This post is part of a paid partnership with DiversyFund.
America is the land of opportunity, right? Where hard work means you’ll be able to achieve anything you want. And all you have to do is pull yourself up by the bootstraps.
After all, shouldn’t the two of us, The Finance Twins, be the poster children for this? We grew up in poverty, raised by a single mom who always struggled to make ends meet. Through hard work, one of us was able to get an MBA from Harvard and the other become a Doctor at the Mayo Clinic.
But what if we told you that the U.S. ranks amongst the worst 50 countries in the world when it comes to economic mobility? This means that it’s actually harder for you to move up in economic class in the U.S. than in the vast majority of developed countries.
In other words, it’s not as easy to go from growing up in poverty to becoming a millionaire as most people think it is.
Stories like ours are actually extremely rare, and there’s good reason to believe that we got extremely lucky. Lucky to have been at the right places at the right time. Lucky to have been blessed at birth with an extremely loving and supportive mother who always inspired us.
And lucky to have had each other to compete with to do well in school growing up.
But this doesn’t mean that it’s not possible to work hard to make your dreams come true. In fact, without working hard you’ll never be able to achieve amazing things like becoming a millionaire. But if you are going to put in the hard work to build an awesome life, you need to know what you are up against.
Understanding The Gender Pay Gap
Imagine learning after working your butt off for years that you’ve been paid 76% of what the rest of your co-workers are making. Well, if you are a woman, you don’t need to imagine it because you’ve been living it.
In the U.S. women earn, on average, 76 cents for every dollar that a man makes.
Women also only make up 12% of the billionaires in the world. The gap has been slowly closing, but it’s important to know the reality.
In addition to being raised by a single mom, we are both married to incredible women and one of us has a daughter so this one hits close to home.
But pay equality isn’t the only issue that you need to be familiar with; Even greater than the disparities in pay are the disparities in wealth.
Understanding Wealth Inequality
In 2017, the Federal Reserve reported that the wealthiest 1% of Americans owned 39% of the countries total wealth. As you know if you’ve read our article about the importance of net worth, wealth refers to the total amount of money and assets you own minus any debt you have. You can check your own net worth using our net worth calculator.
At first glance, these stats make sense because clearly if you have a billion dollars that should account for a lot of wealth. But in reality, these numbers are incredibly skewed.
Some historians believe that wealth inequality in the U.S. is worse than it was during the Roman Empire and the Roaring ‘20s.
The problem with wealth inequality is profound at an individual level as well as a national level.
Imagine a society where the majority of people can’t afford the basic things in life. A roof over their head, food on the table and in the fridge, and basic health care. In the long term, this may mean that the government has to step in and use its resources to provide assistance to an increasing number of people.
Investing Behaviors Are Critical
When you look at those who are wealthy, it’s clear that they have very different investing behaviors and habits than the majority of people.
For one, a large part of their incomes come from investments and not from paychecks at jobs.
And when you dig into these investments, they often contain real estate holdings and other investments in addition to stocks. Their asset allocation is more diverse than most.
If you aren’t already rich to begin with and you want to invest in real estate your options are limited if you don’t have the cash to buy rental properties.
That’s the reason we are super excited about DiversyFund’s announcement that they are lowering their investment minimum to $500. They are on a mission to allow everyday people to invest the way the wealthy always have, and help reduce wealth inequality.
Their investment offering is a real estate investment trust (REIT), which gives investors exposure to real estate so that they can start to invest like the top 1%. At a very basic level, a REIT is a company which buys income-producing real estate. So when you invest in the DiversyFund Growth REIT you are investing in the underlying real estate projects it owns and operates.
One aspect of DiversyFund that we think makes them pretty awesome is that they are vertically integrated. This means their team is sourcing, investing, operating and managing their real estate properties. This means lower fees since they don’t need to pay a 3rd party for this.
If you are serious about adding real estate to your investment portfolio (we recommend an allocation smaller than or on par with bonds in your portfolio), make sure you check out DiversyFund! Their new low minimum might mean that it’s exactly the type of investment you are looking for!
DISCLOSURES/DISCLAIMERS
The Finance Twins, LLC is not an investment advisor and does not provide investment advice. This is not an offer to sell or a solicitation of any offer to buy any securities. Offers are made only by prospectus or other offering materials. Past performance does not guarantee future results.
Camilo is a personal finance expert and the Co-Founder and CEO of The Finance Twins. I was raised in poverty by a single mother and had to learn everything about personal finance on my own. I have been featured on Forbes, Business Insider, CNBC, and US News. Earlier in my career, I worked as an investment banking analyst on Wall Street at JPMorgan Chase & Co., and I have an M.B.A. from Harvard University and a B.S.E. in finance from the Wharton School of the University of Pennsylvania.