Patrick Lonergan is the owner of Vital Wealth.
Many of us grew up with a classic financial narrative: work hard, live below your means, invest in a diversified portfolio…and over time, you’ll build wealth. It’s a simple and familiar formula. But it’s also misleading.
While investing in a portfolio can be an important part of your financial plan, it’s not the same thing as building true wealth. Here’s why that distinction matters—and what you should be doing instead if you want to create something that lasts.
Investment Portfolios Provide Security, Not Wealth
Investing in a portfolio is definitely a solid step toward financial security. When you invest in a portfolio, what you’re really doing is setting aside income today to create income for later. And that’s a good thing, as it creates financial security.
A well-constructed portfolio—diversified across asset classes, optimized for risk—can produce 7 to 9% annually in average returns. After inflation, that’s closer to 3 to 5% in real growth.
That kind of return can help fund your retirement, but it’s not going to multiply your assets. It won’t scale. And unless you’re living well below your means or investing massive amounts, it likely won’t last well beyond your lifetime—much less be able to take care of your children or grandchildren. You’re not going to create a trust fund for your heirs this way.
Investment portfolios are, at their core, depleting assets. They are built to be drawn down over time. That’s not a bad thing—it’s just simply not the same thing as wealth-building.
Security And Wealth Are Two Different Goals
Financial security is about stability. Wealth is about growth. Security gives you the ability to maintain your lifestyle. Wealth gives you the power to create something larger than yourself.
True wealth accelerates. It’s exponential, not linear. It’s built through ownership of businesses, real estate, or other scalable assets. These assets often involve leverage: not just financial leverage, but strategic and personal leverage as well. They require your involvement. They ask more of you. But in return, they offer the potential for real scale and lasting impact.
Financial security gives you peace of mind. Wealth gives you the opportunity to create and contribute far beyond your own lifetime.
What does build wealth?
If your goal is to create something lasting, something that benefits not just you, but future generations, then it’s time to start thinking differently and investing in things that grow.
For most people, wealth is built through:
• Owning a business.
• Investing in real estate.
• Using income wisely to buy back your time and reinvest in wealth building assets assets.
These paths require effort and decision-making (and sometimes risk). But they are the paths that create real wealth—wealth that expands rather than depletes.
Wealth doesn’t come from passive participation in public stock and bond markets. It comes from ownership, leverage and value creation.
Be Honest About Risk
How do you truly feel about risk? If you’re not comfortable with the risks of business or real estate, then stick with a diversified portfolio. Just be clear about what you’re doing. You’re building security, not wealth.
There’s nothing wrong with prioritizing financial security over building wealth. And security is a worthy goal, as long as you’re not confusing the terms.
Why Entrepreneurship Is The Answer
Employees may have a nice, steady career, but that often comes with capped income and rising lifestyle costs. Entrepreneurs, on the other hand, have the potential to earn far more than they spend. That surplus, when used wisely, is the fuel for wealth creation by reinvesting in the business or buying real estate
Entrepreneurship isn’t easy. It’s definitely not for everyone. But it is one of the most consistent, proven paths to building real wealth. When you control your income, your time and your capital allocation, you gain access to opportunities that most people never see.
You don’t need to start young. You just need to start with clarity. Begin small. Solve problems. Serve others. Build something of value. That’s how wealth begins, step by step, with intention. There is also the reality that building a business is hard and can be slow. Social media can make building a business look easy. Don’t buy that lie. It takes a lot of work.
Other Paths To Wealth-Building
Not everyone wants to be a full-time entrepreneur or active investor. Luckily, there are other ways to gain exposure to wealth-building assets without running a business or managing properties yourself.
Consider:
• Becoming a limited partner in real estate deals.
• Investing in small businesses through equity or revenue-sharing.
• Partnering with experienced operators.
You don’t have to be active to benefit from ownership. But you do need to shift your mindset from simply accumulating to multiplying. Also understand that you are taking outsized risks and like any small business, these investments can go to zero. The more experience you and your team have to understand and vet these strategies, the better.
Build Wealth Wisely And With Purpose
If you’re currently stacking up investments and calling it wealth, take a moment to ask yourself: Am I building financial security, or am I building something that multiplies?
Portfolios can support your life. But it’s usually business and real estate, and the ownership mindset behind them, that build true wealth. When wealth and wisdom are passed together, momentum builds. That’s when wealth starts to work for generations.
And wealth, when aligned with purpose, becomes more than money. It becomes a legacy.
The information provided here is not investment, tax or financial advice. You should consult with a licensed professional for advice concerning your specific situation.
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