Sunday, October 14, 2018

Races of Wealth Accumulation : The Dwarf, Elf and Orc

Sarah Stanley has continued the good work of her late father Thomas Stanley and updated The Millionaire Next Door into a new book The Next Millionaire Next Door and it is chock full of interesting facts about how to get rich in this current economic environment.

Inspired by both her material and our recent discussion about approached towards early retirement, I thought I'd write about three type of millionaires which I categorise as three fantasy races of dwarf,elf and orc so that we can distinguish three distinct roads to riches.

a) The Dwarf

The largest number of millionaires are dwarves. Hard-working and frugal folks who succeeded by saving as much as they can through penny earned. Dwarves do not have high salaries so they spent most of their lives working very hard and adopting a standard of living well below their peers.

I see myself as a dwarf because my salary throughout my life was not particularly high. The strength of FIRE movement is largely dwarven because it focuses so much on resilience and frugality.

These are the value of a people who spend years underground mining for gold.

b) The Elf

A lesser number of millionaires are elves. Elves are high flying professionals who earn well above the average income. A high flying CEO, investment banker, medical specialist or a legal partner is considered elven.

Elves need to spend a lot of time honing their skills to do well in their careers because they are amply well rewarded for plying their trade. They often become millionaires by the sheer size of their pay check.

Frugality is less important to elves but to reach the ranks of the millionaires, elves do need to spend less than what they earn ( which is a lot anyway ). Frugality is also harder as elves also has to adopt the habitus of the Elven race. For example, law firm partners often mingle with their peers and are expected to adopt the consumption patterns of law firms partners.

As elves do have to spend to keep up elven appearances, the net worth of Elven millionaires is often tied to their properties. The rest is normally spent on keeping up appearances.

c) The Orc

The life of an orc is nasty, brutish and short.

A small business owner faces a 90% rate of failure, but those who do succeed gets to enjoy the life of a powerful Orc Chieftain. Many Orcs die at an early age, but those who make it big usually do it with dash of ingenuity, salesmanship and no small amount of luck.

Those who do make it, make multiples of million of dollars when they do cash out. It seems that Orcs do not need frugality at all, instead Orcs hone their salesman instincts and risk taking ability to kill off any other Orc who end up competing in the same field as them.

I think that it is useful to understand that these three distinct segments are best treated as different races.

It's hard for an Elf to understand why Dwarves work so hard to keep their expenses low. Dwarves may scoff at Elven penchant for high-living. Orcs, having killed 90% of their own kind to become War Chieftains, do not understand why frugality matters to Dwarfs since life is short. Elves think that every other race has little cultural capital. Orcs despise Elven elites and their inability to survive in the harsh realities of small business.

Of course there is always a fourth race. The Undead generally do not expect to reach their financial targets within their lifetime which is why there are four fantasy races in the above picture.


  1. Hi Chris,

    Many dwarves aspire to be like elves and spend considerable sums to imitate an elven lifestyle when they have sufficient income backing.

    Do you think a fake it till you make it style will succeed or it is best to just stick to what style you are good at?

  2. INTJ,

    This is not found in the research started by Thomas Stanley.

    Frugal millionaires stay frugal for life. It is very hard to live like highly paid professional because it goes beyond money and requires cultural capital.

    An veteran lawyer once encouraged me to watch this play called Evita, but I told him that I will stick to my Monty Python and he scoffed at me.


  3. Hi Chris,

    My take is that it's better to be oneself which is the true reflection of one. Focus on the matters which have strong impression on one. I think that this is sufficient to lead a fruitful life.


  4. So Ben,

    Are you a Dwarf, an Elf or an Orc ?


  5. Can you be an Elf with Dwarfen traits?

  6. A lot of folks are curious about that.

    A lot depends on whether your profession allows that.

    If you are a high flying partner of a law firm, must you look the part ? If you do not drive an expensive car, will this affect your client's confidence in you ? I guess it is the same for an investment banker or doctor.

    Maybe its easier for surgeons.