Wealth
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"Chance favours the prepared mind."
- Louis Pasteur
I returned to Canada over the holidays, which was rejuvenating. I always forget how dark and quiet it is during the winter. It's a good opportunity to catch up on "deep rest" and sleep.
I caught up with my parents and visited each of my three younger brothers in turn. They are all highly successful at their respective careers. Each of them is also in the midst of raising a young family. So not only do I get to play with my nephews and nieces, each of which has different personalities and interests, I also get to take a few notes with respect to several differing parenting styles.
Beyond the good times, something was niggling away at me during the trip. I have long known that each of my brothers can lay claim to many more possessions than myself. However, I probably now also have the lowest income of the four. Seeing each of them doing quite well on a financial level prompted me to re-examine my own perception of wealth.
I've always believed true wealth lies in having as few wants as possible, and that the richest person in the world can still feel broke and dissatisfied if they still want more. I still believe this. However, I also think this definition can be expanded...let's see how.
Searching For Wealth
Upon arriving back in New Zealand, I explored this concept by updating myself on some contemporary financial perspectives. The philosophies of two individuals, Morgan Housel and Ramit Sethi, resonated with me the most.
Housel wrote a book called The Psychology of Money (1), which encapsulates his philosophy of wealth. Housel defines wealth as the money one has but does not spend, for having a large savings affords that person autonomy and allows them to wake up in the morning and do whatever they want. By this perspective, savings trump possessions. Housel also argues that it is more important to control one's expectations rather than pushing financial goals. By doing so, the goalpost of wealth stays in the same place, and a person can develop a feeling of having "enough" to be satisfied in the longer-term. However, most people set a target for wealth, achieve it, and then move the financial goalpost further away so that they are always chasing more wealth. Consequently, they are never satisfied.
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Housel's book...more philosophy.
Sethi's book...more structure. |
Although Housel and Sethi appear to champion different styles and approaches to wealth, there are also similarities. Perhaps the greatest commonality is that both agree that low-risk investing over a very, very long time provides the best way to achieve a wealthy life, as defined above.
Discovering Wealth
Taking this new information on board, I expanded my own conception of wealth, which may now be summarized as (1) maintain few essential wants, and be clear on what those are, but additionally (2) maintain a readily-available financial buffer, in case of crisis, and (3) maintain a long-term investment, to prepare for the future.
First, the few essential wants. I have long advocated for four core categories of importance. One, to sustain optimal health, mainly through dietary, fasting, exercise, resting, and sleep protocols. Two, to have novel experiences, including travelling to new places but also embracing new ways of thinking. Three, to maintain important relations, but also grow important new ones. Four, to contribute to the greater good through my own life's work. These are the essential wants, at least for me (notably, there is no mention of possessions in there, which is probably why my only possession of note is a motorcycle, and not much else).
Second, the financial buffer. I always considered that having a bunch of cash sitting in a bank was pointless, for that money could be used to buy something, or invested. Yet after considering the arguments above, I think that having a decent amount of cash on demand is psychologically appealing, for it facilitates preparedness and spontaneity - should a devastating crisis or an amazing opportunity present themselves, a person can meet it swiftly and with authority.
Third, the long-term investment. Having a relatively low-risk financial buffer for the future seems important, with some numbers run to actually see how much that investment might be worth in one's elderly years. The investment can vary in risk and take many forms such as precious metals, index funds, Bitcoin, Ethereum, or real estate. However, whichever form that investment takes, it should be relatively low-risk and reliable in its capacity for long-term growth.
In summary, it could be argued that real wealth lies in having:
- A few essential wants, which ultimately make life meaningful.
- A readily-available financial buffer, for immediate autonomy.
- A long-term growth investment, for the unforeseeable future.
That's it...and that's "enough."
Solace.
References
(1) Housel M. 2020. The Psychology of Money: Timeless lessons on wealth, greed, and happiness. Harriman House.
(2) Sethi R. 2019. I Will Teach You to Be Rich: No Guilt. No Excuses. Just a 6-Week Program That Works. Workman Publishing Company.
