How to Become Truly Wealthy

By Grandpa "Bert" Foster

What could possibly have motivated a comfortably retired ninety-year-old former engineer to write a book titled How to Become Truly Wealthy? I was troubled seeing so many young Americans following their peers into bad life decisions, crushing debt, poor behavior, and a flawed idea of what true wealth is. I wrote this book to tell my grandchildren and great-grandchildren what I wish someone had told me when I was young. It is my sincere hope that anyone that feels the same way about their children or grandchildren (or themselves) might benefit from this effort as well. I have been blessed with many years' worth of experiences and the wisdom they bring. This book is my way of giving back what I can-by passing it on to you. As I explain within these covers, human wealth is measured by much more than just money. You and your brain are the most important wealth you have. I truly hope that you will join me to learn much more and that you enjoy the journey! This book is divided into the following parts: Wealth vs. Money How to Grow Your Human Wealth How to Become Financially Wealthy Protect Your Wealth: Future Concerns Appendices

• Language: English
• Publisher: Christian Faith Publishing, Inc.
• Release date: Oct 28, 2020
• ISBN: 9781098048372

Book preview

1.1

Wealth

Wealth is everything that is the product of men’s hands and minds. It is tangible and intangible (tangible means you can touch it). Everything you see in this room, including the clothes on your back, is tangible wealth. The room, the chairs you sit on, the building you are in, the cars you drive, and your home and furniture are wealth. They are all made by man. This book is also wealth. If you are from Texas, cattle may be your wealth. Cattle have economic value. So does land and materials.

Without tangible wealth, we would all be naked and afraid; but the greatest wealth we all have, we take for granted and don’t even think of it as wealth. It is us and the intangible wealth we all have.

Your body and brain are the most important wealth you have! We are not accustomed to thinking of ourselves as wealth, but we are, and we are the most important asset we have!

The information stored in the brains of human beings is probably the most important wealth of all and it is intangible. Imagine how much is stored in everyone’s brain. All the details of everything we make or do—and we all know the devil lies in the details.

It also makes you a distinct individual. It defines you. It is you. Many people just do not realize this very simple truth: you keep on becoming you until the day you die and you get to make many of the decisions that determine what you become. Try to make good ones.

An intangible could also be the idea for a new invention or the product of a great imaginative mind.

Albert Einstein, the theoretical physicist, looked pretty much like a normal person but what he was able to do with his brain was remarkable. He spent a large part of every day thinking about super challenging problems.

Labor, particularly skilled labor, is also wealth. When you get a haircut or go to a doctor, you are paying for his or her service. What about the plumber or the man who cuts the grass? All people in the service industries are using some human capital. They have a combination of mental skill and physical skill for rent.

tools

Tools are a super important form of wealth. Tools are called capital and so is the money set aside to buy tools. A capitalist is the man who buys those tools. A carpenter that owns his own skill saw, power nail gun, and truck is a capitalist!

Every economy in the world consists of three items: raw materials, human input, and tools. The importance of tools cannot be stressed enough because they multiply the value of a human’s labor hundreds or thousands of times over. Tools are invented by the human mind. One man without tools is almost worthless. If you don’t see the importance of tools (capital), imagine living in the Stone Age.

As one more example of the value of tools, imagine a man standing in line, outside an auto plant, looking for a job. He isn’t worth much standing in line, but when employed in that plant, using tools that cost millions of dollars, he is suddenly worth at least forty dollars an hour with fringe benefits. In my opinion, we are all capitalists if we own tools.

human capital

Knowledge is also wealth. It is called human capital. Our ability to work using our muscles is also human capital. We represent one man or woman power.

Human capital is all the knowledge, folklore, social and personal skills, and all the muscle memory stored in that fantastic brain of yours. Your brain and what it knows is what makes you. It is the locus of your persona. Knowledge grows throughout your life. It makes each of us unique and is an intrinsic skill that sets us apart from each other.

A great pianist has skill that takes years of practice to develop as he or she hone their muscle memory and their musical knowledge. This is part of his or her human capital and qualifies them to perform, producing economic value.

Employers need human capital to produce their products and to remain competitive. Some companies sponsor training classes to increase the human capital of their employees. Bless them.

The basketball player LeBron James (2019) has much of it. He is paid millions of dollars for the human capital stored in his muscle memory of how to make seemingly impossible shots as well as millions of experiences as a basketball player. This has made him a unique athlete worth millions of dollars. This isn’t rocket science. It is the facts of life. He provides a product that people are willing to pay for.

