Money Really Does Lead to a More Satisfying Life
nytimes.com
nytimes.com
I have a fairly high-paying job, but I would like to find a way to earn more eventually. Not so I can be filthy rich and buy myself ridiculous things most people can't afford, but so I can have the freedom to take a sabbatical and travel, or start my own business, or heck, retire early, while I'm still healthy enough to enjoy life.
I grew up poor, and to me, having more earnings/savings makes me feel more safe and in control of my life. The biggest difference it has made recently is going from having roommates to having my own place. I'm an introvert, I need time alone, and I find it really rewarding to be able to come home to my own little sanctuary after work.
While I'm a big believer that we're going to see a big correction in the next couple of years (the kind that will make 2008 look like a foreshock), nobody knows how much higher the market can go and for how long. Maybe it will still be going up before I die.
The conventional wisdom is to never try to time the market. Buy and hold, and in the long run you'll make money.
Is that where Bitcoin's HODL "wisdom" comes from?
Also, don't bet on one horse.
http://awealthofcommonsense.com/2014/02/worlds-worst-market-...
“The market can remain irrational longer than you can remain solvent.”
But let's step back and calculate suppose you got into $SPY in 2007 at 155. If you had kept the $10K in there, it would be worth $20K today almost. However, if you had kept adding money to it each year, your return would be massive. As you get older, you move from more index holdings to bonds, which guarantees you to hold your money. Another method is dividends, if you had AAPL shares, suppose 1000 shares @ 0.50 per quarter, that's $2.00 a year on 1000 shares, $2000 a year. If you had a family member who doesn't work and owns all the shares, in Canada, that would be up to $60,000 each year you can earn tax free.
I don't hold any stock, although I believe it is safe to do so, I currently only own 2 shares of TSLA as I wanted to be eligible for the class action lawsuit if there ever was one. I only trade options and I believe that is the safest way to make money and never go bankrupt.
Also, if you buy stock you can also sells calls/puts against your shares to protect you from a downside/flat days.
To reiterate, the statement above, is always easy to make, because this is the only way to make money. If you don't get into the market, then each year your money is running away from you, see inflation. Ally savings accounts just aren't as helpful.
Hopefully I have changed your mind and you will start looking into Vanguard funds at the minimum.
With that said, I am nervous about the current market. I'm still invested but am starting to diversify into buy and hold real estate in established locations. One thing I don't like about the market is the impact that some random geopolitical event can have and I don't see the world moving toward more stability at the moment.
Depending on the interest rates of the debt you hold and how long it's supposed to take to pay it back, you could save yourself a lot of money long term. It's not an approach that investors often recommend but if you've got a 7% interest rate on a 30 year mortgage the return for paying it off early is 7% saved. Whether the market goes up or down, the loss for that percentage remains the same.
The more debt you get paid off, the more cash flow you free up to invest.
It doesn't always make sense, but it's worth considering. When interest rates were really low I locked up a 2.8% rate on a 15 year mortgage...and at that point there's really no incentive to pay it off early. Other forms of debt will vary though.
- Better debt to income ratio/monthly cash flow numbers as I diversify into real estate
- Provide more cash flow to purchase under valued assets should the market drop significantly (there's always an initial overreaction)
With real estate, there are hidden costs. The furnace breaks, the AC breaks. The stairs need something. The roof needs patching. There is mold. There is property tax. There are bad tenants. There are other aspects also. It takes time.
IMO forget real estate and get in the market. But I mean, I am biased right? :)
I'm not looking at it as an either/or thing though, I'll still stay in the market just not 100%. Part of the reason I'm diversifying is because the market has been very good to me and I want to pull some of that profit off the table. In any event, I'm going to begin looking for the user named realestategod so you two can have a chat :)
Edit: Also, everyone should investigate this.
If anything, ownership should be spread more widely. Suppose the government bought index funds and used it to fund basic income?
Apparently that makes the average Joe a crook? I don't know, I don't see it.
You are providing funds for companies to exist. Companies that pay some of the people, and provide services for other people. You also get a share of the profits.
Certainly, this can be abused, but at the fundamental level, it's a good thing to have businesses that provide value. I like being able to go buy a nice computer when I want one, or going and getting some fast (or slow) food. I also like googling things. All these things are (often) supported by stocks.
If all people wanted was agency over themselves most people could do it--living off the land in the middle of nowhere is still pretty cheap here in the U.S.
How does money get other people to do things for you? Well, there has to be this group of individuals who are just dying for that money and will do all manner of things to get it. That flexibility comes from desperation and not having agency over your own life.
