The 5 Types of Wealth: A Transformative Guide to Design Your Dream Life

Fifteenth-century moneylender and merchant Jakob Fugger built a wildly successful money-lending practice by creating schemes that supported royals and popes, amassing a level of wealth that was equivalent to about $400 billion in today’s money. Bloom uses Fugger as an example of someone with keen money sense and business skills who let his lust for wealth dominate his life. Fugger’s constant quest for wealth ultimately eroded his relationships and his ability to enjoy other pursuits.

Historically, money has been an essential tool in the development of human civilizations, from ancient Chinese societies to the Lydians and the Mongols under Kublai Khan. While money used to be a largely visible phenomenon, it has recently become more invisible. Rather than being represented by physical gold, modern money now has an “imaginary” value and is largely digitized. Bloom likens modern financial apps to a financial “amusement park” in which people are offered alluring but deceptive “rides.” Bloom encourages people to ignore gimmicky get-rich-quick schemes and to “focus on what is real” and “stick to the basics” (326) in their financial planning.

Bloom’s three pillars of financial wealth are income generation, expense management, and long-term investment. Together, these practices should help to build wealth in the long term. Bloom explains that by ensuring that their income is larger than their expenses, people will have savings that they can invest. These savings are a “foundational asset” to building long-term wealth. By keeping lifestyle expenses modest, people can ensure that they are always saving and investing their extra wealth for the future. Long-term investment is the last essential step in building wealth. By taking advantage of the wealth-building effects of compounding, people can easily build wealth by simply allowing their saved money or investments to accrue interest. Financial experts tend to recommend buying stocks in index funds and holding them for as long as possible, thereby allowing decades of compounding to work in their favor. Bloom outlines five levels of financial wealth, with level one being access to food and shelter, up to level five, which involves enjoying a luxurious lifestyle funded by a passive income.

Bloom argues that building wealth does not erase problems from people’s lives; instead, it changes the kinds of problems that they have. While earning more money might solve “money problems,” it doesn’t change anything else, and living a healthy and satisfying life requires paying attention to physical, mental, time, and social wealth as well.

The author’s financial wealth guide offers eight systems for building wealth. First, people should envision and define their “enough life,” including where they would like to live, how they would spend their time, what kinds of material possessions they would own, and how much they would earn and save. Everyone’s “enough life” will be different depending on their preferences and needs. The author then lists some money tips, such as spending more on high-quality items that last longer, negotiating membership plans, investing in index funds, and keeping things as simple as possible when it comes to money matters.

The author relays career advice, such as focusing on bringing something of value to others, taking on the boss’s unwanted or challenging tasks, and building a reputation of professionalism, kindness, and resilience. Next, people should consider how to build their most valuable and marketable skills, such as design, writing, software engineering, or data science. Bloom details his advice on expense management, advising people to set aside monthly savings, create a budget, plan ahead, and never develop interest on credit cards. Bloom then outlines the best investment options, explaining the pros and cons of stocks, bonds, investment properties, real estate, and more. 

He then explains the concept of the “return-on-hassle,” noting that some investments are more time-consuming and difficult than others. The “hassle” of making an investment must be factored into the choice. The author calls investing in oneself “the single greatest investment in the world” (361). This approach could include spending money on books, education, mental health, personal development, and more. He argues that these short-term expenses will have long-term benefits.

The author provides five statements that people can apply to their own lives and rank. By adding up their rankings, people can find out their financial wealth score. To begin their journey of building financial wealth, people should reflect on their income, expenses, and long-term investments.

Bloom reminisces on the “leap of faith” that he took when he decided to equally prioritize the five kinds of wealth in his life. For him, this decision transformed each area of his life. He is now in great physical condition, has positive relationships, is succeeding in his businesses, and has a strong sense of purpose. Bloom shares his joy and gratitude that he decided to measure every aspect of his life and acted on the data that he found. He challenges others to do the same and to always consider how each decision they make will affect these five core areas of life.