'True wealth is invisible': Looking poor can be key to being rich — here's why

Frugality's virtues

Many material possessions — coveted collectibles and fine art come to mind — can more than recoup the money spent on them. Still, you can't enjoy any small fortune tied up in Beanie Babies or a Jackson Pollock until you sell.

Moreover, paintings and pop culture artifacts may not keep up with conventional investments. Over the last 20 years, the S&P 500 has seen an annual average return of 10.12%, assuming all dividends were reinvested, according to the Official Data Foundation. That means a $1,000 investment in an S&P 500 index fund 2004 would have grown to around $7,100 in 2024.

While certain cars qualify as collectibles, the typical luxury automobile is often a financial clunker. According to Kelley Blue Book, most new vehicles lose about 20% of their value in the first year and after five years are often worth only about 40% of their original value.

Take a tip from one of the richest men in the world, Warren Buffett, who's worth $140-plus billion, according to Forbes. The frugal investor still lives in the same home he bought in 1958 for $31,500, which is around $340,000 in today's money.

Invest in real estate without the headache of being a landlord

Imagine owning a portfolio of thousands of well-managed single family rentals or a collection of cutting-edge industrial warehouses. You can now gain access to a $1B portfolio of income-producing real estate assets designed to deliver long-term growth from the comforts of your couch.

The best part? You don’t have to be a millionaire and can start investing in minutes.

Learn More

Luxury's trappings

Clothes, watches and swank luggage rank among the luxury items big spenders love. But as a whole, they can drain a budget fast. A person can spend thousands of dollars on these everyday items, or they can get some perspective on their practical value. The late billionaire Charles Feeney felt value was more important than flashing one's wealth. He flew coach, wore a $15 watch and used plastic bags instead of a briefcase.

Speaking of watches, as the late Charlie Munger — Warren Buffett's longtime business partner and a billionaire in his own right — once quipped: "Who in the hell needs a Rolex watch?"

At the Daily Journal's annual shareholders meeting in 2022, Munger also stated: "The world is not driven by greed. It's driven by envy."

Munger boasted that he conquered his envy. And if you can do the same while adopting further habits of the rich, you may find yourself well ahead of the game.