"If all people wanted was agency over themselves most people could do it--living off the land in the middle of nowhere is still pretty cheap here in the U.S."
You mean if people wanted to trade nature having control of their existence for an employer having control over their existence, it should be easy in the US. Even that is hardly true - even subsistence agriculture requires skills that can't easily gotten and moreover, all land owners have to pay taxes so you can't have true independence, a best growing your own food and hopefully selling the surplus to pay your property taxes.
It's not that any of this is impossible. Rather, it's a "way out" but so is getting a lot of money so you're a labor buyer rather than the labor seller. But all this does add up to lack of money actually being a force to "regulate and monitor the agency" of most people today.
Not that lucrative … by whose standards?
Requiring someone else to provide something you need without compensating them with something they want in return (money or barter) is removing their agency over their life.
We might not advertise that we use them explicitly for this, but this is exactly what they end up doing. People that need money have to give away their time and do stuff for other people.
>We use money as a medium of exchange enabling people to get other people to do things for them.
Po-ta-toh, po-tah-to. Those people that do "things for them" give up part of their own agency of what to do and part of their own time in exchange of getting paid. They can still pick between this or that job (if they're lucky and there are plenty of jobs), but they can't choose not to give their time to a job, or to be too picky about which job to do (lest they starve).
>If all people wanted was agency over themselves most people could do it--living off the land in the middle of nowhere is still pretty cheap here in the U.S.
The agency doesn't end in subsistence, as people aren't animals. It includes being able to do things like e.g. travel, watch tv, eat a nice meal, surf the internet, etc. -- and that gets costly fast. Part of that agency also includes that is shouldn't involve others treating them like pariahs (because again, they're not animals).
by that definition, nobody can have true agency, until a post-scarcity society where provision of services does not require any labour from any human, and is free.
Of course. Nobody is 100% free. At best we have fewer limitations to what we decide to do, but not none.
Even in a post scarcity world, where we would much freer, we wouldn't have 100% agency (for one, we can't do whatever we like to other persons, we need to respect their agency too. Second we have inherent limits, as to what we can do without getting tired, talent, a lifespan, etc). So our agency is limited in several ways.
When I think of money..I think of freedom...to do what I want to do. When you don't have money or your need to get money then suddenly you have to do stuff that you don't want to do. Even if you have a job you love to do...you are still going to work and taking orders from your boss. It would always be preferable to do the stuff you love to do...but on your terms.
By some estimates, two-thirds of lottery winners are broke within seven years.
https://nationalpost.com/news/canada/lottery-curse-claims-an...
Nearly One-Third of U.S. Lottery Winners Declare Bankruptcy
https://wolfstreet.com/2018/04/17/nearly-one-third-of-u-s-lo...
So it's not so much the winning that make people go crazy. It's just what happens when people who don't understand money get lots of it.
However, I will suggest that many poor people think coming into money would solve all their problems because money is very often the most obvious sticking point in their own life. In reality, they trade poor people problems for rich people problems and it doesn't come with some built-in education on how to handle rich people problems. (I mean a la The Matrix: "Download this to my brain." A lot of the advice they get falls on deaf ears and they are ill-equipped to sort good advice from bad.)
In fact, many poor people are incredibly dismissive of the idea that rich people have any problems. They often mock the problems that rich people have. So no surprise they aren't psychologically prepared to deal with the reality of sudden wealth in cases where they think "rich people don't have real problems."
I think this group has similar characteristics to the lottery winners. They become rich suddenly, after having beaten long odds.
You can make the same sorts of arguments about the rationality of professional athletes too. Most people who aspire to become professional athletes don't make it. Continuing to pursue the dream is largely an irrational decision.
Similarly, it is possible to play sports because you love it, not because you see it as a get rich scheme.
Participating doesn't have to be crazy behavior in either case.
That only makes it more likely that this person is losing money by playing. "Crazy" is too strong, I agree, but it's certainly not the shrewdest investment.
Some people enjoy gambling. If it pays off, yay! If it doesn't, it was only a couple of bucks that they felt they could spare.
I'm aware there are very poor people who play the lottery in hopes of it fixing their lives, even homeless people. And I don't think that's a great idea. But there are people who can spare a few bucks who just like playing.
One person I know used to call it "Contributing to my nephew's scholarship fund" because the lottery covers education expenses in that state.
I have only rarely played the lottery. It's not really my thing. But not everything in life needs to be decided with a slide rule for someone to be fundamentally healthy. In fact, I have seen studies that suggest that people who do a little gambling are typically healthier than average.
It's not supposed to be an investment, it's something you do for the fun of the "what if".
