(From the archives: first published 8/10/2024)
In the high-stakes "game of money," as investor Mark Moss describes it, accumulating wealth often steals the spotlight. Stories of rags-to-riches entrepreneurs dominate headlines, portraying the grind of starting businesses, spotting market opportunities, or riding investment waves as the ultimate challenge. Yet, according to financial experts like Peter Dunworth, founder of The Bitcoin Adviser, the real test begins once you've amassed that fortune.
Drawing from a recent interview between Moss and Dunworth, this article explores why building wealth might feel like climbing a mountain, but maintaining it is akin to defending a fortress under constant siege - from taxes, inflation, legal threats, and even societal shifts.
Building wealth demands ingenuity, risk-taking, and persistence. For most, it starts with identifying undervalued assets or creating value through innovation. Dunworth, who advises high-net-worth individuals and family offices (typically managing $25 million or more in self-directed assets), notes that these families often built their piles through savvy investments in real estate, stocks, or businesses. The process involves leveraging "tips, tricks, and strategies" that the ultra-wealthy have honed over generations, such as diversifying portfolios or timing market entries. However, Moss shares a personal anecdote: after losing his wealth once, he realized acquisition is "the easy part." The interview echoes this sentiment, arguing that the wealthy prioritize "return of capital" over aggressive gains, focusing on security rather than speculation.
Maintaining wealth, conversely, introduces a barrage of invisible drains. Governments worldwide are increasingly aggressive in taxing unrealized gains - profits on assets not yet sold. Moss points out how inflation artificially inflates asset values, as seen in his Southern California neighbor's home rising from $330,000 in the early '90s to $4.5 million today, only for taxes to erode the real gains. In a debt-based monetary system, value is effectively "stolen from the future," as Moss puts it, through currency debasement.
Beyond taxes, external threats abound. Dunworth warns of "attacks on that absolute base layer" of ownership, including cyberattacks, litigation, or geopolitical risks like those in Venezuela, where military crackdowns underscore how unstable regimes can seize assets. Even in stable democracies, policies that erode personal freedoms are far more common, potentially foreshadowing wealth confiscation.
Family dynamics add another layer: Moss debates critics who argue leaving wealth to children fosters entitlement, but both he and Dunworth advocate for generational planning, viewing wealth as a "scoreboard" of legacy. Without proper structures, like family constitutions or trusts, fortunes can dissipate through poor decisions by heirs.
Bitcoin emerges as a pivotal tool in this maintenance arsenal. Dunworth calls it the "longest-lasting" and "best-performing" asset, outpacing stocks, bonds, or real estate due to its scarcity (capped at 21 million coins) and resistance to debasement. Unlike properties that require upkeep or companies that average just five years of lifespan (per Dunworth's stats), Bitcoin can be "set and forgotten" for centuries, with features like time-locking allowing funds to be inaccessible until future generations. Its risk-free nature - volatility notwithstanding - stems from self-custody, and complete control over your asset.
Yet, even here, challenges persist: proper setup is crucial to avoid single points of failure, such as lost hardware wallets. Politically, the landscape is shifting. Trump's pledge for a U.S. Bitcoin strategic reserve, echoed by Senator Lummis and Robert F. Kennedy Jr., could force global adoption, accelerating Bitcoin's role in wealth preservation. Dunworth sees this as pressuring other nations to front-run the U.S., potentially creating a "one-way valve" of capital flowing into Bitcoin from traditional assets. Larry Fink of BlackRock, once a sceptic, now champions it as a hedge against debasement, signalling institutional buy-in.
Ultimately, the interview reveals that building wealth is a sprint fuelled by opportunity, while maintaining it is a marathon demanding vigilance. In an era of hyperinflation risks and policy whims, the wealthy succeed by prioritizing custody, diversification, and forward-thinking. As Dunworth advises, focus on owning what you think you own - through robust structures and education. For the average person, these insights democratize the game: start small, learn deeply, and build defences early. In the end, wealth isn't just made; it's guarded.
High-Level Bullet Points: Tips, Tricks, and Strategies for Building and Maintaining Wealth
- Focus on Return of Capital First: Prioritize asset security over high returns; ensure ownership and custody are ironclad to avoid losses from taxes or theft.
- Diversify with Bitcoin for Longevity: Allocate 10-50% to Bitcoin as a "risk-free" asset; use its scarcity and time-locking features for generational preservation, outperforming volatile stocks or depreciating real estate.
- Implement Collaborative Custody: For self-custody, use multisig setups (e.g., 2-of-3 keys across jurisdictions) to eliminate single points of failure; pair with estate plans for seamless inheritance.
- Navigate Taxes Proactively: Hold assets in trusts or personal accounts to evade unrealized gains taxes; avoid frequent transactions to minimize capital gains hits, treating taxes as "volatility."
- Plan Generationally with Structures: Create family constitutions and trusts to guide heirs; view wealth as a legacy tool, providing optionality rather than entitlement.
- Monitor Global Policies: Front-run government moves like U.S. strategic reserves; diversify internationally to protect against litigation or seizures in unstable regimes.
- Leverage Inflation Hedges: Counter debasement by shifting from bonds/stocks to scarce assets; aim for assets with high liquidity sensitivity like Bitcoin.
- Avoid Single Points of Failure: In all investments, build redundancies - jurisdictions, and recovery protocols - to ensure resilience over 100-200 years.
NB: This video is for information and entertainment purposes only and should not be considered investment advice.