But what is "Wealth" after all?

This is the typical kind of question for which the answer seems to be so obvious that we never bother to ask.

First of all lets clarify what is not "WEALTH", and even though it could sound disturbing, wealth is not money, is not the balance in our account or the total assets in our portfolio. All those things are ways we have to measure save or manage our wealth, but are not wealth.

In a very straight forward definition, wealth are goods and services. When we produce a good or we provide a service, we are creating Wealth; When we purchase a good or we hire a service, we are consuming our wealth; and the more goods we can acquire or the more services we can consume,the wealthier we are.

It is such a basic and elemental concept that it may seem pointless to clarify it, but as they say "the devil is in the details" and if we overlook this concept, we may end up overlooking some more important and relevant factors, and that is why I took the time to explain it.

As an example, the same amount of money has a very different purchase power depending in the geographic region you are spending it, and therefore you would be more or less wealthier depending where you are planing to  spend your money. Similarly, the same good we produce or service we provide, would represent more or less money for us, depending the geographic region in which we are selling it.

A simple application for an individual of this concept would be to go to the university in a country where you could get a high quality education at a very reasonable price, then move to work in a country where you can maximize your income during your professional life, and lately retire and move to a country where you could get the most for each dollar spent. Of course there are many other personal factors to consider in order to take such decisions, but if someone want to focus in maximizing his or her wealth, it definitely will be something to consider.

The same concept is applied for a company when deciding to outsource part of its operations to a foreign country, where the cost of labor is cheaper; or with exactly the same reasoning, when a worker decides to move to a foreign country where the cost of labor is higher.

As we can see, the concept of wealth is a very intuitive one but it is also a very important concept to understand and to have a clear understanding of it.

Hugo Novaro

Welcome!

Hello, I'm just starting my blog and probably the first think you would be wondering is what this blog is, or will be, about.

The answer is in the title of the blog, that happen to be a question; let me explain it. I'm an investment professional, and as such, I am highly interested in subjects related to economics and wealth management, therefore the question made in the title of this blog, will allow me to address several economic and investment matters, from the individual point of view and also from a more global perspective.

I came up with this question a few years ago when I was analyzing some economic events, I started to develop a line of thought and then the best way I found to summarize the complete idea was the question "How Much Wealth Can We Afford?"

I the following posts I will start to explain with more detail my ideas, and at the same time I will discuss current events related to the subject.

Thanks for visiting my blog,

Hugo Novaro