I read with interest the thoughts expressed in this thread on accumulated wealth. I also learnt a couple new words and can’t wait to drop sophistry into a conversation.

Here are some related thoughts on wealth and happiness.
I started re-reading “Awaken The Giant Within” by Anthony Robbins on the weekend to see if it would make a good addition to a nephew’s 21st present. On page 27 this sentence clearly articulated by belief on wealth.
“The key is not the mere pursuit of wealth, but changing your beliefs and attitudes about it so you see it as a means for contribution, not the end-all and be-all for happiness.”

Buffett clearly understands that wealth is a means for contribution. I think that is one of the important lessons he has taught. Of course Buffett benefits from his contribution as the happiness derived from such a contribution is of far greater value than any sum of money.

My nephew’s present is currently a copy of 1001 Albums You Must Hear Before You Die, a Georg Jensen elephant bottle opener and the aforementioned Tony Robbins book.

I read the following on Saturday by Mirko Bagaric which also perfectly expressed another thought I have on money.
“There are two main forms of personal spending: necessities and discretionary items. The only items in the necessity basket are shelter, food and energy to keep us warm or cool. But apart from the “true” essentials, everything is up for grabs. Discretionary items come in two basic forms: stuff and experiences. Stuff is what we wear, drive, sit on and own for a long period.
Experiences are things we participate in. They require some degree of exertion. Often they involve money, as in the case of eating out, travelling, playing tennis and golf.
In tough economic times, the tendency is to cut back on the experiences and maintain, as far as possible, the stuff.
This mainly stems from an innate desire for status and conformity. People want to be liked, and we think that owning nice cars, clothes and TVs will so impress others that they will think well of us and treat us well.
But studies into the human condition have established that the keys to happiness are health, self-esteem, good relationships, a sense of control, challenging work and active leisure. Stuff doesn’t matter. In fact, once people are beyond the average level of income, money also doesn’t enhance wellbeing.”
You can read the rest at The Age.

Then while at a dinner party on Saturday night a fund manager at Goldman Sachs JBWere said she was planning on selling her family home, investing the proceeds and moving her family of four into a rental property as she believed housing prices were inflated while the Australian stock market presented good value. When house prices were once again good value she would sell her investments and buy a house. Her view was that as rents were less expensive than mortgages that. for the same cash flow she could live in a better house and be instantly better off. I don’t know her, nor her me and I decided not to comment. Unfortunately, the host knowing that I am an investor asked what I thought about that. That was a tough question for a guy whose opinions sometimes seem offensive. I decided it best to start by asking questions or at least probing statements.

I began by saying, it all depends on what your priorities are in life.
I was gob smacked that not one of the accomplished professionals at the table could clearly state their priorities. Most had never thought about it. So I asked, without knowing your priorities how could you sensibly make such a monumental decision in life?

I had dozens of other questions to ask, like do you think of your primary residence as a home or an investment, do you like your house/home, your neighbours and your neighbourhood? Are you close to your kids school, do they have many friends close by? Did they realise that moving house in commonly considered one of the most stressful events in life. Had they considered the psychological differences between home ownership and renting? However, the host was not happy with me turning a financial question in to a psychological one and so she cut the priorities conversation short saying “BS aside did I think it was a good financial move”.

I bit my tongue and tried to provide an answer. If you think timing markets is possible and further that you think you can accurately time not one but two markets simultaneously on not one but two occasions then it may be a good financial move. Further that Australian housing pricing were clearly above their long term trend lines; however, when viewed as a multiple of disposable income prices could be justified.

That either bored or stunned everyone as no-one spoke, so I kept going.
I said I doubted anyone could accurately make the four calls required. Especially when coupled with the stresses associated with uprooting a family and moving house. Even if they did make the four calls accurately, the financial benefit would not increase their happiness and the resulting stress could lead to health problems, divorce and myriad other unconsidered results.
From the ensuing shitstorm you’d have thought I’d spat in the host’s face and said her friend was a moronic she-devil who worshipped false idols.

Needless to say I don’t think I’ll be consulted on financial matters anytime soon and perhaps I need to re-read Relationship Mastery. I think I failed to clearly communicate my view that happiness should always take priority to wealth and for those with the necessities more than covered making decisions based solely on financial considerations is ill-considered.

I hope you all find happiness.

Dean

Related posts:

1. Your Money or Your Life
2. Investing vs Working plus a Simple Path to Wealth
3. Wealth Management Value Chain