Headline: What is Stealth Wealth?
Date: 8/4/2022
Body: I was in High School at the early portion of the 1990s, gasp, I know. One thing I well remember is in Economics, we learned about “conspicuous consumption.” As an example, you might walk into Lord & Taylor and get a few bags, and use these to place all of your household trash into. The whole concept was to advertise to your neighbors how wealthy you were. But, what if you WERE really wealthy, could this backfire? Yes, it could easily backfire, and you would be instantly covered in requests for money. You might even turn up as a target of a kidnapping. Hence, the concept of “stealth wealth.”
Wealth is going stealth.
Isn’t it interesting that the first part of stealth is “steal?” Ok, that’s as political as I will get.
The number of billionaires is small and largely concentrated in the U.S. But, the number qualifying for this elite status has been decreasing. In 2012, there were 87 billionaires minted and in 2014, there were only 53 minted. Hedge funds not doing so well is part of it, but UBS suggested that they might have become harder to find. Based upon the pandemic, I would suspect that this decrease might continue.
U.S. wealth may be underestimated,” says John Mathews, the head of ultra-high net worth Americas at UBS—meaning that there could be more billionaires in America, or billionaires that are richer than we know. Mathews says this is due to two phenomena: the tendency to keep companies private for longer, and an increasing desire among the uber-wealthy for privacy. Some of the billionaires are flying under the radar simply because they want to. One gentleman owns roughly $12 Billion in property including the Plaza Hotel and Union Station in Washington, D.C. Yet, even with these flagship properties, many within the real estate industry have never heard of him. One gentleman owns a company making vodka, and his company is worth more than $2.5 Billion. These are just 2 of many.
Why is stealth wealth so attractive?
| Reasoning for Stealth Wealth | Comment |
| You become the underdog. | People are much more likely to help you if they think you are struggling as much as they are. |
| You deflect attention. | Any time you attract attention, there are likely going to be scammers. Even more than that, if you bring attention to yourself, some will do everything they can to bring you down to their level. |
| People’s expectations of you decline. | There was a guy on my swim team, named Eric. Eric won most of his races, to such an extent, it almost became expected. When he didn’t win, he would come out of the pool, head down, and hole up in a corner of the area. The pressure on him was very intense. For a billionaire, I think it’s safe to say that this kind of pressure is multiplied by a great factor. |
| You don’t always have to pay the bill. | If you are extremely wealthy, people might begin to expect you to pay for events. Regardless of your capacity to afford the price, it is nice to have somebody else contribute to group fun. |
| You’ll be much happier, overall. | If people think you’re struggling like they are, they are much more likely to want to hang out with you. Having true friends is something money cannot buy. |
What are their techniques?
The article spoke of one woman who owns a defense contractor with offices in 30 U.S. states, Germany and Turkey. She named her company the same name as a very popular beer brand. Perhaps she is just a fan of the beverage, but I suspect it is a kind of camouflage. If she mentions the company name at a cocktail party, somebody looks up the name, and they see the beer concern, NOT her very profitable company. If this was her intention, I contend that it was a very smart move.
The article also points out another billionaire, owner of a cheese-making company. Not cheesy at all, this company makes over a billion pounds of cheese per year, and that means a lot of cheddar. (Sorry.) But, this billionaire really likes his anonymity. So much so, that his picture does not ever appear on his company’s website. The author suggests that finding a picture of the man is nearly impossible.
Practical Stealth Wealth Tips
| Tip | Comment |
| Drive a conventional car, and leave the exotics in your 7-car garage at home. | My buddy is a director at Morgan Stanley, and he is quite wealthy. He has an Audi R8 and on the weekends, enjoys wearing the roads out. But, during the week, he can be seen driving his reliable Toyota. |
| Avoid easily identifiable high-dollar value clothing. | If you are always wearing distinctive shirts/blouses or shoes, people will begin to suspect that you have more money that maybe you could share… |
| Always say that you purchased your clothing at a discount store. (e.g. Target, Kohl’s or Marshall’s.) | If you mention a high-end store (e.g. Lord & Taylor) people are going to know that you are earning a lot of money, somehow. Claim that your clothes come from Marshall’s or TJ Maxx, who get the high-end fashions just after the height of their popularity. |
| If they are persistent, make a joke to steer the conversation to a new topic. | If people comment on your watch, and it is a Patek-Philippe, claim that there is a company that makes knock-offs of fancy watches, and start a conversation on that brand, instead of the small fortune attached to your wrist. |
| Never engage in conversations about your salary | If you speak concretely about your salary, people can begin to have a really good idea of how much money you have available. Allow them to assume that the bulk of your income is from your paycheck. |
| Never admit to having a trust fund or a large inheritance. | The presence of a Trust Fund is one of the neon sign that “something unusual is afoot” in your financial life. |
| Keep a bus pass in the outside part of your wallet. | If you open your wallet, and somebody is looking, you want them to see the bus pass that confirms that you’re one of the common crowd. |
| Do not brag about your expensive vacations. | People (like me) are used to flying coach, and being jostled by the flight attendants in the aisle. If your stories differ a lot, your listeners will begin asking questions about your level of wealth. |
The Verdict
I am lucky because I will never have to worry about these techniques. I suspect that if you are reading my blog, you won’t have to worry about this either (Unless, my blog is being read to you by a Shakespearian-trained actor, in which case, you’re welcome.) But, every time there is a lottery, somebody does have to win, and sometimes lightning does strike repeatedly when you open a business. I guess the point here is, money is a taboo topic within our society, which is odd because all the time, we are reminded how important it is. This strange juxtaposition will make the life of the wealthy, sometimes less carefree than we might imagine. So, if somebody seems to be especially touchy about revealing how much they earn, please consider backing off and showing them the respect that you might want for yourself. I promise you; this gesture of kindness will not go un-noticed.
REFERENCES
https://www.barrons.com/articles/whats-behind-the-rise-of-stealth-wealth-in-the-u-s-1541102361
https://www.personalcapital.com/blog/family-life/the-benefits-of-stealth-wealth/
https://www.marketwatch.com/story/5-ways-to-tell-if-you-belong-to-the-aspirational-class-2017-06-26
Editor’s Note: Please note that the information contained herein is meant only for general education: This should not be construed as Tax Advice. Personal attributes could make a material difference in the advice given, so, before taking action, please consult your tax advisor or CPA.