September 25, 2025

Episode 376: Nick Maggiulli - Climbing The Wealth Ladder

September 25, 2025

Nick Maggiulli is the Chief Operating Officer at Ritholtz Wealth Management and the author of the international bestseller Just Keep Buying: Proven Ways to Save Money and Build Your Wealth. Through his popular blog, OfDollarsAndData.com, he explores the intersection of data and personal finance, reaching millions of readers worldwide. His latest book, The Wealth Ladder: Proven Strategies for Every Step of Your Financial Life, explores how our financial strategies should evolve as we build wealth.

His insights have been featured in The Wall Street Journal, Forbes, CNBC, and other major media outlets. Mr. Maggiulli holds a degree in Economics from Stanford University and currently lives in the New York City metropolitan area.

Are your financial decisions evolving as your wealth grows? In this episode of the Rational Reminder Podcast, we welcome back Nick Maggiulli to unpack his approach to climbing the wealth ladder and creating the life you want. Nick is the Chief Operating Officer at Ritholtz Wealth Management, the author of The Wealth Ladder and Just Keep Buying, and creator of the blog Of Dollars and Data. He is renowned for his ability to take the complexity out of finance and for his deep knowledge of investing. In our conversation, Nick explains his new framework for building wealth in his new book, The Wealth Ladder, and he unpacks how spending, income, and investing should change from one level to the next. He breaks down his .01% and 1% rules for spending and income, how the opportunity cost of time changes with wealth, and what the data reveals about income, wealth, and asset composition between different levels. Nick also shares strategies to progress between levels, insights on the challenges of extreme wealth, and why focusing on non-financial forms of wealth is important. Join us for a practical, data-driven framework for thinking about financial decisions and what truly constitutes ‘enough’ with Nick Maggiulli!

Key Points From This Episode:

(0:00:00) Nick Maggiulli, his new book, and his background at Ritholtz Wealth Management.

(0:03:48) The Wealth Ladder, its different levels, and why he thinks the concept is important.

(0:06:59) Hear about the 0.01% rule for spending, and examples of The Wealth Ladder levels.

(0:12:09) Unpack the 1% rule and how the opportunity cost of time changes up the ladder.

(0:15:00) Explore how income determines wealth and how to move up and down the ladder.

(0:19:47) Which level is the most common to fall, and how wealth changes up the ladder.

(0:22:34) What shifting wealth composition indicates and how to move from level one to two.

(0:25:48) When education should be the focus, and what it takes to move out of level three.

(0:29:41) Discover the pros and cons of a side hustle and why controlled spending is crucial.

(0:33:32) Learn the key to reaching level five and why people fall out of levels four and five.

(0:39:20) Insights on the downsides of extreme wealth and how it impacts lifestyle.

(0:42:54) How long it takes to climb the ladder and the correlation between age and wealth.

(0:46:10) Why financial persistence is vital and what a typical millionaire household looks like.

(0:49:00) Find out what constitutes ‘enough’ financially and examples of other forms of wealth.

(0:51:56) Nick shares what he hopes readers will take away from the book and how it impacted his view of success.

Read The Transcript:

EPISODE 376

Ben Felix: This is the Rational Reminder podcast, a weekly reality check on sensible investing and financial decision-making from two Canadians. We're hosted by me, Benjamin Felix, CIO, and Cameron Pasmore, CEO at PWL Capital.

Cameron Passmore: Welcome to episode 376. And this week, we welcome back a long-time friend of ours, Ben, Nick Maggiulli, who has a new book out, The Wealth Ladder. Terrific book, terrific framework. I thought that conversation was great. Now, we've known Nick a long time. He was first on episode 255 when his first book, Just Keep Buying, came out, and that was a great conversation. And we keep in touch with Nick fairly often. So, it was great to see him again.

Ben Felix: It is great to see him. And like you said, we've known Nick for years. When we recorded with Barry, however long ago that was, we met Nick in New York City at their office.

Cameron Passmore: Seven years ago. Yeah, and they're much smaller. And he says at the end, they jokingly call us the Ritholtz of the North because we got to know Barry, and Josh, and Nick, and the people at Ritholtz right there in Midtown Manhattan. And you're right, remember that day we visited Barry in the office with microphones. Boy, that was early on.

Ben Felix: Barry made some off-hand comment about how he has a studio at Bloomberg and he couldn't imagine schlepping all that equipment around. We were like, "Here, we are schlepping the equipment." Oh, yeah, it's funny. Nick sent us copies of his book. He wrote a very nice note in the front cover in the one I got. I'm sure same as yours, Cameron.

Cameron Passmore: Yeah.

Ben Felix: It's an interesting book, an interesting way to think about the progression of wealth over the life cycle and how people can move from, as Nick said, that the buckets are somewhat arbitrary. He's talking about this concept of The Wealth Ladder, which is moving up different levels of wealth, and how decisions about spending, time use, and investing change as you move up those different rungs on this wealth ladder. But the latter rungs, the specific numbers that you attach to them are somewhat arbitrary. But just the general concept that decisions change as the amount of wealth that you have at your disposal increases, I think, is a pretty interesting idea. And Nick talks through how some of those decisions change, and also his observations based on looking at a bunch of US data just on how the composition of wealth changes over time, which I think is interesting. In very broad terms, because the data he has are not super specific, but in very broad terms what types of behaviours get people from one wealth letter to another, whether income or spending is more important to move up.

Cameron Passmore: Up and down.

Ben Felix: Up and down. Yeah, that's right. What leads to extreme wealth? Like he says, what gets you up to level four, which is the 1 to 10 million rung, is not going to get you up to level five. Those kind of ideas, I think it is an interesting framework. I enjoyed reading the book. I think we had a good conversation here with Nick.

Cameron Passmore: We mentioned the two books he's written. Nick is the Chief Operating Officer at Ritholtz Wealth Management, which he says is now a 70-plus-person firm. Hats off to the Ritholtz gang. He's also the author of the weekly blog ofdollarsanddata.com, which, as he puts it, focuses on the intersection of data and personal finance. I mean, he is a data nerd, self-professed data nerd, which is a great framework and certainly resonates with us and our audience.

Ben Felix: I think it's a bit of a change of pace relative to talking with an academic about their research, but I think this is super practically useful, and I think Nick has a lot of interesting insights.

Cameron Passmore: All right, he's a good guy. Let's go to our friend, Nick Maggiulli.

Ben Felix: Nick Maggiulli, welcome back to the Rational Reminder podcast.

Nick Maggiulli: Thanks for having me back on, guys. Appreciate it.

Ben Felix: Super excited to be talking to you. I did enjoy reading your book. Read it a couple days ago. It was good.

Nick Maggiulli: That's great. I appreciate it.

Ben Felix: All right. So, Nick, what is The Wealth Ladder?

Nick Maggiulli: The Wealth Ladder is a new framework for thinking about building wealth that basically argues that your financial strategy should change over time. When I say over time, I really mean as you build wealth. As your financial situation evolves, the thinking around the decisions you make in terms of your spending, your income, your investments should change as well.

