Wealthy vs Rich: What’s the Difference and Which Is Better?

February 22, 2022
February 22, 2022 disrupt

Wealthy vs Rich: What’s the Difference and Which Is Better?6 min read

People often think about similar things when they hear the terms wealthy or rich. You might imagine being rich as having glamorous yachts, money, and owning a mansion. Of course, when you think of wealthy people, you’ll probably think of the same thing. At first glance, wealthy vs rich seem to be on the same side of the monetary coin.

However, the two concepts have subtle differences to them. Understanding this difference can help investors make better decisions and crystallize their goals. What’s the difference between the two, and is there one that’s better? Let’s find out!

Wealthy vs Rich: What Is the Difference?

The two concepts of wealth and riches are closely related. Both imply an abundance of money, and both suggest being able to afford an affluent lifestyle.

However, the concept of being rich is subtly different than being wealthy. The term “rich” tends to look more towards income. A person making $500,000 a year is rich. They can afford practically anything they want – more expensive homes, good food, entertainment, and travel.

But, if a person spends their entire income on all those things, they are not wealthy. A person can make $500k a year, spend $600k per year, and quickly find themselves in debt. Such a person is “rich” because they can afford practically anything they want but are not wealthy as they have no money to fall back on if that income expires.

Being rich makes it much easier to be wealthy, but it is not required. Many people earn meager salaries yet are equally judicious about their money. They spend less, invest well, and grow their wealth over time. Eventually, they have enough wealth to retire and live a comfortable life, even if they have never lived an affluent lifestyle.

Is It Better to Be Wealthy or Rich?

When looking at being wealthy vs rich, there’s no question that both are desirable. The easiest way to achieve wealth is to be rich, but be careful with your spending. For example, a person making $500,000 a year, spending $20,000 a year, would have a massive advantage over someone earning $50,000 per year and spending that same $20k.

If you plan on working forever, you can probably be rich and enjoy the money from your labor. There are two problems with this approach, though. First, you don’t know if you’ll be able to work until you die. The company you work for may lay you off, or the business you run may have troubles 20 years from now. Second, you’ll spend your entire life working. You may be earning money, but you cannot enjoy your life. Instead, you’re working to be rich!

Therefore, if you dream of retirement, or even just dream of the financial independence to leave your job whenever you want, you need to be wealthy. If you dream of not living paycheck to paycheck, being wealthy is the way. If you desire the ability to spend time with your family and not worry about financial pressures, wealth is what you want.

Put another way, being rich is the first step toward being wealthy. Being rich makes it easier to achieve true financial freedom.

The Path Toward Wealth

Despite what you may hear on the radio or read on the internet, there is no one singular path to getting wealthy. Some people start businesses that make them wealthy. Others get rich by landing a fantastic job and then leveraging that money to invest wisely and accumulate wealth.

The key, more than the method, is prioritization. People need to prioritize building wealth. All too often, people get a fantastic job, feel like the money will never end, and wind up spending it all. Pro athletes fall into this trap all the time. When they retire, they quickly realize that they went through all their money while rich and now don’t have the wealth to sustain them in retirement.

Once you prioritize accumulating wealth and make that a core goal, your mindset changes. Instead of focusing on what you can buy, you focus on what investments you can make. You find excitement and joy in getting closer to achieving your goals. Of course, money won’t (and shouldn’t) drive everything you do, but having a plan will make saving and investing more enjoyable as you are working towards a bigger goal!  For example, instead of buying a new car, you’ll want to make an investment that will (hopefully) generate enough passive income to buy that new car.

Despite what the internet would have you believe, discussing the paths towards wealth is a fruitless endeavor because every single person has the potential to achieve wealth – and every single person who sets out to become wealthy will do so in a different way. You’ll need to find what works for you!

How Real Estate Syndications Can Make You Rich and Wealthy

How you become wealthy will vary, but all paths to wealth have one thing in common: they include intelligent strategic investment decisions. 

Real estate represents one of the best investments that people can make. Historically, real estate has been recession-resistant, and it offers monthly income (rich) combined with price appreciation (wealth). If you are a full-time employee, run a business, or are a full-time parent, managing real estate investments profitability may not be feasible. That is what makes real estate syndication, in particular, one of the top ways to become rich and achieve wealth through passive income and appreciation!

The way real estate syndications work is quite simple. A real estate syndicator will purchase a real estate property to acquire, hold, and eventually sell! This real estate syndication company will locate the property, secure the financing and funding, perform the maintenance, repairs, handle rents, and then once the business plan has been executed will sell it. However, buying a commercial or apartment building is often too much risk and requires too much capital for one person or entity alone.

So, they form the LLC and recruit partners (called limited partners) to invest in the company (the real estate syndication). These limited partners review the company’s plans, projections, and can invest in the project, should they desire.

These syndications collect rent from tenants and disburse part of that rent as monthly income to the limited partners. With improvements, the building will eventually sell for more than the syndication paid for it, and those profits also go to investors.

While every syndication is different, and all investments risk loss, many syndications run for five years. During that time, real estate syndication returns  pay between 8%-10% annually and 30%-50% appreciation at the end. Therefore, syndications have the potential of earning between 70%-100% ROI over five years – a fantastic way for investors to both get rich and grow wealth!

Wealthy vs Rich: Both Are Important for Achieving Financial Freedom

Warren Buffet once said, “predicting rain doesn’t count, building the ark does.” Put another way, if you work towards financial freedom, you don’t need to worry about predicting the market or worry about whether or not you’re going to lose your job or not. You’ll be confident that your wealth (your ark) will protect you. It will let you downsize your work or allow you to pursue your true passions. Both of those are immensely valuable.

When thinking about wealthy vs rich and how those intersect, remember that being rich and making wise investments leads to financial wealth. Real estate syndications are just one of the ways investors can grow generational wealth and provide the passive income necessary to be rich!

If you are interested in investing in real estate syndications, feel free to reach out to us at Disruptequity.com/invest to stay in the loop on our open real estate investment opportunities. 

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