The idea that being a part-time investor is going to bring you wealth and make you rich enough anytime soon to retire and enjoy the life of as a country squire, tending grapes at your chateau in France is delusional. Better to assume that your efforts as an individual investor will leave you in a position “down the road of life” to enjoy long stretches of time doing things you enjoy. Maybe even months or years pursuing interests for their own sake, regardless of whether you get paid or not. I’m a big fan of the notion we should be able to take time to pursue activities simply because we want to – without worrying about any financial ramifications. That’s the point of this blog, to help ensure you have the means to create and enjoy a full life.
|Ask yourself, is it the wealth, or what you can do with the money, that interests you most? I’m a big fan of the notion that we should be able to take time to enjoy ourselves without worrying about financial constraints; as money simply represents the potential of what can be achieved by spending it.|
The wealth of Croesus isn’t waiting for anyone diddling in the markets, or looking to make a fast buck off of gold or real estate. If you want to make the Big Money, then you had better be prepared to put the fun stuff on hold and get busy doing Big Work. Do you really believe that you can play competitively on the same court as any of the 491 players currently in the NBA? What this meant for an individual investor really hit home for me many years ago, after reading John Train’s book Money Masters of Our Times.
A collection of interviews with 17 of the best investors alive, including the usual suspects like Buffett and Soros, the relentless drive, and focus of these individuals is breathtaking. And their idea of fun is to be relentlessly driven to focus on wealth accumulation. When one of the billionaires Train interviewed is asked about his very pedestrian lifestyle he replied that money was the scorecard. If he actually spent money, his score would go down. Ask yourself the tough question; is it the money, or what you can do with the money, that interests you?
The luck of the few
Circumstances beyond our control (often called “luck”) will likely be a major factor in our personal pursuit of wealth. Eric Beinhocker, in The Origin of Wealth, satisfyingly demonstrates that wealth tends to clump even without external influences. The winners in the contest for asset accumulation are more likely to be people in the right place at the right time, rather than master rainmakers.
Money, Blood and Revolution by George Cooper, further suggests that democracy is a key driver of economic growth for most people lucky enough to be living in one, but also a guarantee that income disparity will inevitably persist. Which in turn suggests inequality is not a problem to solve, but a fact to be lived with (personally, I’d suggest the issue is primarily defined by education, but let’s save that conversation for another time).
Yet another point Cooper drives home in his book is the importance of dealing with the world as it actually is, not as we wish it to be. In the final analysis, one of the biggest influencers of creating wealth is luck. So, when luck arrives, avoid assuming you had anything to do with your success and proceed to save and invest humbly. Also, be mindful of the distinction between the need for creating wealth, and the need to keep what you have. Worse than never having the chance to achieve a meaningful level of net worth is arriving at success but then letting ego and hubris make it all disappear. At some point, preservation becomes more important than getting more.
I’ve always understood that money simply represents the potential of what can be achieved by spending it. Further, most of us are trading the (very limited) time we have on this mortal coil to acquire that money. I’ll suggest the accumulation of things (the biggest house, the fanciest car, the most expensive watch) is far less valuable than a trip to Egypt with your kids or knowing you can leave a job no longer offering the satisfaction of doing meaningful work without putting your financial well-being, and that of your family, at risk.
Now ask yourself again, “is it the money, or what you can do with money, that matters?” With all the talk here at Invest-notes about “having a plan” for investing, please don’t lose sight of having a purpose for what the successful implementation of that plan really means. When the time comes and you cash out the winnings from your investments, what will you do with the proceeds?
We’re all in this together
And finally, remember that your investment portfolio should include not-for-profit and charitable service organizations. Both our time and money need to be directed toward helping rectify the inequality in our own communities. The day we forget what an outsized impact luck has had on our lives is the day we begin to lose our humanity. If we can be smart enough, and lucky enough, to put ourselves on the winning side of creating wealth, then we have both the privilege and obligation to earn the dividends of helping those less fortunate than we are.