How it does this, it breaks wealth into six distinct levels. And this is all in US dollars. I know you guys are Canadian, so I think we can probably just use the same translation for Canadian dollars, and it's probably close enough, even though the exchange rate's a little different. I think there's slightly less wealth in Canada than the US, so it probably actually maps decently well.

In the US, these six levels are level one is less than $10,000 in net worth. And by the way, this is net worth. So it's all your assets minus all your liabilities. Less than $10,000 is level one. Level two is $10,000 to $100,000. That's level two. Level three is $100,000 to a million. Level four is $1 million to $10 million. Level five is 10 million to $100 million. And level six is 100 million plus.

And the thinking behind this, obviously, it's a log scale. So everything is multiplied by 10. If you just memorize, level three is $100,000 to a million dollars. And then you can just go up by multiplying by 10 or go down by dividing by 10. And that actually divides the United States pretty nicely in terms of the distribution. About 20% of households are in level one. So that's less than $10,000. Twenty percent are in level two, which is 10,000 to 100,000. Forty percent are in level three, which is middle class in the United States, I would say, which is 100,000 to a million. And then you have 18% of households in the United States that are in level four. That's 1 to10 million. And then the top 2% is level five and six. And level six in particular has 11,000 households in there. It's a very, very elite small group that are in that 100 million plus range. And there's only about 30,000 of those people in the world. So the US has about a third of all the centimillionaires. But from that, you can just start to see like, "Wait, so my income decisions might change across the ladder. My spending decisions might change, my investment decisions or how they're allocated might change." And we can get into all of that.

Cameron Passmore: So why do you think this concept of ladders is so important?
Nick Maggiulli: I think the idea of a wealth ladder has been talked about for a very long time. Like people just say it like, "Oh, you're climbing The Wealth Ladder." It's just like a common concept that's been thrown around. I've at least seen it in the literature in terms of just how people talk about this thing. And I said, "Okay, why don't I actually define this? Why don't I try and make it into a real thing? I'll come up with levels. I'll come up with different strategies that have to fit within each level, etc." I just realized that financial advice should change over time.

Yes, there's a lot of great strategies. You can be like, "Hey, just buy a globally diversified index fund, save money." That's going to be a great strategy for most people, and that's going to work for like probably 60% to 70% of people. But for some people that are deeply in debt or something, they need a different strategy. And for those that are trying to really build extreme wealth, the S&P 500 is not going to get you there by itself, unless you have a super long-time horizon or a really high income. I think realizing that there's other strategies out there and just thinking about this more holistically is what got me to this point.

Ben Felix: What is the 0.01% rule for spending?

Nick Maggiulli: The .01% rule basically states that you take your net worth and you multiply by .01% or divide by 10,000. And that is roughly how much your wealth should generate on a daily basis. That's my assumption here. And if you actually do that .01% per day, which is about one basis point a day, that ends up being 3.7% a year, which is a more conservative 4% rule. It's like a 4% rule in disguise.

And the idea here, the goal isn't to say, "Hey, you should spend .01% of your net worth every day." It's when you're making that marginal spending decision, if that marginal spending decision is less than .01% of your net worth, then don't worry about it. It's almost like a triviality rule. Let's say you have a net worth of a million dollars. That means that all else equal, your net worth should be going up by about $100 a day, conservatively.

If you're at a nice restaurant and you're like, "Oh, do I want to get this salmon or the burger?" and the difference in price is 10 bucks or 20 bucks, who cares? It's less than that $100 amount, just buy the thing and don't worry about it again. Buy the thing you want. If you want the salmon, assuming.

The whole purpose of this rule was I'm trying to allow for lifestyle creep. Because I think right now the personal finance community, the only real argument I hear is, "Oh, no, you can't let your lifestyle creep. You have to keep your spending the same no matter how much you make." I think it's a little strong. I want to allow some lifestyle creep, but only after you've built wealth. "Hey, I've done the hard work. I've saved this money. I've invested it. I've built this financial base." And as that base gets bigger, you get to spend a little bit more over time. That's the assumption behind it. And I think it's very conservative.

Of course, I'm not recommending someone spend .01% of their wealth every day. But if you're doing this on occasion, it's not going to be a big deal. That's how I tried to solve the problem of allowing some lifestyle creep, but only after you've demonstrated the financial discipline to get there.

Cameron Passmore: I'm curious, Nick, if you have some examples as people really climb up the ladder. Do you have some idea of examples of how spending decisions might really change as you climb?

Nick Maggiulli: If you think about the big spending decisions most people make, it's going to be like in a handful of categories. Your house, your car, how often you're travelling, where you travel to. So, you start thinking about these categories. And I mapped all these categories onto the different levels on The Wealth Ladder.

For example, in level two, which once again is $10,000 to $100,000 in wealth. Once you're in level two and by the end of level two, you have what I call grocery freedom. So when you're at a grocery store, you're like, "Okay, the difference between buying one item versus the maybe more premium version of that item is going to be anywhere from like let's say $1 to $10." And that's where level two is. You take $10,000 x 01% is $1. $100,000 x 01% is about $10. So that marginal choice, can I afford to get this nicer version of this thing at the grocery store? Yes, you can once you're at the end of level two.

When you're in level three, I call that restaurant freedom. Because now, once you're at a restaurant, you can kind of buy what you want by the end of that level. Level four is what I call travel freedom. That's where you can start to, "Okay, maybe I'll buy a slightly nicer seat on the airplane. I'll stay at a nicer hotel." And then it goes from there. I think level five is where I say house freedom, where you can basically get a house almost anywhere you want. Now, not any house. But by the time you have 10 million bucks, you can basically live in any neighbourhood. You can kind of just go from there. As you start seeing your wealth increase through these levels, the spending categories change and thinking about the level of freedom you have.

This is not a perfect metric. I'm just trying to come up with rough ideas of thinking about this. If you were in level four, you just start getting travel freedom. It's not like, "Okay, I have $1 million and $1. Now I can go crazy." No, you probably still fly coach. You probably still are staying in a cheaper hotel. Maybe once in a while you can upgrade something slightly. But as you get deeper into level four, halfway through 5 million bucks, yeah, you can probably stay at a nicer hotel. You can get a nicer seat on the airplane. I think that's the thinking behind it is because you've shown the financial discipline, so the reward is more spending.

What most people do is they say, "Oh, your income's gone up a lot. Now you can spend more." I don't like that because income's fickle. It comes and goes. Imagine an athlete. They have a 5-year career. Yeah, they have an insane income. They could spend a ton of money, but once that dries up, they have no wealth at the end. What happens? There's that always that cautionary tale of athletes that go broke and things like that. I think it's because they spent based on their income, not their wealth.

Ben Felix: It's a framework for how much you can spend, but it also gives people license to spend once they reach certain levels of wealth, which to your point earlier, I think is a problem for a lot of people.

Nick Maggiulli: And once again, the whole point of this stuff – it's not that this thing is perfect. It's I've had so many people have problems with spending money, and like, "Oh, I got to do this. I got to do that." I tried to come up with a framework that could help them stop worrying about this. I had someone who's worth $4 or $5 million. He's like, "I don't worry about the grocery store prices anymore," since talking. I'm like, "You didn't have to worry about the grocery store prices yet decades ago. But the fact that now you're actually changing your behaviour is good.” Don't sweat the small stuff. Focus on the things.

