A viral post by Kevin Xu, CEO and founder of Alpha AI, has sparked a heated conversation about what it really means to be “rich.” Despite having a net worth of $10.9 million, Xu claimed to be ‘broke’ and his reasoning offers a valuable lesson in personal finance.
Millions in Retirement — But Almost No Cash
Xu clarified that $9.8 million of his wealth sits in a 401(k), a retirement savings account designed for long-term investment growth. However, when it comes to cash on hand, he has:
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$3,000 in checking
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$296 in savings
That means less than $3,300 in liquid cash the money he can spend right now.
The Financial Principle:
Xu’s situation perfectly illustrates the difference between:
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Net Worth (Wealth): The total value of all your assets (including investments, retirement funds, property, and cash) minus any liabilities (debts). Xu’s $10.9 million net worth makes him a millionaire.
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Liquidity (Cash Flow): How easily and quickly an asset can be converted into cash without affecting its market price. The cash in his checking and savings accounts is his liquid cash.
401k $9.8mil
Checking $3000
Savings $296Wife – Let’s go on vacation?
Me – Can’t, we’re broke.
Few understand. pic.twitter.com/yreMjAtPvA
— Kevin Xu (@imkevinxu) September 28, 2025
Why He Says He’s “Broke”
Xu argues that his wealth is not truly spendable because accessing retirement funds before age 59.5 comes with:
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Income tax on the withdrawal
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An additional 10% early withdrawal penalty
So, dipping into his 401(k) for something like a vacation or a major expense would be financially reckless.
The Internet Reacts; Admiration or Irony?
The online response has been split. The reaction online has been divided between those who understand and agree with his frugal, long-term financial discipline, and those who find the situation ironic or an unnecessary hardship given his overall wealth.
Why He Claimed to Be “Broke”:
The core of his argument, captured in his phrase “Few understand,” rests on the fact that his millions are illiquid due to the nature of a 401(k):
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Penalty for Early Withdrawal: A 401(k) is structured to prevent early withdrawal. Accessing the $9.8 million before the typical retirement age (usually 59.5) would incur significant penalties, including income tax on the withdrawal and an additional 10% early withdrawal penalty (with certain exceptions).
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Purpose of the Fund: The money is intentionally locked away to guarantee financial security decades into the future. Dipping into it for a vacation would be financially shortsighted and costly.
In practical terms, a person with $9.8 million locked away and only $3,296 in accessible cash is “broke” in the sense of being cash-poor and unable to afford a major discretionary purchase like a vacation without incurring penalties or taking on debt.