The Chinese have been stealing our knowledge when stored in computers, copyrighted or patented, but they cannot steal the training stored in Mr. James’ mind (yet).

Everyone in America grew up with a standard of living earned by the hard work and the many sacrifices many other earlier Americans made and so many now take for granted.

Some think the world owes them a living. Maybe such people should move to Africa and find out for themselves that everyone does not agree with them. If they wanted to eat, they would work. Even then, many starve to death.

We have millions of genuine needy. We also have millions living off charity that could work. We have millions who are working that would rather not work and, even worse, they may be drug addicts. This would be laughable if it wasn’t so serious. Presumably you are different or you wouldn’t be reading this book.

If you were prospecting for gold, the first sensible thing would be to do it where the gold is. If you want to be an investor, live in a place that is kind to investors. Guess what? You are already living in such a place. Pray some fool politicians do not spoil our economy or our good environment for investing.

The United States of America is the greatest economic powerhouse the world has ever seen. Do not be ashamed of this country and don’t apologize to anyone for what it is, including the descendants of African slaves. They were treated very inhumanely but that was the way the world worked at that time and still does in some places. White people were also slaves in other parts of the world at that time. Context is everything. Don’t forget that.

America has helped the entire world to new heights of personal wealth and a higher standard of living. The USA is not perfect but it uses the best economic system ever invented—capitalism. Everyone is lucky to be born here. Why do you think we have trouble with illegal immigration? They want to live here because they know they would be better off and so would their children. Many become, in effect, indentured servants of the criminals that smuggle them across our borders. They are desperate people.

Many poor people who immigrated to the USA as poor people are now rich. It is the American dream come true. They become wealthy because they have a service or product to sell, or human capital, that many other people are willing to pay for. They are also thrifty and work hard.

Why don’t people who advocate socialism want to move to countries that practice socialism? Because they like living in a land of liberty and plenty.

Incidentally big governments do not do anything well, including spending taxpayer’s money, managing Social Security, managing health care, managing the national debt, managing the United States Postal Service, etc. They are not motivated to be productive. Why would we want them planning anything?

Many politicians are motivated to build an empire at taxpayer expense because it grows their paycheck and power. Many are willing to be irresponsible with taxpayer money if they think it will get them elected. They are also tempted by corruption.

Something else you should know, there is a new kind of socialism called democratic socialism. This means you get to elect them to power. This is very likely to be a one-way street. Once they are in power, there is no way back. Venezuela is a good example. Meanwhile average Venezuelans suffer and die.

Economics is sometimes defined as the study of the distribution of scarce resources. To be sure you understand this simple statement, pause for a moment and think about it. If something wasn’t scarce, would it have much value?

Many socialists say they have a great heartfelt desire to help the poor but isn’t there a better solution than robbing Peter to pay Paul?

Suppose we substitute a higher standard of living for giving everyone free health care. Does that make the basic problem of what to produce any easier to understand?

Which is more important, a higher standard of living or free health care? If we make it free, will there be any doctors or hospitals? Someone has to pay. There is no such thing as free without someone paying the bill. Nothing is free. Someone has to produce it.

The problem isn’t how to give away health care, but the problem is to make it more affordable. If making it free piles on a huge amount of expense, it may just make it more expensive for everyone.

The beauty of capitalism is that it finds a way to make what people want and are willing to pay for cheaper through the decision power of the free market, of tools, and mass production.

Free-market consumers tell the economy what to do by voting with their own money. Is there anything more democratic than that? Everyone gets to vote.

In a socialist society, the state attempts to decide what to produce instead of letting the market (you) decide what to produce. The state is also soon tempted to use the power of the state to guarantee its own survival instead of doing the will of the governed.

1.2

Money

Money is a medium of exchange. Today it is just a paper IOU, like a check, that allows one person to exchange their labor or possessions with another. It is also called a store of value. Money allows us to trade wealth without having to barter. Money is a way of measuring wealth and usually isn’t wealth itself.

Money can be paper or coin currency. It can also be a check, a cash card, or a form of credit like a credit card when it is used to create credit, a debt instrument, a form of IOU like a loan, home mortgage, a bond, etc.

Gold can be both money and wealth. It served as money from long ago because it was desirable, very scarce, did not tarnish, and was fairly easy to carry and store. Sometimes something else can be used as money.

American Indians used wampum. During Chile’s economic collapse they used internal-combustion engine spark plugs as money. Other things have also served such as Hershey’s bars and women’s silk stockings during WWII.