If you're in level four, do I want to get a first-class seat, or do I want to just maybe get an emergency exit row seat, if you're like middle level four? That's a fairer question than one you should think about. Not, "Oh, do I get the cage-free eggs versus the standard eggs?" Just get what you want. If you want the cage-free eggs, get them.

Ben Felix: That's the .01% rule. What is the 1% rule?

Nick Maggiulli: Similarly, the 1% rule is for making income decisions. If you do .01% times your net worth, that's usually a very small number. It's how much you're spending. For income decisions, I think this is very helpful. Especially if you're like a freelancer, you're always evaluating income opportunities. If you have a 9-5 job and that's your only income, this is not as helpful if I'm being honest.

But the idea is take your net worth, multiply by 1%. And if this income opportunity, the side hustle, whatever, is not going to create at least 1% increasing your net worth, then you shouldn't do it. Or you should just reconsider it, maybe. And so, I think there's people like, "Oh, I'll take on this client." And after all the work you do and everything, you're like, "Wait, this client is actually not even going to move my net worth by 1%. Why did I do all this?" It's not a perfect rule either, but it's made as a secondary check on the thinking you already have about something. She may feel a certain way about a certain decision. Do I want to take on this side job? Do I want to do this side hustle? Do I want to take on this client, etc.? You're like, "I'm not sure. Well, is there a mathematical framework I can use?" Yeah. Do 1% of your net worth. Is that person or is that opportunity going to at least increase that by 1%?” Time matters, too. If someone said, "Hey, you can clap your hands. I'll give you $100." Everyone would do it because it just takes basically no time. But in the grander scheme of things, think about how this framework can help you with income decisions.

Cameron Passmore: How does thinking about the opportunity cost of time change as you go up the ladder?

Nick Maggiulli: As you move up the ladder, in theory, you're investing more. You have more assets. Those assets are throwing off more income. You have to really think a bit more about the types of income opportunities you take on. Is this job worth my time? This is even in your own career. Imagine you get to a point you're in. This usually happens for people, I think, in level four. Because you get to a point where your investment portfolio could be earning more than you, and even by a considerable amount.

What you do on the investment front is far more important than what happens in terms of your job or something like that. Thinking about that is very important because now the opportunity and cost of your time is going up. You don't want to overdo this. Tim Ferriss recently talked about this. You can put a value on your time that's super high, and you're like, "Oh, my time's worth $1,000 an hour." If you view everything in your life that way, any second of something that's not optimized, you're going to freak out. It's a bad way to go through life. I'm not saying to do that. I'm just saying, when you're thinking about things like, "Oh, should I take on this job? Do I need to keep working? What's the point?" All those types of questions should be related to the opportunity cost of your time. Not, "Oh, should I go to my child's birthday party? I'd rather just go work, and I can make a thousand dollars or something." I don't want you to start making those trade-offs. But I think the trade-offs that do matter are like income decision versus another income decision. That's where you want to really think about those things.

Ben Felix: You look at a ton of data in the book. How strong is the relationship that you observe between income and wealth?

Nick Maggiulli: I consider it the strongest relationship in personal finance. And I know you guys have had people on the show that talk about expense management. And I do think it's important. I don't want to say that expenses are nothing. But if you just look at the data, it's very rare to have high income and low wealth or low income and high wealth. The data is overwhelming. I tweeted something today, 95% of US households with an income over $200,000 have a net worth over $200,000.

Anytime someone's like, "Income doesn't matter. I know someone that has a high income, and they spend it all. They're in the 5%." Don't get me wrong, I'm not saying they don't exist. I'm not saying that person's lying. I'm not saying that. I'm just saying that's the 5%. I would rather focus on the 95% and the thing that's probably actually going to help you, which is your income.

I talk about this concept, and I still get so much pushback on it. People are still like, "Oh, no. It's cuz you're buying too many lattes. Is this and that." Where is the data that supports this? I'll be the first person to shut up and say, "You know what? I was wrong." I have not seen the data to support it, and no one can show me. And every data set I've looked at shows a very, very high correlation between income and wealth.

Someone's going to push back and say, "Well, Nick, if you have a lot of wealth and it's invested, it's going to be creating a lot of income." Of course, this is like a flywheel. You have higher income, you save it, you invest it, that's now wealth. That wealth throws off income. It creates a flywheel where more income creates more wealth, which creates more income, etc. If that's your counterargument, that's my point. This is exactly true. The wealth is creating the income and vice versa. That's all I'm trying to say. I'm not saying expense management doesn't matter at all, but if you have to think about, “What am I going to do over the next 5 years?” I think your spending is not the place to spend all that time, and it's more of your income.

Cameron Passmore: Speaking of data, how common is it for households to actually climb The Wealth Ladder?

Ben Felix: Depends over the time period. I have this data here. I looked at 10-year and 20-year periods. This data is different. So, most of the data I talk about is from the survey of consumer finances, which looks at household snapshots, just different households over time. There's another study called the Panel Survey of Income Dynamics, which follows the same set of households over time. And I use that data to see, "Okay, if I see a household today and I look at them in the next snapshot 10 years later, or that's probably two snapshots later, where are they? Are they in the same wealth level? Are they up, down? Etc."

Over a 10-year period, about 20% of households will increase by at least one wealth level, and 3% will have increased by two wealth levels. And over a 20-year period, about 33% of households will have increased by one wealth level. And about 5% will have increased by two levels.

There is upward mobility even in the United States, despite what people say. It's good mobility. But this is not just mobility like, "Oh, I gained wealth." This is, "I gained enough wealth to get into a new level." And so for some of those people, that's going to be a marginal increase. For others, it could be a 10x or more jump. For those that went up two levels, their wealth went up at least 10x over a period of a decade or two.

Ben Felix: What about the other direction? How common is it for households to fall backwards on the ladder?

Nick Maggiulli: Regardless of time period, the downward mobility is about the same. There's about a 10% chance of falling down a level within 10 years or 20 years. That's actually good. It shows that there's not necessarily like, "Oh, over a longer period of time, there's more downward mobility." It's about the same. Going down two levels, it's going to be about 2% of households.

Once again, going down a wealth level is not necessarily always the result of something really bad happening. I think it could be that you're in retirement, you pull down your money. It could happen. You fall down a wealth level. That's not necessarily a bad thing. You expected that to happen. There are also cases of divorce. Two individuals are in a household, they divorce, they have to split their assets. Now you have two individuals, possibly at a lower wealth level. You take anything, multiply it by 0.5. You could see how you could fall down a level.

In addition, there are investment things that can happen. If you have a lot of your money, let's say you have a business and almost all of your net worth is in that business, and something bad happens to it. We go through a COVID-like scenario. You own a bunch of restaurants, you could see how you'd fall down a level or two. Those are examples of how that happens. It is rare, though, which is the good part. And so, once again, only about 12% of households will experience a downward shift in level over a 10 or 20-year period.

