What do the Rich Know About Making Money That Most People Don’t?

Image for post
Documenting percentage of households receiving wealth transfers, by income, age, and ethnicity. Source: Bureau of Labor Statistics.

Generally speaking, very little.

In America, the bottom 60% owns only about 1% of the country’s total wealth. That’s not something they chose, unless you are trying to say that 60% of the United States is completely stupid.

A study published in 2017 by Thomas Piketty estimated that about 60% of the private wealth held in the United States had been inherited rather than worked for.

Image for post
Share of inherited wealth, comparing Europe and the United States. Source: Economica, Facundo Alvaredo, Betrand Garbiniti, and Thomas Piketty. 2017.

The biggest thing that the rich know is that most people are completely unaware of something like an estate tax, which, in the United States, is infamously dubbed a “death tax”.

A survey from the Linnaeus University in Sweden asked Swedish adults about the estate tax, which has been abolished since 2004.

The survey was broken into two groups, one who had no information about wealth inheritance and one who had the following information in three factual bullet points:

  • ”Inherited wealth represents about half of all wealth in the population.”
  • ”Those with the highest incomes inherit the most.”
  • ”A majority of Swedish billionaires have inherited their fortunes.”

The respondents who had the bullet points were significantly more likely to support the estate tax than the respondents who didn’t.

Outside of the anecdotal cases, the rich mostly inherit their wealth. There is no magic trick or trade secret over the middle class that makes the rich geniuses in wealth creation; mostly because the wealth isn’t created, it’s passed on in death then passively gained over a lifetime with interest.

Getting to the point of being that wealthy is insanely hard to do. Once you are there, even the tiniest percentage made on massive wealth will generate more money than several households combined — all while doing nothing.

Written by

UC Berkeley, mathematics. Los Angeles. Long-time runner. Top writer on Quora, 100M+ total content views. New to Medium. Inquiries: Moumj@berkeley.edu

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store