Most of our money today is paper and it has no intrinsic value. To increase the supply of it, just print more. Even counterfeiters can make paper money.

Figure 1

In figure 1, there is a piece of paper that says it is worth one hundred dollars, USA. There is another piece of paper the same size that says it is worth one hundred thousand bolivars. USA dollars are backed by the full faith and credit of American taxpayers. Bolivars are backed by the full faith and credit of the Venezuela taxpayers. USA dollars are currently used as the world’s currency and bolivars are worthless. Beware of paper currency.

Coins made of precious or semiprecious metal have intrinsic value. Figure 2 shows a $20-gold piece that has 0.9675 ounces of gold in it. In 1932, it was worth $20, and recently, gold was selling for $1,300 an ounce. The gold coin is now worth about sixty-three times what it was in 1932 while the cost of living increased fifteen times during the same period. To increase the production of gold coins, a person starts by buying more gold.

Figure 2

Figure 2 also shows a USA silver dollar that has 0.78 ounces of silver in it which is approximately worth twelve dollars today (This particular coin also has collector value. I bought this one for sixty-seven dollars).

If someone wants metal instead of paper, the USA says it has a gold reserve of 8,135.5 metric tons of gold in storage, mostly at Fort Knox, Kentucky. Sounds like a lot, doesn’t it, but is it?

A metric ton is one thousand kilograms. One thousand times 35.2738 ounces per kilogram equals 35,273.8 ounces per metric ton. Assume gold is currently worth $1,300 an ounce. So one metric ton is about $45,855,940, and 135.5 tonnes is worth $373,060,999,900. The US gold reserve is only $373 billion and our national debt is about $22 trillion.

In the future, money may be obsolete when everyone can make electronic transfers. I will debit my account and credit yours instantly.

1.3

Economics for All

Economics is not an exact science, and if you took a college course, you would soon learn how inexact it is. I have had several economic courses in college and promise I will stick to a common sense approach we can all share.

First, for our society to have more wealth, we must create more of it. I hope we all agree on this simple truth.

Second, trade is supposed to mean imports are paid for by equal value of exports. The United States of America has been importing far more than it pays for by equal trading. We are actually buying on credit when we have an imbalance. This shows up as an increase in the national debt and as lost jobs in our economy because we are not competitive. Our increased standard of living is actually based on borrowing from China or Japan. We are not earning it. Much of our labor is simply too high-priced to compete in the world market.

Third, the population is growing, things are wearing out, and other things are becoming obsolete. We must make more things then before just to keep even. I think we can agree on that.

Fourth, every worker must contribute more value to an enterprise than the value of his or her paycheck. If they don’t, they are not worth their cost. I think we can agree on that simple truth.

Fifth, it takes truckloads of money to conceive, develop, build a new factory, fill it with tools and a staff before any production can occur for a new product. Do we agree?

Sixth, this big pile of money comes from people who have managed to save and accumulate it and are willing to invest it for a profit. I think we can all agree on that.

Seventh, the riskier the investment, the higher the profit must be to attract investor’s money. I think we can all agree on that.

Eighth, confiscating investor’s money and transferring it to poor people who just consume it will reduce the amount of money available for new plants, tools, and workers. I think everyone can see this too.

Ninth, taking wealth away from those that created it, like Jeff Bezos, and giving it to others who consume it shows a lack of knowledge or just greed. Wealth is not money. In his case, it is the value of the stock he holds in the company he created or ones he has purchased. It is not cash. His wealth is a company that employs thousands of people and generates a living for them. He makes far better use of wealth than the government ever will.

Tenth, the best course of action is to constructively invest more wealth, create more jobs to meet increasing demand, and to efficiently employ more people. Can we agree on that (we could achieve full employment by having people do useless work, such as emptying one of the great lakes into another using a bucket brigade, but that would not increase wealth)?

Eleventh, price controls do not work. The surest way to create a shortage of anything is to set a price that is below what something actually costs. The item will be available on the black market only at a higher (fair) price. The surest way to create a surplus of something is to create a price that is too high. We see this in minimum wage laws. They create a surplus of unskilled labor that cannot find a job.

Free-market capitalism is the best economic system ever invented. Plans that penalize the rich to give free handouts to the poor actually decrease the total amount of wealth (goods) when we really need to increase it. Redistribution is a short-term solution that ultimately reduces the supply of goods and is also inefficient because it takes a vast army of bureaucrats to run this wealth scam. The government doesn’t do anything well unless you include wasting wealth.

