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!
Do you identify with the stealth wealth concept? Would you try to live the stealth wealth life or does it really matter to you?