The More Important Way: Staying Rich Rather Than Becoming Rich

Two Sides of the Same Coin – The Warning of the Vanderbilt Family and Buffett’s Rule

There are two powerful stories in the world of wealth.

One is the warning from the Vanderbilt family, who once held the greatest wealth in America but lost it all within just a few generations. They succeeded in the “path to building wealth” but failed miserably in the “path to preserving it.”

The other is Warren Buffett’s first rule: “Never lose money.” His decades-long success is not due to genius returns but proves how great the power of preservation is—surviving every crisis without interrupting the magic of compounding.

Most people focus only on how to become rich, the “offense.” But the core of this article is the opposite. Sustainable wealth is not the product of explosive gains but the result of survival skills that avoid fatal mistakes. This article will guide you through the two worlds of wealth accumulation and preservation. We will explore psychological traps that cloud our judgment and provide practical compasses by age group to protect your wealth amid unpredictable waves. At the end of this journey, you will gain not just money-making skills but a philosophy to truly master your money.

Part 1: Offense vs Defense, Two Languages of Wealth

If wealth is a journey, it is drawn on two completely different maps. One is the map of the “offense”—pioneering unknown territory, and the other is the map of the “defense”—protecting secured territory. The tragedy begins when most people stubbornly follow only one map their entire lives.

Psychology of the Offense: The Path to Becoming Rich

This stage is summarized by optimism, high risk-taking, and focus. It requires seeing the world positively, viewing volatility as opportunity, and boldly betting on your ideas or a few assets. When Jeff Bezos risked everything to start an online bookstore, he bet on concentration, not diversification. Key strategies: calculated risk-taking, concentrated investment in a few assets, and a growth mindset that trusts long-term performance.

Psychology of the Defense: The Path to Staying Rich

This stage means a complete shift from offense to defense. The mindset is close to humility, fear, and even a bit of paranoia. Constantly reminding yourself that “wealth can disappear as fast as it was made.” The question changes from “How much more can I earn?” to “How can I protect this wealth forever?” Key strategies: humility to admit you can be wrong, pessimistic planning for the worst, and diversification so that no single asset’s collapse destroys the whole.

The problem is the “paradox of success.” The very confidence and success from concentrated investments that made you rich become your strongest enemy, creating confirmation bias that blocks you from learning the wisdom of the defender.

Part 2: The Invisible Enemy, Psychological Biases Hacking Your Brain

The biggest enemy in investing is not the market but our own brain. We must understand psychological biases that interfere with the long-term discipline needed to protect wealth.

The Paradox of Compounding: Patience is Bitter, the Fruit is Far

Compounding is a snowball that grows by consuming “time.” But our brains are wired to prefer immediate rewards. Due to the psychological effect called Hyperbolic Discounting, valuing “500,000 won now over 1,000,000 won later,” we settle for small gains or flee the market after small losses before the compounding snowball grows.

The Trap of Confirmation Bias: Investors Hear Only What They Want

After deciding to invest, we unconsciously seek only evidence that confirms our decision. Positive news about our stocks stands out, while warnings are dismissed as “temporary noise.” This confirmation bias acts like blinders, preventing us from seeing impending risks.

💡 Overcoming Confirmation Bias

• Seek opposing views: Before investing, deliberately find the top 3 strongest arguments against your investment.
• Keep an investment journal: Clearly record why you started the investment to return to your original mindset when emotions interfere.
• Devil’s advocate: Ask a trusted friend to criticize your investment ideas.

Part 3: Survival Skills, How to Avoid Ruin

“The only way to stay rich is not to go broke.” This chapter explores concrete techniques to avoid ruin.

Ultimate risk (Lesson from Archegos Capital): In 2021, Bill Hwang’s Archegos Capital lost $20 billion in just two days. A perfect example of destruction caused by extreme leverage and concentrated “offense” strategies—like speeding without a seatbelt.

Cornerstone of caution (Benjamin Graham’s “Margin of Safety”): The margin of safety reflects humility that “my analysis can be wrong and the future is unpredictable.” If you value something at 10,000 won, you only buy it below 7,000 won. This 3,000 won gap is your buffer zone.

Duty of humility (Arrogance of beating the market): Decades of data show most experts fail to beat the market average long-term. Stop the arrogant challenge to beat the market and adopt the humble surfer’s stance of riding the giant wave called the market with low-cost index funds.

Part 4: A Wealth Roadmap for Life’s Four Seasons

Money management requires different tasks and strategies by age. Which season are you in now?

Stage 1: Ages 20-40 – The Accumulation Phase, Planting Seeds 🌱

Your greatest asset at this stage is not money but time and earning ability. Key task: Aggressive asset accumulation and investment habit formation Best investment: Invest in yourself to increase your value. Asset allocation (Offense): Consistently invest 80–90% of assets in growth-focused stock ETFs like the S&P 500. Biggest enemy: YOLO and debt. Develop a habit of saving before spending.

Stage 2: Ages 50-60 – The Transition Phase, Protecting the Tree 🌳

This is the crucial time to shift from offense to defense. “How much you earn” becomes less important than “how you protect it.” Key task: Asset preservation and preparing cash flow Asset allocation (Balancer): Gradually reduce stocks to 40–60%, increase stable assets like government bonds and dividend stocks. Biggest risks: Risks from children and financial scams. Beware of reckless support that damages retirement funds and reject “guaranteed principal high returns” temptations.

Stage 3: Age 70 and beyond – The Withdrawal Phase, Harvesting the Fruit 🍎

The ultimate test of “staying rich.” Your portfolio must now provide sustainable living expenses. Key task: Ensuring asset sustainability and maintaining a dignified life Wise withdrawal strategies: Use the “guardrail method” to adjust withdrawal rates based on market conditions or the “bucket strategy” dividing assets into short-, medium-, and long-term buckets to avoid selling stocks in downturns. Asset allocation (Defense): Lower stocks to 20–40% or less, move most assets to the safest places like deposits and short-term government bonds focusing on stability.

Wealth as Freedom, Not a Destination

Through this long journey, we confirmed that building wealth is the result of optimism and risk-taking, but preserving it is the result of humility and survival. The greatest returns are not made in a single year but are those allowed to compound uninterrupted over a lifetime.

The ultimate goal of mastering the psychology of money is not numbers but gaining “freedom,” the highest value. Wealth is control over your time and the ability to choose your path. Therefore, protecting assets is more than protecting money—it is protecting that precious freedom for yourself and future generations.

The journey from “becoming rich” to “staying rich” is ultimately a great journey toward a more cautious, more humble, and ultimately freer life.

Now, establish your own principles and steadily walk that path. At the end, you will encounter true abundance that cannot be measured by numbers.