What Kind of Person Can Be Called Wealthy?

Understanding profit systems, building profit systems, taking equity in profit systems, and integrating into profit systems—the key is integration. Becoming part of the system; otherwise, everything before that is wasted, your value doesn’t depend on what you’ve done but on what you can still do. This applies to everyone.

Determining what it means to be wealthy, what kind of people will grow richer—this isn’t prediction; it’s the basic skill of investing.

It starts with judging the present.

Income ≠ after-tax income, after-tax income ≠ net surplus income, net surplus income ≠ stable income.

A star might have earned 30 million this year, but if she fades next year, that might be her lifetime earnings. If she gets into trouble and faces breach-of-contract lawsuits from sponsors, or gets fined heavily, her income could even turn negative.

A demolition household might collect 300,000 annually in rent, but after basic living expenses, only about 150,000 remains saved. People have minimum living costs—they can’t survive on thin air. Meanwhile, an P8 engineer’s after-tax income might be 1 million. Deducting similar living expenses, their net surplus would be 850,000. 850,000 is five to six times 150,000. Note that 1 million is only a little more than three times 300,000, but when calculated by net surplus, it expands five to six times over.

This is something many overlook, yet it’s truly important.

The power of having money is far greater than you imagine, reflected precisely in net surplus. That 1 million is only three times more than 300,000, but in net surplus, it suddenly becomes five to six times larger. The latter may spend more, perhaps 300,000 annually, leaving only 700,000. But consider this: spending 300,000 a year versus spending 150,000 a year results in different quality of life. In other words, even if you spend more, you’re the one enjoying it.

Considering that five-to-six-fold difference, the demolition household’s advantage in income stability becomes less obvious. Ten years of their work equals five to six decades of yours. Twenty years already exceeds the human lifespan.

Therefore, financial health assessment tends to favor the P8 engineer. He has risks, but risks are closely tied to time, and his surplus power is enormous.

There is a relationship between time and risk.

Is the stability of government employment correct? Yes. But concluding that government jobs must outperform private sector jobs—or that a 300,000 government salary beats a 3 million private salary—is nonsense. A 300,000 government salary yields no more than 150,000 in net surplus, while a 3 million private salary still leaves 2 million after tax and net surplus. That’s more than ten times the difference. One year of theirs equals more than ten years of yours. Have you noticed the shift in the risk balance?

A bird in hand is worth two in the bush. No matter how stable, it’s not as good as cash already in hand.

Cash in hand means you’ve received it in an infinitely small amount of time, whereas stability still requires waiting decades.

What if during those decades you face layoffs, like in the 1990s when a cultural bureau director was laid off and set up an orange stand at the courtyard entrance? How stable is that?

No matter how stable, if the timeframe is too long, stability itself becomes a risk. No matter how unstable, if the timeframe is short enough, instability itself becomes a form of stability.

Because time affects certainty.

Actually, financial assessment—or investing—is more about looking ahead. Human value depends primarily on what you can still do, not merely on what you’ve done.

If a demolition household owner knows nothing beyond lounging at home and collecting rent, their future appreciation potential scores near zero. They might not even compare favorably to a government employee earning several hundred thousand annually. Government employees have the advantage of stability; rent collectors also enjoy high stability, even slightly higher than government jobs. The problem is, the government employee has promotion prospects, while the rent collector can only collect a few hundred thousand in rent annually. After deducting necessary living expenses, there’s little surplus left. Their financial future equals that of a government employee who cannot be promoted.

Demolition households are luck. Luck has a price but no value. Luck is non-repeatable, whereas a person’s value depends on the repeatable parts of themselves.

Suppose there are two neighbors, A and B, in a Shenzhen residential community averaging over 20 million per property. A is an office worker who bought when prices were 1 million. For over a decade, he faithfully worked and paid off his mortgage, and has recently finished paying. Now his property is worth 20 million. B just bought with 20 million cash outright.

Do these two have the same income level? Do they think about money the same way? Definitely not.

A has never touched 20 million in his life, though theoretically his house is worth 20 million. How can he understand 20 million? Sell the house for 20 million, start a business, and go through one full cycle. Let’s say he doesn’t make a profit, but runs 300 million in revenue over three years, pays out 50 million in wages, breaks even, and still gets his 20 million back. Only then does he truly undergo a transformation and become on par with B. More likely, he’ll lose everything. Although nominally neighbors, in understanding money, they’re at completely different levels.

Being wealthy and understanding money are different. Understanding money requires continuously earning it. You must always be able to earn money and keep pace with the times to prove your wealth isn’t just luck. Strip away the luck component—can you still rise without it? If yes, this investment is hard to lose.

Many people in big cities live in multi-million properties because they bought early, but have they achieved financial freedom? Not at all.

Why? Because only the property appreciates, not the person. The person who can live in a prime location when it’s worth 5 million, and still live there when it’s worth 50 million—that person is what capital seeks.

It’s never people chasing money. People chasing money won’t succeed. It’s money chasing people. The essence of making money is always about owning the system.

A profit system can be anything. Owning company equity and enjoying dividends and appreciation—that’s a system. Owning creative works and earning royalties—that’s a system. Being a celebrity providing public services—that’s a system. Collecting rent—that’s also a system. What kind of system do you own? Do you know what a good system looks like? Do you know how to smoothly switch between systems as times change? This becomes the question: do you understand systems?

Different systems have different stability. Rent collection is more stable than celebrity work. Don’t just look at stability; also look at size. How is that size created? Why do some earn over 100 million annually while others earn less than 100,000? Why?

Five words: the power of leverage.

Leverage brings scale, scale limits income. Those who can leverage versus those who can’t—these are two different kinds of people.

Whether demolition households or P8 engineers, assessing their future prospects means looking at whether they have pathways to leverage. Without pathways, they’ll never get rich, no matter what.

“Leverage carries risk” is true, but it’s trivial. Profit itself comes from risk. Risk cannot be avoided; avoiding risk equals avoiding profit. Profit and loss share the same origin.

Risk can only be managed, not avoided. The goal isn’t to dodge risk but to face it, embrace it, and manage it. This is the only path.

For ordinary people, the sole path to changing destiny is to stop being ordinary. And being non-ordinary means you can’t avoid leverage, can’t avoid risk, and can’t avoid risk management.

Either accept fate or manage risk.

Managing risk isn’t magical. It’s almost like farming. How does a farmer learn to farm? By farming. No farmer can learn without doing it. Risk management is learned while managing risk—from small risks to medium, from medium to large, gradually figuring out nature’s temperament through continuous exploration.

You shouldn’t just evaluate others; you must also evaluate yourself. What can you provide? What can you sustainably offer over time? To intervene in someone else’s business, you can’t merely assess their current finances and future prospects. You must also consider: where does their business align with my abilities? Besides investing money, what other value can I bring? Can I endorse them? Introduce connections? Serve as their behind-the-scenes strategist? Without these follow-up services, any investment won’t be protected. When their business takes off, they’ll dilute or even push out early angel investors—it’s completely normal.

This is what becoming an investor entails:

Understand profit systems, build profit systems, take equity in profit systems, integrate into profit systems.