What that tells you, though, is most people actually stay in the same wealth level over a 10-year or a 20-year period. Most of them will be in the same wealth level. That doesn't mean they didn't build wealth, but they didn't build enough wealth to jump out of their level. I think this is very common in level three and level four. Because once you're in these levels, especially level four, it's the hardest one to get out of. I think it's something like 64% of households that are in level four today, or at least based on the historical data, 64% of those households will still be in level four a decade from now or two decades from now. One way or the other, it's very difficult to break out of these levels once you get there because the strategies that get you in there may not be the same as the strategies that get you out. And we can go into that later.

Cameron Passmore: I'm curious, Nick, if you have any idea of which level might be most common to fall down.

Nick Maggiulli: Once again, there's limited data on this because the Panel Survey of Income Dynamics doesn't have too many households in this level, but it's technically based on the data I have. Level five, those with 10 million to $100 million are most likely to be in level four, $1 to $10 million of all the levels. So, of all of them, anyone that's most likely to fall down, it's technically level five. Why do I think that is? Divorce, as I just mentioned. I just talked about the concentrated holdings. All my money is in this one business, and it's worth 20 million bucks. Right now, you're in level five. Something happens to that business, you could see your fortune wiped away. That's what we see in the data. Once again, there are not enough households in this data to really be 100% definitive. But based on what I've seen, that's what the data looks like. It makes sense. How do these people that are billionaires go to zero? They bet everything on one thing, or there's fraud in their company, or there's all sorts of weird things, or they're not diversified. I think concentration is fundamentally the issue there.

Ben Felix: How does the composition of wealth change as people move up The Wealth Ladder?

Nick Maggiulli: In general, there's like this trend from let's say levels one and two, to like levels three to four, to levels five to six, where the main assets that people own in levels one to two is mostly like their car, and then it starts to become their home by like levels two to three. And then as you go into levels four and five, it starts to become their retirement accounts, stocks, things like that. And then five and six is where you're starting to see private business ownerships, equity in your own company, or you have equity in a startup that got very big and either sold for a lot of money or it's just worth a lot of money. That's what we tend to see in the data. In general, this trend is from less income-producing assets to more income-producing assets over time.

Of those in levels 1 to three, less than 25% of their assets are in income-producing assets. And by the way, your home is not considered an income-producing asset. Your primary residence is not considered one in this instance. Compare that to levels four to six, and over half of their assets are income-producing assets. That includes your retirement accounts, real estate, stocks outside like a brokerage account, and private businesses. And so when you just look at that over time – and this was in chapter three of The Wealth Ladder, I'm walking through every single asset class and just showing you, "Okay, here's all the levels and here's the distribution of the percentage of their assets in each level allocated to that particular asset class."

And it's interesting because for those lower on The Wealth Ladder, they just don't have the money to go and buy stocks. They don't have the money to do all this stuff. And so it's very obvious. But as they do start to get money, you start to see, "Okay, they buy a home. And then after they buy a home, then they have a retirement account, and then they start to own stocks, and then maybe they even have a business." It's kind of that progression up The Wealth Ladder, and makes it very useful for those that are looking at these types of things.

Cameron Passmore: What do you think the key takeaway would be for the listeners from that data of shifting wealth composition?

Nick Maggiulli: It's more income-producing assets all the way up. I wrote about this in the first book, in Just Keep Buying. I said the continual purchase of a diverse set of income-producing assets. I wrote that back in 2022. Did not have this data yet. And looking at this data now, I'm even more convinced of that. There's one of the charts in the end of chapter 3 where I take all this together and I say, "Okay, look at just the percentage of income-producing assets for each wealth level, and it just increases in every single one. Level two has more than level one, level three has more than level two, etc. All the way up The Wealth Ladder." That's my main takeaway. The people that have the most wealth also tend to have most of their money. Not even just most. They have more money, obviously. But a higher percentage of their assets are in these types of asset classes that are income-producing than those lower on the ladder.

Ben Felix: Yeah, it's interesting. It kind of makes sense. A vehicle and a house are fixed. Then there's variation in value. Obviously, you can get really expensive houses. But someone with a medium or moderate level of wealth is probably not going to have a crazy expensive house. And so, the rest of their assets are going to go into other stuff. And then you have the flywheel effect that you mentioned earlier. Those income-producing assets are going to increase in value over time. All makes sense.

A big part of your book is going through the strategies of how you can get from one wealth level to the next. And that's probably the most interesting part of the book, which I think was the point. Can you talk about the strategies for moving from level one to level two?

Nick Maggiulli: The strategy in each level is going to be different because of obviously the starting point. The obvious strategy that most people would say in level one. Level one, once again, you have less than $10,000 in wealth. You could even be in debt. It doesn't matter. Just less than 10k net worth. And I think the solution there is to get to safety of some sort.

Obviously, you're going to hear people say, “Get an emergency fund, financial safety.” My more expanded way of thinking about safety is, who do you have in your network? Do you have friends? Do you have family that can help you out while you build that safety? And then you can help them out later, help other people out in your network. And I think that's really important because we always like to measure wealth in financial terms and like, "Hey, what's on your balance sheet?" But there's a lot more wealth out there in terms of networks, friends, family, as I said, that can really help you get out of a dire financial situation. And so that's what I would say to focus on.

Of course, everyone knows, "Oh, I need to get an emergency fund." That's pretty out there. That's not a cutting-edge idea. I think the thing that's a little bit different here is what are the other types of wealth I can rely on to get myself out of this? And this is a very common thing in the third world. There's this great book called Portfolios for the Poor. And these people are the best budgeters on the planet because they have so little that they have this network of borrowing they do. And okay, I owe this person money. And they even do stuff that doesn't even make sense to someone – if you know mathematics, it wouldn't make any sense, but it actually makes a lot of sense behaviorally.

For example, they will take out debt at maybe not a crazy interest rate because they know if they don't do that, they won't save money. And so they take out debt as a forced savings mechanism. Because if they just had a bunch of cash sitting there, they would just spend it all right away. There are behavioural tricks. And it's not everybody that does this, but there were just some shocking things. You read this, you're like, "Oh, that's very interesting." But just a lot of ways of thinking about budgeting and how you get to safety, and using your network to do that.

Cameron Passmore: Where on the ladder does pursuing education become really important?

Nick Maggiulli: From a financial perspective, it's definitely level one, and probably most important in level two. Because by the time you're out of level one, you can kind of say, "Hey, you know, I have a base of safety, and I can use that to now invest in myself." And this is not true, for example, of high schoolers going into college. A lot of these people don't have $10,000 in assets. I didn't either. But I think through my family, I've never been in level one, even though technically my net worth was below 10,000 when I graduated all through college. But through my family, I would say as a proxy, I was at least in level two. And some people are higher than that.

When I'm thinking about education, I'm saying like, "Hey, you're in a spot where you can take this risk." Even if my education didn't pay off, I still would have been fine. I could have come home, stayed with my family. I could have lived at home and gotten a job, and done whatever. That's not true of a lot of people. And so for those that aren't in that situation, you kind of have to get to some sense of financial safety before you can really start investing in your education a bit more. And that's unfortunate, but I think that's what's true.

