Tier 2
What Is Wealth?
Wealth is stored optionality. A clean definition that separates wealth from income, cash, and status.
Answer
What Is Wealth?
Direct answer: Wealth is stored optionality: the ability to make good moves over time without being forced by fear, debt, or fragility. Mechanism: Wealth reduces forced choices, and forced choices usually come with bad terms and high stress. Implication: You can increase income while losing wealth if you increase dependencies, obligations, or irreversible downside.
Definitions
- Wealth: Stored optionality across capital, skills, relationships, and time.
- Income: A flow of receipts; it can stop.
- Net worth: Assets minus liabilities; a partial view of wealth.
- Runway: Time you can operate without new income.
The mechanism (why this works)
- Life includes uncertainty: shocks, opportunities, and changing constraints.
- Optionality gives you survivable choices during uncertainty.
- Therefore, wealth is better measured by flexibility and resilience than by a single number.
Where this breaks down
- Net worth can be illiquid. Paper wealth is not always usable wealth.
- Some assets create hidden liabilities (maintenance, taxes, attention).
- Wealth can be fragile if it depends on one market regime or one counterparty.
Practical use (evergreen)
If you understand this model, you should:
- Stop optimizing: headline income
- Start measuring: runway, dependency count, and irreversibility
- Redesign: lifestyle so obligations do not consume your options
Related pages
- Start here: How Money Actually Works
- Value Creation
- Leverage
- Trust
- Optionality
- Risk
- Income vs Wealth
Summary
Wealth is stored optionality, not just cash or status. Durable wealth comes from value creation, trust, leverage, and risk management that protects optionality.