There are two groups of people in Capitalism.
- The feeders
- The benefactors
The first category usually includes the masses. People who don’t bother to learn about the inner workings of money. They’re simpletons who see money as a finite resource that is allocated to them in exchange for their time at work. An entity that allows them to survive and indulge as far as the system lets them. Their consumerist habits drive economic growth, ultimately helping the benefactors (and to a small extent, themselves).
The benefactors on the other hand, understand exactly how money works and utilize this knowledge to their benefit. They are primarily a drain on the economy because they are far bigger savers and investors rather than consumers and spenders.
If you’re reading this, chances are you’re either a benefactor or are at least interested in becoming one. The only way to become a benefactor is to learn about the mechanics of capitalism and put it to work for you. The most important part of capitalism is right there in the word itself. Capital.
Benefactors understand that having spare money allows you to use it to fulfil the consumerist habits of the feeders and profit from it. This process takes many different forms –
Real Estate Investing
Real estate investors use their spare money to buy homes/condos/apartment complexes and then rent them out to the feeders making more money than they spent, over the time they hold the property. Commercial real estate investors may rent space to businesses that service feeders’ spending habits through warehouses, shops, malls and restaurants.
All stock investing is essentially a partnership stake in the said business. The moment you buy stock in a company, you’re part owner in it. You have a share in all future profits the business shall make. As the feeders spend their dollars buying products and services from your business, you pocket profits and become the benefactor of capitalism.
Bond investing is nothing other than a capitalist benefactor loaning spare dollars to governments or businesses. The loan comes with a contract that elicits fixed interest payments from the borrowers and eventual return of the principal. Once again, your spare dollars helping you draw more dollars.
Seed and Venture Investing
Once you’ve gotten to significant wealth, more avenues of benefitting from capitalism open up to you. Formally, you acquire the status of an accredited investor when you have $1,000,000 in investable assets or meet specific income requirements. You are then allowed to invest in seed and venture capital allowing you to take on larger risk for larger potential returns. Once again, the need for significant capital availability is paramount.
As you can see, a common theme in order to benefit from capitalism and create wealth is simple. Having disposable cash and using it like a benefactor, not a feeder. Fancy cars, vacations and social media posts about a seemingly amazing life will actually hinder the creation of actual wealth.
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