Now, once again, that's the financial side of education. I think education from a spiritual or personal growth side is important, regardless of your wealth level. If you just want to learn more, I think that's great. But if we're just talking what's the financial payoff, it's the most important definitely in level two because that's you're either early in your career or you just need skills to kind of get out of that level where you can really change the trajectory of your life. If you get a good-paying job or something, that can get you into level three or level four. All you need is time now.

I think education is the thing to think about. And once again, education is a very broad term. Because I'm not just talking college degrees. You can go, and there's blue-collar work. There's trade schools. There's other types of skills out there. Learn sales. I think of all of the skills out there that going to be valuable in the future, I think sales is still going to be one of the most valuable because AI is not going to be able to do it. I don't really imagine robot realtors and things like that. I really think people are going to buy from people. AI will do a lot of other research and other things that are really important, but I still think sales is going to be an incredibly valuable skill. And if you get very good at it, the sky is the limit. You can sell luxury real estate in New York City and make a killing doing that.

Ben Felix: Okay. That was to get from level one to level two, we're talking about budgeting and social networks?

Nick Maggiulli: Yeah. Safety.

Ben Felix: Safety. Right Okay. Then level two to level three, education. What does it take to get out of level three?

Nick Maggiulli: I think that's where investing really starts to play a bigger role. Obviously, time is the big vector in all of this. With enough time, saving money, investing, etc., that gets you into level four, etc. It's not that investing is not important in level one or level two or anything like that, but the payoff and the impact are literally 10 times smaller. If you say, "Oh, I have $10,000 invested." Okay, let's say you have a 10% year. That's 1,000 bucks. I mean, that's not nothing. But now you have $100,000 invested, and now that's 10,000.

At some point, your portfolio starts to compete with you in terms of how much you can save. That is the big unlock. And especially by the time you're in level four and get deep into level four, it's probably going to start earning more than you. Kind of rebuilding yourself as like a financial asset equivalent. You can imagine like, okay, I'm trying to rebuild a worker that goes out and earns money for me. So in level two, that worker doesn't make that much money. Your spending is going to be far more important. Your income decisions, how you do your career is going to be more important.

By the time you get to level three, that little financial asset equivalent is a bit bigger. And now it's probably maybe not making the same as you, but it's really helping. It's like having an assistant that's there earning you money. And then as you get deeper into level three and especially into level four, that thing actually starts making more than you, and that's where the real unlock is.

And so I really focus on investing in level three. It was why I wrote Just Keep Buying for the proverbial level two to level three household that wants to get into deeper into level three or into level four. I fundamentally believe that's it. It takes a long time, and you got to save and hustle away at that. But I think that is the way to do it. And there's a ton of data that shows it can be done.

Ben Felix: You talk in the book about having a side hustle. Would you worry about a side hustle distracting people from their main career?

Nick Maggiulli: Oh, definitely. I probably should have mentioned that a bit more. It depends on what your career is. In my case, my side hustle is I've been blogging on the internet for nine years. Now, I've written a few books, etc. I did that because I had hit a cap in my job, my old job. There was no way I was going to earn more. I'd have to go get an MBA or a PhD. So, I was capped out. If you're in one of those positions where, like, "Hey, I'm going to get 3% to 4% raises for the next 20 years, unless I do something else,” then that side hustle really isn't as much of a distraction. If you're in a career where, like, "Oh, I could get a promotion and then this happens," that's a different story.

So, I think you have to really think about your situation. I don't think a side hustle is necessary. I think for some people, where maybe they're in an industry or position where like, "Hey, for me to get to that next level, to get a real big jump in pay or anything like that, it's just not going to happen or it's going to take much longer than I thought," then maybe a side hustle can make sense.

I also enjoyed it, too. I think there's also some personal enjoyment in side hustles because people do them because they love them, I'm guessing. That's not always the case. But in my case, that was true. And so when you're thinking about, "Should I do a side hustle?" Yes. Think about is this going to distract from my main career, and could that send me off on the wrong path? And then also think about, like do I enjoy this thing? And that's another piece of it.

Ben Felix: Your side hustle, I think, led you to change careers and go into something that has a much bigger upside. I asked the question because I've never done a side hustle. The closest thing I've done is the content stuff, but I did that as part of my career. We kind of took different paths to get to a very similar place, I think.

Nick Maggiulli: Yeah. Exactly. I was doing this on the side, and then I got recruited to join a wealth management firm. This is not technically through them. But yes, it does help bring in clients here and there. That's helpful in its own right. But it's just interesting that you have that alignment. And so, it's nice to have that. And so, yes, now there is more potential in my actual career than there was before. But I started this on that side path. And now the side path veered into the main path somehow.

Cameron Passmore: How important is controlling spending in level three? Either to get out of it or to even stay in it.

Nick Maggiulli: The biggest expense for those in level three, in general, is their home. And you see that in the data in terms of their assets. Of all the asset classes they own, their primary residence is the largest one. When I was looking at data on some of the mobility data in terms of, let's look at households that start in level three today, and then 10 years from now, they're still in level three. And compare those households to those that start in level three and make it to level four. What were the differences?

One of the biggest differences is those that made it to level four had higher income. Once again, income is one of the big things. But the other thing I saw was that the spending between these two groups was almost identical. Even though the people that made it to level four had more income, and so that obviously helped them save more, the people that didn't make it to level four spent almost as much as the people that did.

There is a keeping up with the Joneses. So here's an example where spending can matter. And I do start to see that in the data. But once again, if I had to pick, if I'm talking to the person that's in level three and I think they're going to still be in level three in a decade, I'm not going to tell them to cut their spending. I'm going to tell them to grow their income. Because it's going to just make it so much easier. Because they grow their income, their spending is not going to go up that much. At least based on the data I saw. Those that went from level three to level four did spend a little more than those that stayed in level three, but they didn't spend that much more. They're spending almost the same amount of money, but they're making so much more. That's where the wedge is. It's in making more money.

And so to some people this is going to sound obvious, but at least in the United States and the financial media, this is not an obvious point because there are still so many people that beat the spending horse. Just keep on bringing this argument up over and over. And I'm not saying it doesn't matter. For a small subset of people, it definitely does. But for the vast majority, it is the income that is the lever.

Ben Felix: Earning and investing is going to get you into level four. What does it take to get up to level five? Because the jumps in wealth start becoming really big.

Nick Maggiulli: I call level four the no man's land of wealth. Because once you're in level four, you don't need to get out of level four. For some people, you don't even get out of level three. In certain places in the world, especially in Europe, because the social safety net is so much better, I think level three is the enough level in Europe. In the United States, where healthcare costs are much higher. I would say Canada is probably between I would say Europe and the US in terms of how I would think about it. You probably need to be level four even in Canada to kind of really feel that financial independence and everything.

Why I say level four is the no man's land of wealth. Because the stuff that got you in there is very unlikely to get you out. And I can just do some simple math, which I brought from the book that demonstrates this. Imagine today you have an investment portfolio. I'm just making it very simple. A million-dollar investment portfolio. You've already done that, which is an accomplishment. So congrats on doing that. However long it took you to get there. It's earning 5% a year. Let's assume this is inflation-adjusted. And you're adding $100,000 a year. How long does it take you to get to 10 million? So, how long does it take you to get from the beginning of level four to level five? The answer is 28 years. Take your financial calculator, run it yourself, you'll see 28 years.

