Does being from a certain culture affect the way you look at wealth and money?
I’d say so.
It is no secret that Chinese people for instance, believe that the only way to become wealthy is to own a lot of real estate.
Houses = Wealth for them.
They’re pretty impressed when you tell them that you have 4 properties in your family, never mind that those properties are in a village in the middle of nowhere.. because it’s property.
If you DON’T own a house, you can’t possibly become wealthy. It just isn’t in their general cultural mindset.
(Of course, not ALL Chinese people think like this, I am obviously generalizing.)
I know a Chinese family that owns a property in each of these cities:
- Tokyo, Japan
- Lake Tahoe, USA
- San Francisco, USA
- Sydney, Australia
Do they actually live or rent out these places when they aren’t there? No.
No one in their family can really live in all 4 locations at once unless one of their kids decides to relocate to Sydney or Tokyo, but they refuse to sell because the Chinese mindset is that the more properties, the better.
Especially in prestigious cities.
In fact, I’d wager that most people think Houses = Wealth although not to the extent that the Chinese take it.
How many times has someone told you: It’s time to start owning a house and building wealth.
Or: Owning a house is the only way you’ll become rich.
Upon hearing this, have you ever questioned them whether or not a house equals wealth?
I am not saying owning a house does NOT equal being wealthy, but consider this:
Isn’t having a $400,000 house really the same (for all intents and purposes) as having $400,000 in maxed out retirement accounts and in cash in the bank?
I’d rather have the latter to be honest (although both would be nice!), but assuming they’re both equal, $400,000 anywhere you put it is considered to be “wealth”.
I just prefer liquid assets over having a fixed one, as it is more mobile and less of a hassle.
The risk is still the same no matter which asset class you decide to stick your money
With houses, you run the risk of it dropping in value from a market crash… but it’s the same if you put your money in investments on the stock market, in index funds, bonds, cash, collectibles, antiques, or whatever other asset classes you decide to put your money in.
Having money instead of a house, just means you can spread it out over different things (bonds AND stocks) a lot easier than if it were all stuck in one spot.
Wherever you decide to keep your wealth, the best rule of thumb is to make sure it is diversified across all assets of wealth, rather than in one asset class alone.
In other words, do not keep all your golden eggs in one basket.
You are only going to cause yourself a world of hurt if you decide to put 90% of your wealth in a house or 90% of your wealth in stocks but none in bonds because then everything you have saved and owned in life, is dependent on it.