The concept of stealth wealth is one that’s fascinated me ever since reading about it in Thomas J Stanley’s book, The Millionaire Next Door.
For those not familiar, stealth wealth is the notion where you’re a wealthy person, perhaps even financially independent, but you live well within your means and seem like an average, ordinary person. This means that maybe you don’t have an expensive car, live in a huge house, send your kids to private school, etc so that people can’t tell you are rich. Simply put, stealth wealth is when you live your life in a way that people don’t know you’re a wealthy individual.
Just the idea of being that person or family that isn’t super flashy and seem like normal, regular people yet have a big secret hidden from view is very enticing and sounds pretty awesome to me.
Perhaps it’s because I’ve never been a flashy guy.
Despite my expensive car, it’s just a Ford Fusion which I can’t imagine anyone considers ostentatious. I don’t wear designer or expensive brand name clothes, shoes or accessories. My apartment is full of cheap furniture and appliances that are either second hand or purchased years ago. I’ve shifted my typical spending on experiences from the expensive cramped, dimly lit bars to the relatively frugal wide open expanse of nature.
I’m certainly not the guy who goes out of my way to try and impress everyone I see. I guess being the center of attention is just not my style (a partial exception when around family I suppose).
All that being said, it seems like stealth wealth would be perfect for me, even easy you might say.
But are there some natural road blocks to stealth wealth when you’re Financially Independent? Let’s take a deeper look.
The Journey to FI and Stealth Wealth
When you’re on the journey to financial independence, stealthily saving and building your stash could be a challenge, or may not be depending on your situation.
The big challenges to stealth wealth you’ll face during the journey will come when family, friends, coworkers and/or neighbors notice a shift in your spending tendencies.
If you used to spend lots of money, like drive nice cars, live in a big house, spend boatloads of money on things, etc and all of a sudden you trade in your cars for older ones, downsize your house and drastically cut your spending, people may want to know what the heck is going on. “Normal” people don’t do things like that!
You may answer by explaining that you’re turbocharging your savings for retirement, which could blow your cover. However, initially people won’t assume you’re wealthy as you just made those changes and may just be getting serious about it.
What works to your advantage is that most people aren’t aware of the incredible effect of compounding interest and just how fast it can grow once you have been investing for a while. Soon you’ll have your stealth wealth and people won’t even realize it despite you telling them!
If you have always been frugal, or are a natural saver, you could probably go your entire journey to FI without anyone ever suspecting you’re getting wealthier and wealthier. That is stealth wealth at its finest!
During this accumulation phase you’re likely working and grinding just like everyone else, which can make it fairly easy to blend in.
The real challenge to stealth wealth is once you are financially independent.
Can Stealth Wealth And Financial Independence Coexist?
When you reach financial independence, you’ve got a choice: keep working, retire early, or some sort of mix between where you work part time, on passion projects, etc. Whether you make money or not is irrelevant, it’s the appearance that matters.
Why is that? Well, the appearance is your cover!
The people you interact with in your life will be curious as to what’s going on in your life if you suddenly quit your job without any indication, and no other job to go to.
Most people can’t comprehend doing something like that. They simply just don’t have enough money to sustain living without an income.
Naturally they’d be curious and ask you about it. What you do here determines how stealthy you can be!
Obviously you could lie about your situation, and say you’re still working for income even if you aren’t. But if you tell the truth, that you’re simply living off your investments, there goes your stealth wealth cover! People know you are wealthy enough to not have to work again.
The younger you are, the harder it will be to maintain your cover. One, simply due to the longer length of time, and two, due to how much more difficult it is for the average American to believe retiring at an early age is even possible.
However, if you still actively work full or part time when financially independent, or you at least have the appearance of a job, you could be in the clear!
Because your day still has elements of work in it, it’s much more believable to others that you can still make ends meet.
Perhaps Financial Independence and stealth wealth can coexist, but the early retirement element makes it tougher?
The Stealth Wealth Dilemma
While I do think a stealth wealth lifestyle is something I’d want to pursue, I also think it personally would be tough for a couple reasons.
First, I blog about my journey to financial independence, and even share my net worth! Nothing really stealthy about that… Although I’m anonymous, there are people who I’ve met in the community who know me in person.
Second, I’d like to think that someday I will use all this financial knowledge I’ve accumulated to help spread the FIRE/personal finance message further than this blog can go. You know, perhaps help people face to face through local classes or something of that nature.