It's going to take you almost three decades of grinding it out, saving $100,000 after tax, a considerable amount of money while earning 5% a year after you've already made a million bucks. You can see the math is not your friend once you're in level four. And even if you're like, "Well, Nick, I'm going to save even more. I'm going to save 300,000 a year." You're almost making probably $700,000 a year pre-tax. Even then, it takes 17 years. Even with saving 300k a year, 5% return starting with a million.

You can see that standard 9-5 job, save, invest in your 401(k) or your retirement account, whatever, and let the markets do the thing for you, it's not going to get you there without a very long time and grinding for a long time. The better solution, if someone really wants to get into level five, is what are those people that get into level five? And how do they get there? Besides the celebrities, athletes, and entertainers, put those people aside, let's assume you're not them. It's business owners. It's all entrepreneurs. And so you basically have to start a company and sell it for tens of millions of dollars, and you have most of the equity. Or you join a company very early that's like a startup, and it sells for hundreds, or millions, or billions of dollars. And your net take ends up, you're now in level five.

That's why, if you look at the data, the vast majority of those people have most of their money in business interests, especially in level six, which is 100 million-plus. It's just overwhelming what the data shows on that. And so I was just trying to emphasize that. If you want to do that, that's the big decision. Do you go out on your own, start a business, or do you say, "Hey, you know what? I'm comfortable not doing that and just doing my thing here." Or you could even take your foot off the gas. That's another option that no one's thinking about, which is the whole coast FIRE idea. I've saved enough, where if I stopped saving right now, I would be able to get to retirement. I just need to cover my current expenses. And so, I think that's the big decision point. And I think a lot of people rationally say, "Hey, I'm not going to keep grinding just to build more wealth. It's not going to really improve my life." And they pull back. And I think that's the right thing to do for a lot of people. And I, unfortunately, don't think enough people do that.

Cameron Passmore: So someone finds themselves in level four, that's the 1 to 10 million rung, what kinds of things knock people out of that?

Nick Maggiulli: We already talked about some of them earlier, divorce, personal things of that nature. If you're not diversified, some bad investments, or you have most of your money in one thing. I have friends that have a lot of their money in tech. They're like in the q's or even a levered q, and they have 50% of their assets in there. And they're like, "Hey, it's going great." And it is going great for them. But if that turns – we saw what happened in 2022. If that had extended further, it would have been really bad.

And I actually think the 2022 bear market was going to get much worse. Just this whole ChatGPT happened at the end of 2022, and that's been the bull market ever since. We're off to the races. And so if that doesn't happen in that way, who knows where tech valuations would be today.

If I had to pick what are the two things, in the US especially, it could be health issues. But those are rare, and they happen, but they're rare. It's going to be health issues, divorce, and overconcentration. How do you lose wealth? How does that even happen? You're not going to be spending down necessarily. That could happen if you're in retirement. So there is that class of people who are kind of level four and they pull down.

But if you actually look at the retirement data, most retirees do not spend down their portfolios. They just don't do it. They spend their income. They spend up to what their investments return, but they just don't withdraw. One in seven retirees actually pull out and actually have a portfolio. We talk so much about the 4% rule, and no one uses it, sadly. But that's at least the data I've seen. I've looked at all these retirement things for so long, and I just have not seen any data that a large percentage of people use the 4% rule.

Ben Felix: There's a Canadian paper showing the same thing. Retirees in Canada spend way less than they could.

Nick Maggiulli: I knew you'd have a paper, Ben. The fact that the Canadians and the Americans think the same on this is like, yep, that's probably true then.

Ben Felix: Yeah.

Nick Maggiulli: And I get it. You're worried. I don't want to spend out all my money. A lot of people aren't well-versed in the 4% rule and know all that. They're like, "I'm going to spend it," and there's going to be a market crash. And then I'm going to go through – I talked to a lot of retirees and they're like, "I have nothing I want to spend on." They don't want to fly private. All these things that you're like, "Oh, spend it on this or that." They don't want to do. They don't want to get and travel to the other side of the world and be on a 10-hour flight or something. They just can't be bothered with a lot of this stuff. And so, I think they're very content and they just don't want to spend money. And so, it's really hard to be like, "Oh, spend more." They don't want to.

Ben Felix: I think a lot of this is the separation of income and capital, too, where people will spend their dividends but they just don't want to spend their capital even if that's wrong. We can tell them, "Hey, that's wrong you could spend more." But people don't want to hear that.

Nick Maggiulli: Live off the income is such a great line. And so never touch the principle basically.

Ben Felix: Yeah, exactly. What are the downsides of reaching level five when you start to get into that more extreme wealth?

Nick Maggiulli: I'll bucket level five and six together. You have to think about all the different ways that your life will change. Not just, "Okay, yes, I have more money. I have to manage it." There could be the stress of managing the wealth. That's financial in some ways. But the loss of possible trust. Like, if you meet someone and they know you're wealthy – it also depends on how if this is stealth wealth or not. If you're known as being wealthy, I think it changes it a little bit. Or people could, like, look you up and realize how wealthy you are. You'll never know, does this person like me for me or they just after me for my money? This is where, like old friends, are really important because they liked you when, hopefully, you weren't in level five, etc. So, you got along with them then, which is great. And so, I think that's one thing.

Family dynamics change a bit more. Maybe there's an expectation because you have so much money. Maybe if you're like low in level four, no one's like, "Oh my gosh, you have all this money and you're rich and you can do all this stuff." But if you're in like level five or even deeper into level five, you could do tons of stuff with your money. There's like the social almost pressure, or maybe expectation, or what are you doing with that money, or maybe you should be donating, or this or that.

There's a lot of these things that happen. Even your own motivation. When you're level four, you're like, "Okay, at least I can still grind to do more." But by the time you're like deep into level five, you have so much money you would probably never consume it. It really changes your motivation to work, all sorts of things.

I talk about all these in the book and the different ways that these can impact you. Now, I know what some people are going to say. First world problems. World's tiniest violin. Who cares about this stuff? But I do believe more wealth can actually ruin people's lives. I know some people will like, "Oh, yeah, I'll agree with that." But inside, they're like, "I don't actually agree with that." But I really believe there's a lot of people out there that more wealth actually made them worse off than if they had never had that wealth.

Ben Felix: I believe it. But we did a whole episode, episode 145 of this podcast, with Jennifer Risher, who wrote a book about exactly that, about the challenges of extreme wealth and all the ways it can affect social dynamics. And it's a real problem. It's a funny thing to call it a problem. And I think people are quick to criticize calling it a problem, but it's a real thing. There's a different type of struggle that people in those situations have.

Cameron Passmore: How much do you think people's lifestyle changes when they go, say, from level four to five or even five to six?