There. Just saved you n dollars where n is the number of times you want to play that game.
Humans also want a tiny possibility of it happening to make their "what if" worth, and are willing to pay to get that.
Just like they are more engaged when there are props and sets and costumes when they see a play. A play requires suspension of disbelief, so they could have also made believe that they see the set and costumes over a naked stage, but we don't want that, we prefer to have them as aids.
However, that's where the similarities end. Athletes become successful from years of hard work and sacrificing present enjoyment for future rewards. Lottery winners are chosen randomly from people who literally demonstrate how poorly they handle money buy buying lottery tickets.
I buy a megabucks ticket about once every year. Sometimes twice. I buy it for a little bit of fantasy. It's totally worth the dollar. In reality I'd hate to win a big lottery because the evidence is pretty overwhelming that it would ruin my life (not the financial aspect, I could handle that bit, it's the social consequences that would make me wish I had never won).
When you win the lottey, you get seed money. This money is "worth" 200 times less than you think it's worth, because you can only spend it once. If you put e.g. 10 million in an investment, you get an allowance of less than 50k/month to spend without eroding the original capital. That's the true "value" of this lottery ticket.
[1] Where I amassed orders of magnitude less capital than you’re asking about
https://www.reddit.com/r/AskReddit/comments/24vzgl/you_just_...
Though I guess that post doesn't apply to smaller winners.
You'd be surprised. People of all kinds play lottery.
The real reason is far more likely to be that people who are not rich already are not prepared for sudden wealth, and do not know how to handle their finances. Plus all kinds of other people (relatives, advisors, etc) will prey on them.
I know why you might think that, the articles talking about lottery spending by poor people and socioeconomic "failures". But they are not capable of the lottery spending necessary to reach jackpots numbers we see multiple times a week. Because all classes of society play the lottery at an even distribution.
The % of their income or net worth is negligible once you get to the middle class and higher. It is negligible and inconsequential and sometimes you win.
Your supposition is flawed, and also many more people are fine winning the lottery and you never hear about them. They buy the condo in South Beach and send their children to Ivy League schools and make up stories about their successful business, the end.
https://www.vox.com/identities/2016/1/13/10763268/lottery-po...
https://money.cnn.com/2018/01/18/pf/lack-of-savings-cover-un...
It's completely fake. I, for instance, would also not answer 'from savings' -- probably preferring to reduce expenses, since I try to avoid touching my savings.
More than that, "money is positively associated with happiness/life satisfaction" is common sense. Anyone who has ever struggled with money knows that it's incredibly stressful. "Money doesn't make you any happier" is the counter-intuitive research finding that needs ironclad evidence.
It's also important not to confuse either of these claims with "anyone who has money is happy", which is obviously false. It's still true that money can't buy happiness. But lack of money is a major (but not guaranteed) cause of unhappiness.
I don't think so. If you have a lot of money, there will be constant pressure upon you about ways to spend it or invest it "wisely". And you ll always will have the fear of "ruining everything". If you choose to do nothing with it, you ll be blamed for not investing it or making it grow.
Not to mention that you will have a hard time differentiating associates who are just there for a piece of the cake.
This might come across as condescending, but everything you're saying sounds like the typical cliches about what it's like to have wealth from people who don't actually have it. It comes with its own challenges but I would not include the ones you've mentioned. Clearly some people with money do struggle with some of what you've said, but in my experience it's rare for it to be a dominating focus in their lives, and it's rarer still for it to cause the wealth to become a net negative on their health and well-being.
The reason why I'm saying this is because frankly I find it frustrating when speculation like this is promulgated so confidently despite its disconnect with reality. Of the people I personally know earning over seven figures in annual income, none of them struggle with what you've said. Your generalization has a very brittle foundation.
Unfortunately there are two obstacles in combatting generalizations like this: 1) most wealthy people don't talk about what their life, aspirations and challenges are actually like, 2) hearing wealthy people say they in fact are mostly happy and fulfilled makes for a boring story without a lot of draw.
Sure. Some people are afraid of public speaking. But some people on the other hand, can't wait to get in front of people. But I think it wouldn't be too off to say people are generally afraid of public speaking.
So generally, the more you have to lose, the more you will worry. Simple. If you want to refute that, argue logically why it might not be the case, instead of just "I am rich, and you are wrong". Please.
> So generally, the more you have to lose, the more you will worry. Simple.
This is not simple and I don't follow that it's true a priori. Moreover I don't necessarily agree that it's the correct characterization, either. I don't know anyone with wealth whose approach to thinking about wealth is that they have "more to lose." That strikes me as begging the question. I can understand why a given rich person might feel that way, but I don't see why the modal rich person would feel that way.
