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Only Two Social Classes: Investor and Consumer

Unfortunately the media will most likely always be there to give us their view of the world order. A lot that we see and hear is from a political standpoint, and it's usually just repetition from the left and right agenda.  But with freedom of speech and press we are not forced to listen to popular opinion. 

I would like to convince you that the economists' views on social hierarchy are not based on the real world. Just like most of their other theories that don't actually work. 

Have you wondered why economists can't agree on almost anything?. It's tough to agree on things when you're dealing with hypotheticals. 

Theory of Three Classes

Economists and Sociologists like to place people into three groups. The lower class, middle class, and upper class. These are usually defined by occupation and income.

With the lower class made up mostly of working class citizens. The middle class is those that earn more such as teachers, nurses, etc. And the upper class are the high earners such as doctors, lawyers, etc.

Income vs. Wealth

The three class hierarchy falls flat when examining the data. Don't let graphs fool you into thinking the real world can be put neatly into an equation. 

And the media will do their best job to politicize every single thing they can. While at the same time downplaying  personal responsibility and behavior as the foundation to success. After all they know most would just like to be entertained and to be told what they like to hear.

Ever notice how it's almost always about income when referring to social class?. The data shows that even though there is a positive correlation between income and wealth it's not 1 to 1!. The correlation is more like .3-.5 between income and wealth!. 

What does this have to do with anything?. Almost everything. A high income helps to maintain a certain standard of life. For example, the big house or the nice car. 

But the lifestyle can only be sustained temporarily!. If the high income does not increase the wealth or net worth of the individual, in 10 or 20 years the person will still be an employee!.

Wealth on the other hand can sustain you without the need of your labor. Real wealth can work for you instead. That is why I believe wealth is better suited as a metric for where you are economically.

Investor Class

Instead of low, middle, and upper class I personally only see two groups. Some people spend all they earn, they are called consumers. 

Some put aside a portion of their earnings habitually and make do with less, they are called investors. Investors save and with their savings they invest. 

Investing can be into a business, or into other assets such as stocks or bonds. Or anything else that beats the rate of inflation in the long run and produces a solid return. 

The Investor class first saves and invests. The business they own or company in which they hold shares sells their products to the consumer class. 

The Investor vs. Consumer is the difference between black and white. They are two completely different mindsets. The Investor class looks at a $1 bill and respects its power. The consumer looks at the same $1 bill and sees a pack of gum.

The Investor class is frugal, disciplined, and does not consume their income. They drive the used car while investing the difference into appreciating assets!.  

Have you noticed that I did not mention high income?. A high income is not necessary to be an investor!. The only thing needed is to not spend everything you make and more. And to invest your savings. That's it!.

Long Run

Success usually only manifests in the long run. Being conservative with your dollars and managing your resources well is a formula to wealth. 

Wealth is the freedom to do what you want. Wealth can only be achieved by freeing yourself from consumerism. It's personal behavior that is the distinction. And stuff doesn't equal happiness. 

In the long run investors have something to show for their hard work. They followed the principle of paying yourself first and were good stewards of their resources.

It's best to not compare ourselves to other people or other groups, but it's still important to make distinctions. Following in an investor's footsteps is a proven formula to not just wealth but happiness. Happiness with the way you lived your life and with your decision making.