Nick Maggiulli: I think it's more of a personality thing that's going to determine if there's going to be a lifestyle change. There's certain types of people that it doesn't matter what's in their bank account. They will just never spend that much money to, let's say, fly private. Five grand an hour, 10 grand an hour. They're just not going to pay that.

I think there's others who will say, "Okay, what happens when you start to get into level five?" That's where you can start to fly private. There's actually a guy named Preston Holland. He's the Private Jet Guy on Twitter, and he has really good data on this. There was a Moneywise episode where he's talking about the middle of the bell curve for where people really start to fly private a lot is about $20 million in wealth or $2 million in annual income. These are very far right-tail exceptional people in terms of either wealth or income. And so that's where we start to see it. They start to show up at around $10 million in wealth, but they really are showing up the most at 20 million bucks. That's the kind of consumption change that can happen.

Once you get into a hundred million, now you can start talking about yachts and all sorts of other things. Obviously, it depends on the size of the yacht, etc. There's no way to stop your consumption if you really want to go all out. You can start buying companies. You can really start impacting people's lives in a much bigger way. That's the big difference is, especially those in level five, if you had a business or you sold a business, you had the ability to influence a lot of people's lives that you had the business with. I think that's another thing to think about, not just consumption, but how your money can impact society just through the decisions you make.

Ben Felix: How long does it typically take people to reach each rung on The Wealth Ladder?

Nick Maggiulli: It really depends. I have some data in chapter 10, which looks at this because I don't have an annual snapshot, I can't be like, "Okay, it takes 4.7 years or something." I have them in five-year snapshots. And because of that, I can say, "Okay, what percentage of people started in one level and then got to another level over time?"

For example, on page 153, there's a matrix which shows the starting wealth level on each one of the rows, and then the ending wealth level along the columns. So you can imagine, it's like a matrix. 46% of people that are in level one will still be in level one 10 years later. 30% will have made it to level two, 22% will have made it to level three, etc. And so you can look at this little matrix here and do it over a 10-year period. And I have it over a 20-year period as well. And you can see what percentage of people. So you can say, "Hey, I'm in this level today. What's the probability I'm going to be in that level?" And it only goes to level five because we just didn't have any level six people in the data, and they're very hard to find.

But either way, you can run the math and run the numbers and say, "Okay, this is the rough percentage of the chance I'm going to be here in 10 or 20 years." And I think over a 10-year period, it's going to be about 24% of people will have moved up at least one level. Over a 20-year period, it's going to be about 34%, I think. Something like that. Roughly a fourth will move up over a decade, and a third will move up over two decades. That's the thinking.

If you're like, "Okay. Well, where am I at today?" It's probably going to take at least 10 to 20 years to move up a considerable number of levels. It does take time. And unfortunately, there's no shortcut to that. And I think the whole point of that chapter was to really show that idea and say, "Hey, look, it does take a long time. And here's the data showing that." And so there's all these get-rich-quick things out there, obviously, that we've all heard about. But I really wanted to show people this does take more time than you think. And here's the data to prove that. Despite what your favourite Instagram influencer, whoever says, the data shows it takes more time than most people think.

Ben Felix: I think you showed a pretty clear relationship between age and wealth, too. The people in each bucket just tend to be older than those in the bucket below them.

Nick Maggiulli: The median age in each wealth level is as follows. Now, once again, if we just said what's the median age in the United States, that should be like the level one age, because all else equal. Everyone, in theory, starts in level one. That's like the base level. The median age in level one is 42, which is probably close to what the median age in the whole United States is.

In level two, it's 44. In level three, it's 54. By level four, once again, which is 1 to $10 million in wealth, it's 62. Level five is 64. And level six is 66. As you can see, it's monotonic. It's always increasing. Each level, the median age goes up. But you really see the biggest jump from 2 to 3, which is 44 to 54, and then 3 to 4, which is 54 to 62.

And so, let's just imagine a hypothetical median person. If you're in level two, at 44, it takes you roughly 10 years to get to level three. And then from level three to level four, it takes another 8 years. I know that's not exactly how this works statistically, but the median ages are about that far apart. You can assume that it's going to take you 20 years to go from level two to level four, all else equal. It's another way of thinking about this, but it's something that you could, in theory, use.

Ben Felix: What do you think those data say about the importance of time and just staying in the game to accumulate wealth?

Nick Maggiulli: I wanted to show the data in a way that set the right expectations because this is a long journey. It really does take a lot of time. People that go up more than two levels within a short period of time, it's very rare. And the only people I know that have done it are those that had a business and they sold and ended up being in level six. And so maybe they would have started in level two or three, and they end up in level six. Working in that business for half a decade, a decade at least, if not longer. And so thinking through that, I just want people to know how long this actually takes. So that when they are on their journey, they have to realize it's going to take time as well.

Cameron Passmore: What does the typical millionaire household look like?

Nick Maggiulli: I actually pulled some data for you guys outside of just the book. Some of this was in the book, but I pulled a little bit extra just so we can walk through it all. So, the median age – and we say millionaire household, I'm just looking at level four, which is 1 to 10 million. Technically, I would have to include level five and six, but let's just say level four to make this a little bit easier.

Median age is 62. The median household income in that bracket is about $200,000. The median net worth is actually 2 million. What does that tell you? Okay, even though level four is 1 to 10 million, half of those people have less than 2 million. The other half are 2 million to 10. You can think, obviously, home equity is a big piece of that. What's the median liquid net worth in there? So drop home equity, drop retirement. It's about 700K. So about 33% of their net worth is liquid. So if you're in level four right now, you can be like, "Okay, how much of my net worth is liquid?" I don't want to say on average, but the median household, median liquid net worth in there is about $700,000.

In terms of their asset breakdown, the median millionaire is going to have about 32% on average in their primary residence. About 24% in their retirement accounts, 12% in stocks outside of their retirement accounts. In stocks and mutual funds. About 9% in other types of real estate, 9% in business interests. Of course, this is on average. There's going to be a lot of households with zero, a lot of households with a considerable amount in business interest. Six percent in cash, 6% in something else. A very small percentage in some other non-asset that I haven't listed here. And then 3% in their car. On a $2 million household, which is the median net worth, 3% in vehicles means your vehicles are worth about 60K or something.

That's kind of the breakdown of what a typical millionaire household in the US looks like. And once again, you're going to have people on all sides of that. Five percent of households in their 30s are in level four. It's a very small percentage. About 15% of those in their 40s are in level four. And once again, this is in chapter 10. Just thinking through this data of what is the typical millionaire household look like? It's someone who's a little bit older. They're on the verge of retirement. They're probably going to start pulling from those retirement assets. Their household income is about 200k a year.

Ben Felix: Super interesting just to hear how the data breaks down and what that typical millionaire household looks like. How do you think people should think about "enough" when it comes to financial wealth?

Nick Maggiulli: This is the whole premise of the FIRE movement. What is your enough, and figuring out what you need for financial independence? I think that's why level four is – if of all the levels I think about, not just because I'm in level four, but because I think this is where people have these philosophical debates. Because you start to get to a point where even the typical person spending by the time you're in level four, depending on where you are in level four, you'll have enough income to live a decent life.