The essence is that you're asking me to refute a statement that you have not actually supported. Had you supported with something grounded I'd agree that my anecdotal reply isn't much of a refutation. But so far it's my direct experience and observations against something which boils down to intuition. Intuition is misleading.
Is it not?
1. Having something comes with the risk of loosing it.
2. with risks comes the potential to add worry.
3. People with more to lose have more potential to be worried about it
How is my reasoning flawed?
The only thing you cannot lose is your past. You might lose the memory of it, but that does not nullify it's existence.
2. Again - the ability to take risks increases - this is one reason the rich get richer - they can make riskier investments while the poor can't make such bets
3. People with more to lose - are the people who lose a greater percentage of their savings - a rich person losing $1000 vs a poor person losing $1000 - a poor person loses more
Logical reasoning works best with absolutes, things like individual motives (applied to larger populations) and "risk", "worry" etc have a lot of nuances - you need to work with probabilities backed by data.
This is correct, but in a way that implies the opposite of your conclusion!
Let Alice be a wealthy person and Bob be a poor person. Suppose they each loose $100K. Who suffers the greatest loss in utility/welfare/happiness?
All else being equal, the answer is Bob. Bob will loose his house and have to live on the streets, but Alice certainly won’t.
The takeaway here is that being wealthier gives you a bigger buffer. Being poor means you have more to loose from the vissicitudes of life.
Bigger buffer does not always mean big enough. That is why rich work to make more and more money. It is never enough. You don't know how much money might be required to save you in a future calamity. After a certain point, no amount of money might be able to save you. Then you need to keep people on power on payroll. And they, in turn, will be going through the same thing, demanding more and more money.
The point is, A buffer is not never big enough, if the rate of drain can be arbitrarily high, which is the case for human existence in the current economic makeup.
So you see, once you are rich, there is not stopping.
Actually there is. If someone thinks that, "This is enough. What I have is the buffer I am willing to store for future calamities. For me and my descendants". But I doubt rich people ended up being rich thinking like that. Or if someone is stupid/naive to not see things as they are. Then they will spend themselves to bankruptcy anyway.
Then either they ll kill themselves or grow wise, and might grow rich and go the first path the second time.
The pressure is even greater for someone who has to live paycheck-to-paycheck.
Of course free money (from lottery winnings) is better than no money.
But for most people it's a choice between more money or a less stressful job, or a shorter commute, or less hours etc.
And then it's a much more complicated equation.
False. The sample size is limited to those who buy lottery tickets. Of course people who buy lottery tickets think they will be happier if they have more money; otherwise they would not be buying lottery tickets.
This doesn't sound true. Many high earning workers never play the lottery, yet have the same economic power as those who only win hundreds of thousands like in the study. I imagine their lifestyle choices are different.
Lottery winners are an extremely small percentage of the population. They don't have the same responsibilities, anixities, or "golden handcuffs" that the majority of high earners have because they didn't need to go through that to achieve their economic level and don't need to maintain it.
- Those who don't have money, and are therefore forced to be more self-reliant, generally would like the opportunity to have more money because they envision how it would make their lives easier.
- Those who have a lot of money tend to downplay the importance of having money, generally because it's more about what the money gets you than the money itself - having options to not deal with things you don't have to.
- Money is the vehicle to providing life-enhancing value for yourself in the sense that it can be exchanged for what you want/need. This is what provides happiness. I could have 1 trillion Zimbabwe dollars, but if I can't gain anything meaningful I want with it, then just the number alone isn't going to make me happy (aside from a blip of an ego boost).
https://www.goodreads.com/quotes/240944-lottery-a-tax-on-peo...
It is possible that besides the material part there is some form of psychological effect, "I have won in a 1 to a zilion chance, I am better (or the fate, or God preferred me), I am special".
Inherited wealth or hard worked for wealth may well produce different happyness levels.
And of course whar happens in Sweden may (or may not) be "universal".
So I'd say this is a flawed study with tremendous selection bias, we all know money can't buy happiness :)
Not to mention having a lot fewer responsibilities and knowing a lot less about the world.
I grew up relatively poor in the US. My childhood seems magical compared to this bullshit. Now each day vaporizes in a blur, feeling not very memorable compared to any other. I love what I do work-wise as an adult, and it still just doesn't remotely compare to spending all day roaring down a snowy hill on a sled at ten years old. I'd probably struggle to recall something memorable from ~100 days ago, but I can recall a hundred memorable things from my childhood. I don't think it was money that made the primary difference, it was the nature of every new or semi-new experience and what it means to a younger brain.