Politicians, including labor leaders, are full of promises they cannot keep or don’t even intend to keep. Many simply do not care, or they believe stupid economics.

I am not sure if this helps but it is brief and to the point. It is an overview.

Money itself is usually not wealth. It is a paper substitute for wealth and it is immoral for the government to just print more without the economy growing in direct proportion. This causes inflation!

What you manage to store in your brain and by having a physically fit body is probably the most important wealth you will ever have. Never stop learning and increasing your human capital. You are building you for the rest of your life. It’s up to you to be the gatekeeper of what you become.

Your character and integrity are also a form of wealth. They are part of what makes you unique and valuable.

*****

This is not a textbook. It is just a primer. Learning is a lifelong occupation, unless you are one of those that wants your life to be just a party about feeling good all the time. If that is the case, this little book probably will not be worth your time to read or understand.

There was a saying when I was a boy that still applies, All work and no play makes Jack a dull boy. By all means, don’t spend all your life studying. Learn to be balanced.

Following are some old sayings that capture the wisdom of our ancestors. Some of these sayings can be traced back to the eighteenth century. I hope you enjoy and use them.

If wishes were horses, beggars would ride.

All that glitters is not gold.

Waste not; want not.

Don’t spend money you don’t have.

You can catch more flies with honey than with vinegar.

Nothing is permanent except change.

A stitch in time saves nine.

Persistence pays off.

The early bird gets the worm.

The wheel that squeaks the most gets greased.

If all your friends jumped off a cliff, would you jump too?

A fool and his money are soon parted.

A house divided against itself cannot stand.

A journey of a thousand miles starts with a single step.

A chain is only as strong as its weakest link.

A little knowledge is a dangerous thing.

In the end, it’s not the years in your life that count. It’s the life in your years.

Part 2

How to Grow Your Human Wealth

Live as if you were to die tomorrow; learn as if you were to live forever.

—M. K. Gandhi

I really like this quote. It is a wonderful guide to life. We seldom ever know when our life will end, but in spite of that uncertainty, we should keep learning as if we had forever. Keep this in mind as you read on. Unfortunately some of our most memorable learning is done the hard way. Live and learn.

Most people don’t think about themselves as wealth but they are. In fact, they are the most important asset they have. It is what defines you, shapes you, and is the very essence of who you are. It includes your human brain and what it can do. You probably take it for granted but it is truly remarkable, and I want you to really appreciate what a powerful computer you have in your head. It and your body are you. Take excellent care of them.

The most important part of your human wealth is knowledge stored in your brain, and this human wealth is probably much more important than financial wealth. It has a large impact on your future salary which is usually your greatest source of income and financial wealth.

You never stop growing your human wealth as long as you are alive because you keep on learning. Why not make it your goal to ensure what you store is good stuff instead of bad?

You were born with much of your human wealth potential as a gift of genes from your ancestors but you do most of the rest.

This part of the book is about investing in and growing you, your human wealth. It is also about taking care of your greatest gifts, your brain and your body. Without them, you do not exist. Please take good care of them.

We are all 50 percent heredity which we did not control (thank you, Mom, and, Dad, for creating me). Accept that fact then make the most of life. Life can be a wonderful adventure. Please do not screw it up by doing stupid things when you are young. You may not think your brain is worth much but even a mediocre brain is fantastic. Cherish it and nourish it. Learn how to get the most out of it. Help it to be the best brain it can be.

It was difficult to write this section because everyone’s needs are different, but in general, you should assess your weak and strong mental, personality, character, and physical points and then try to improve where you are weak. Once you start on your self-improvement program, please do not ignore your good points. They can be improved too.

I have tried to rely on my experience to help you and also shared some of my mistakes for your benefit—and I made plenty of mistakes. I was also a deadpan.

With knowledge exploding, so much of what I give as sources may no longer exist ten years from now; but hopefully, my effort will point you in the right direction.

Recognize that you are the most important wealth you will ever have and keep on learning (human wealth) until you die. Make up your mind now to live a life you can look back at when you are an old timer like me and be proud of what you have become over the years. Make me proud of you.

We are never fully grown until we die because we all change as we go through life. Sometimes it is for the good and sometimes for the bad but it is up to you to see that this precious asset of yours grows up in the best way you and your parents can manage. To a large degree, you are the captain of your ship.

In all this growth, be sure your humanity and character grows. Many parents know this but they are also very busy trying to make a living and must deal with many other