Where that is exactly is going to vary person to person, but it's usually going to be somewhere in the, let's say, $2 million to $5 million range for like most people. You start getting in there, and you start to think that's enough to live a pretty decent life just off the income of a portfolio of, let's say, that size. Thinking through that is really the big decision you have to make in level four.

Where is that enough? Every person, as I said, is going to be different. I think it's going to be somewhere in level four for most people in the US and especially Canada. I think in Europe it's probably a bit lower because the social safety net's higher. Health care costs aren't as exorbitant as they are in the United States, etc. It's up to you, really. But if I have to pick what is the enough level, it's going to be level four and probably just a mid-level four to maybe the latter half if you really want to be conservative. I don't think you need to get to level five.

Cameron Passmore: What other types of wealth do you think people should focus on building?

Nick Maggiulli: I took this framework from Sahil Bloom, who came out with a book called 5 Types of Wealth. One of them was obviously financial. And so the other types would include social, time, mental and physical. And I think these are ones that are easily overlooked simply because they're harder to measure. You can go open your brokerage account, you can open your bank account, and see a number. You have a scoreboard, so to speak, that you could use if you really wanted to compare yourself. All this type of stuff.

You can't do that as easily with your social relationships. It's not just like the number of friendships you had, the depth of them. I don't have a social scorecard. You can say, "Well, maybe my health can be looked at or something." But even then, you don't track that. Maybe you see that once a year. It's not the same. Because of the measurement issue, I think it's very easy to overly focus on financial wealth, especially those that have done so well financially, "Oh, I'm doing well at this thing. This is what I do better than everyone else." And so, you overly focus on it. The sacrifice is that you end up messing up other parts of your life as a result. You maybe don't spend as much time with your kids. You neglect your health. You suck up all your time. You're like, "I want to make more money." So, you take every meeting. You say yes to everything. And next thing you know, you don't have time to do a lot of things you want to do.

And so thinking about these other types of wealth, which is the main thrust of part three of the book, is where I start to really open this up. We start very broadly talking about The Wealth Ladder. I get very specific talking about each level in part two. And then part three is like, "Okay, what does this actually matter for?" And what are the bigger issues you need to think through as you're "building wealth" in your life? And so those are the four I would focus on is time, social, mental, and physical.

Ben Felix: Good framework. How do you hope that individuals and financial advisers who read this book should use it to improve their decision-making?

Nick Maggiulli: Most financial advisors, I don't want to say this across the board, but I think the typical clientele is going to be somewhere in that level four bracket, maybe high level three, low level four. And that is where, as an advisor, you can really empower your client to think about these types of decisions. Okay, we have this level of income, you have this much net worth, here's your house, etc. What do you actually want to do in the future? Do you want to start a business? Do you want to have a coast FIRE scenario where you pull back?

Now, I know advisors are going to be incentivized to tell them, "Yeah, keep working, keep adding funds," if you're an AUM fee, especially." Everything's incentivized to keep adding more to the system." I understand that. At the same time, there is this fiduciary responsibility you could have of, "Hey, we also need to think about what's the thing that's going to make the client most fulfilled as well." And sometimes that may not necessarily mean maximizing their wealth.

For advisers in particular, it's the level three, level four types of conversations that are going to really help people. It's not that the level one and two conversations won't be helpful. That could help other people and their clients' lives. But it's just thinking about it more holistically. And for me, it's what is that framework, and what's the decision we're talking about with the typical client? And it's going to be someone who's high net worth. And they're having some sort of debates about what to do tax-wise, what to do with their job, whether they want to move, planning for their children, etc. These are all the types of decisions that roll into that level four bucket.

Cameron Passmore: We have a twist on our final question for you, Nick. How did writing this book affect how you think about success in your own life?

Nick Maggiulli: I'm in level four. And so many of the decision points I was thinking about personally were a lot of the decision points I was writing about in the book. The same things that are happening to those people in level four, I'm thinking about those things. Do I go all in on writing? Do I stop working a corporate job? I had thought about that. Do I stop writing and just do the corporate job and chill out and not have to worry about this anymore? Do I want to coast FIRE? Do I want to start my own business? These are all the things I've thought about.

I think the bigger question that I eventually realized when I was doing all this writing and thinking about success, I define success as a living life on your own terms, whatever that means. And so I'm still thinking through what does that mean? I think that's the bigger question for most people is not even just like, "Okay, if living life on your own terms is my definition of success, then what are the terms that I actually want? And what are the liabilities I want to take on?"

I've had people say, "Oh, Nick, you should start a podcast. You should start a YouTube, etc." That's great. Maybe I'd be successful. And I have no clue. But there's a lot of work that goes into it. You guys know this. I write once a week. And don't get me wrong, as hard as that is, it's relatively easy relative to putting together a podcast, editing, coming up with questions, finding guests. I think there's just so much more work involved. And so, there's liabilities to success that I think a lot of people don't think about. And I'm trying to figure out what are the liabilities I'm comfortable with. And writing one blog post a week for me and an occasional book is just enough liability to keep me happy. I'm still debating what other things I would consider putting on my plate. Because something else has to come off the plate as a result. And so I'm trying to figure out that balance personally.

Cameron Passmore: Great answer. Great to have you on again, Nick. Great to see you. Congratulations on a phenomenal book.

Nick Maggiulli: I appreciate it. It's always great chatting with you guys. And Cameron, I know we go way back. Discussing the Ritholtz of Canada, as I called you guys back in the day. It's been very fun going back and forth with you guys over the years. And obviously, Ben, watching you on the YouTube channel and everything, it's so cool. Definitely a fan over here in the States.

Ben Felix: Awesome. Thanks, Nick.

Disclosure:

Portfolio management and brokerage services in Canada are offered exclusively by PWL Capital, Inc. (“PWL Capital”) which is regulated by the Canadian Investment Regulatory Organization (CIRO) and is a member of the Canadian Investor Protection Fund (CIPF). Investment advisory services in the United States of America are offered exclusively by OneDigital Investment Advisors LLC (“OneDigital”). OneDigital and PWL Capital are affiliated entities, however, each company has financial responsibility for only its own products and services.

Nothing herein constitutes an offer or solicitation to buy or sell any security. This communication is distributed for informational purposes only; the information contained herein has been derived from sources believed to be accurate, but no guarantee as to its accuracy or completeness can be made. Furthermore, nothing herein should be construed as investment, tax or legal advice and/or used to make any investment decisions. Different types of investments and investment strategies have varying degrees of risk and are not suitable for all investors. You should consult with a professional adviser to see how the information contained herein may apply to your individual circumstances. All market indices discussed are unmanaged, do not incur management fees, and cannot be invested in directly. All investing involves risk of loss and nothing herein should be construed as a guarantee of any specific outcome or profit. Past performance is not indicative of or a guarantee of future results. All statements and opinions presented herein are those of the individual hosts and/or guests, are current only as of this communication’s original publication date and are subject to change without notice. Neither OneDigital nor PWL Capital has any obligation to provide revised statements and/or opinions in the event of changed circumstances.

Is there an error in the transcript? Let us know! Email us at info@rationalreminder.ca.

Be sure to add the episode number for reference