I could also un-anonymyze myself on the blog and try to get the message out to a wider audience that way. It’s not something I’ve given a ton of thought to, but a possibility nonetheless.
Third, I’m fairly honest about my situation. If I retire early when the time comes and people ask me what I’m doing, I feel like I’d be honest and let them know the truth that I retired early. This would effectively give away the sneakiness of my endeavor.
Of course, if stealth wealth was truly something I was after, I always have the option of ending the blog and riding off into the sunset to live my best life away from any sort of spotlight, and keep busy with side activities to give the excuse as to why I don’t work full time.
Who knows what I’ll end up deciding, but in the meantime I hope to keep trudging away along this journey while I figure out what’s the path that going to lead to the most happiness in my life!
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Do you identify with the stealth wealth concept? Would you try to live the stealth wealth life or does it really matter to you?
My wife and I are pure stealth wealth. I work one day a week but it sometimes involves travel so to most people it looks like I have a full time job. We have millions invested but my wife drives a 2006 Nissan with 150,000 miles and I drive a 2008 car with 180,000 miles I bought last year for $7,000 cash. Our modest house was long ago paid for. Our kids have all graduated and are gainfully employed and self sufficient. The only flaw in our disguise was I had minor celebrity status in my former career so everyone knows me in this small rural area, and they assume, because of that job, I must be rich. I can’t convince anyone my old job, while it paid OK, wasn’t the gold mine people think it was. We have financial independence because we were, and still are, frugal.
Wow that’s amazing! That is some serious stealth right there haha. I do think having at least some sort of job can throw people off, but yep in your case living in a small area like that would be tough to shake the perception once people have it.
I agree that it’s tricky to navigate, but I don’t necessarily think it’s a bad thing to share the journey or possibility in straight-forward, honest terms.
Just this past week I had that discussion with my cousin: a year younger than me, but we’d never really been close. She asked how I bought my home a few years back, as she’s just about to start looking for her first apartment and pay rent for the first time, and is intimidating by the idea of not only paying rent but also saving for her own home down the line. I told her it was through being (probably way too) frugal, and a lot of planning. My grandparents ended up sharing my website with her, and she’s coming over tomorrow morning so we can get her set up on Mint, open her IRA, budget for her first apartment, and start planning her first home purchase too!
Knowledge is power, and you and I (and everyone who reads your blog) are better for knowing about Financial Independence as a possibility, whether or not we choose to pursue it. So why not be a bit more comfortable sharing the idea, even when we get weird looks and naysayers?
The only danger is if people see you as a resource for anything more than information – in which case you can move on from those relationships. In my mind, it’s a win either way! Bring the people in your life up with you (via knowledge and process), or tighten your circle a bit. Either way, you and the people you love are happier and financially healthier for it.
Great post, I appreciate the thought and balance. It’s awkward, but I’m starting to feel a bit more free in sharing the idea of FI/RE with the people around me, and hopefully help them head that direction themselves (for those interested in doing so). Fingers crossed that it doesn’t blow up in my face along the way!
This is such a good point and well thought out. That is definitely a concern I’ve had, if I ever revealed my plans outside of the few people I have already told and/or know me from the community, that they would try to ask for more than the information/advice you mentioned.
But I totally agree that the more people are at least aware of the concept and have the knowledge and power to make the decisions on their own, the better off the world can be. It’s gotta feel great showing people there is an alternative way to live their life and get more freedom in the process!
Great post, I agree completely. It’s pretty easy when you’re accumulating, especially if you’ve always been a natural saver like I have. Once the time comes to make a move at financial independence, I imagine it will be much tougher!
Thanks Brian! Yes that transition is certainly going to be tough, but I do think it’s doable for those of us who have a good enough hobby to keep people from figuring it out!
Since most FI people will have some kind of side hustle it leaves an easy out when asked what you do. For me, I tell people I’m part time at my W2 and am building my graphic arts business. It’s the truth and it makes them go away 🙂
Yea those is a great point! I do think I’ll have at least something else going on the side during my FI life so that’ll hopefully be an easier way to disguise!
My wife still works so that’s a good cover for us. Once she retires, then it’ll be harder.
People don’t really dig too deep, though. More people work from home now so it’s normal to be around.
My next door neighbor is a lawyer and he’s home all the time.
The next neighbor are professors, they’re off for the summer. It’s not weird to be home anymore.
Oh I didn’t think about the working from home aspect! Yea that’s definitely an easy way to blend in if you’re working from home anyways and/or did work from home during your career.