1 – see link at the bottom of post). In 2010, that same (Sam Walton’s – now split in 5 places among his widow and 4 children) $2.8 Billion is now worth $81.8 Billion while the 400th richest American is worth $1.3 Billion.
I have brought those numbers forward to highlight the difference between jobs (and the accompanying salaries, wages) and ownership stakes. The one thing you will not find about these wealthy folks is that they earned their way to these lists by salaries, nor will it be that this wealth (or net worth) is held in the form of cash in the bank – it is usually some form of ownership stake(s) in income producing assets.
Let us now return to the subject of this blog post – how your wage/salary (if that is all you depend on) is shrinking everyday. Did you know that you are essentially working for less as each day goes by? This is not necessarily obvious until you make some comparisons – an ounce of gold (Link #2) that, 10 years ago, would have cost you less that US$280 would now cost as much as US$1,400 and an ounce of silver, which 10 years ago would have cost you US$4.80, now costs as much as US$30.
The reason why middle class folks (MCFs) don’t seem to know that their pay is being cut – every day! – is because of ‘Money Illusion’ (Link #3). “Experiments have shown that people generally perceive a 2% cut in nominal income as unfair, but see a 2% rise in nominal income where there is 4% inflation as fair, despite them being almost rational equivalents.”
The answer is simple, everyone (no exceptions) needs to build Personal Equity on a foundation of income producing assets – within the limits of your means (you don’t need to wait until you have $100, S1,000 or $10,000 available). The mainstream financial institutions are not set up to help MCFs build personal equity (note that residential home equity does not count), they use your savings (cash/bank deposits and similar instruments, equity and bond mutual funds and ETFs [exchange traded funds]) to increase the already large personal equity of the wealthy elite.
On the other hand, the MCWB Club is a middle class solution for middle class people. It is set up to make the acquisition of ownership stakes in well managed income producing assets as easy for MCFs as buying a can of Coca-Cola. No selling or buying of network/multi-level marketing products, books or seminars – only a very affordable annual fee (currently, the best discount coupon in effect allows you to join for as little as US$25 or under). This platform allows you to buy into well managed income producing assets for as little as $5 or $10 or whatever you have – and the best thing is that oversight of the income producing assets (i.e. directors and the like) is provided by MCFs like you. The MCWB Club is just the aggregation of the financial and non-financial (intellect, expertise and so on) resources of its members.