Is getting money more trouble than it’s worth? Reader Y. B. writes with the following comments and question:
“As a new subscriber to the Daily Reckoning Australia I have read little of your content.
Anyway, I have a question, which may seem odd and/or offensive, but it's not meant to be offensive so please don't take it that way. I just can help but wonder 'why'?
“Not ‘why in general,’ but why this strive [sic] for personal wealth through investment?
“I mean, I can understand that we all want a good life and part of that requires looking after ourselves financially, but the whole world of capital investment, financial gains and personal wealth creation leaves me feeling empty and devoid of anything good. That is why I have started working (after years serious consideration about what I want from life and what is good, if 'good' even exists) with philanthropists to develop and implement community development projects.
“Anyway, I'm rambling but the point is I wondered if you ever produce articles that have a bit of an ethical or philosophical slant on what is the ultimate end to investment, and if there is one besides greed.
“I realise greed is an ugly word, but I'm just trying to understand the whole thing and think you/your publication could provide some valuable insight. I not [sic] anti-capitalist as such, as I'm currently working with capitalists to redress inequalities and 'share the wealth' with those less fortunate. I'm also really interested in the idea of ethical investments, and perhaps devising some sort of framework to which entities can comply to be considered, or even accredited, as an 'ethical investment choice'. In short, while I believe capitalist structures may be responsible for a significant amount of poverty and inequality around the world, I also believe it can offer a myriad of solutions to such problems.
“Has there been much written on this? Do you have any thoughts or does your publication have a stance on this sort of thing? Any thoughts would be appreciated, even criticisms, but I do appreciate that you're probably quite busy so I won't be offended if you cannot reply or just aren't interested. So far the DR sounds interesting, fresh and well-written, which is why I was inspired to send this email.”
An inspired question.
Why do people try and make money investing? We can’t answer for people, only for ourselves. Money doesn’t necessarily make you happier. We were pretty happy when we didn’t have any to worry about, not that we wouldn’t mind the additional worry right now. Whether money helps people live more meaningful lives is beyond the scope of our knowledge here at the Old Hat Factory.
What we think we do know is that money can help you achieve a little more independence from the misfortunes of life. That doesn’t mean people with money no longer get in car accidents or need root canals. It does mean, however, that the accumulation of wealth gives you a degree of freedom and independence and security from matters which are otherwise out of your control.
We can’t do anything to prevent George Bush from bombing Iran. But we can save up for a rainy day. We can’t call Ben Bernanke to tell him what a villain he’s become, but we can store our wealth in assets not controlled by men who serve the banks of the world. And we can’t do anything about the epidemic of debt that’s spread through the Western World, but we can avoid it and grow our wealth in other ways.
All of the things you can do to grow your wealth and keep it help improve the security of you and your family in a world where not much else is in your control. Wealth expands your range of choices and opportunities. And it provides you with something to fall back on in hard times. Wealth and personal freedom have a long and profitable relationship with one another. Indeed, you could argue one is not possible without the other.
Money alone will not get you into Heaven or help you sleep at night. It’s not useful in that respect. But it is useful and practical, and therefore worth your careful consideration.
More than anything, how and whether you accumulate wealth is something you can actually influence. People spend far too much time having opinions about things which ultimately they can’t affect. Meanwhile, they neglect cultivating the useful habits that would have a real effect in their everyday lives.
But that’s just our two cents.
If you have your own response, please leave a comment below.
Dan Denning
The Daily Reckoning Australia
P.S. to get The Daily Reckoning direct to your inbox sign up to our free e-mail newsletter or if you prefer to use RSS, subscribe to the Daily Reckoning RSS feed.
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About the Author
Dan Denning is the author of 2005's best-selling The Bull Hunter (John Wiley & Sons). He began his financial publishing career in 1997 and has covered financial markets form Baltimore, Paris, London and, beginning in 2005 Melbourne. He’s the editor of The Daily Reckoning Australia and the Publisher of Port Phillip Publishing.
Comment by Chris Phillips on 24 September 2007:
I have to agree with Dan that wealth does buy independence. I wrote the following for Crikey.com and would like to share my thoughts here too.
All my life I have been listening to the phrase money doesn't buy happiness. What utter nonsense. Of course money per se doesn't bring euphoria, although you could be forgiven thinking so when you see the reaction of most people when they win the lottery. Let's face it, I have never seen anyone or heard of anyone who hasn't been extremely happy when the recipient of some windfall. However, it does have to be used wisely and can bring unhappiness if it is not. We have all heard of instances where greed or indulgence has resulted in less than a satisfactory lifestyle. Consumerism for its own sake or the benefit of the neighbours, is a pathway to unhappiness and insecurity. Also the degree of happiness provided by money is always in direct proportion to the amount already held. An extra million dollars would make little difference to someone like Warren Buffet or Bill Gates, but make, dare I say you, or me, extremely happy.
I can honestly say that all my life the more money that I have had, the happier I have been. However there is also a rider to that statement because to really appreciate anything, one must have gone without it. To appreciate peace, an experience of war is necessary. To appreciate food, hunger should be felt and so it is with money.
The main thing that money buys is independence. It allows you to do exactly what you like within the realms of social conscience. You are not constrained by employment, so you can live and travel where ever you wish. You can lead a comfortable life and pay others to look after you. You can afford the best of everything from food to transport. You can live a healthier life style by having the time to live less stressfully and without the undue worry that we lesser mortals have with day to day concerns about paying bills. Money even buys health for God's sake. There's a whole industry out there that costs a fortune to keep you healthy. Have you been to the dentist recently or paid some physio or been to hospital ? Money also gives you the time and where-with-all that enables you to endow good causes and give to charities. So it empowers you to spread happiness even further. It allows you the time and expense, to entertain friends. It allows you to pursue the interests that you have in life without the burden of considering cost. It buys education and the whole world of enquiry that follows. Yes it has certainly bought me happiness. As the man said, "I have been rich and I have been poor and rich is better"
From a purely personal point of view, money has allowed me to retire in limited comfort, to go sailing, learn to fly, swim all the year round in my heated pool and keep fit, pay for radiotherapy, have time to read and learn, and time to undertake voluntary work. However, a life time is so restricted that I shall die frustrated by the lack of money to enable me to do so many of the things that I should just love to experience. I still get extreme pleasure every time I swim in my pool or drive my modern (but second hand) car. In the last 5 years I have purchased a mobile phone, a TV, a VCR and a computer. I am still in awe of the technology and the happiness these items give me is not diminished every time I switch them on.
Lastly, if money did not bring happiness, why is it that there are so many people in relentless pursuit of it ? That of course includes all who have dedicated their working lives to refine and advise their clients in methods to acquire it
Comment by Jose Luis Navarro on 24 September 2007:
Dear Dan,
I think you can find the answers you are looking for, in the second-to-none book "The Virtue of selfishnes" by Ayn Rand.
In this book, all the misleading ethics of socialism and its moral fraud is clearly exposed.
Capitalism is presented as a consecuence of morality, not greed.
I hope you will enjoy it.
Yours truly,
Jose Luis Navarro.
(Madrid/SPAIN)
Comment by Ali. on 24 September 2007:
Nice answer, no matter how much the feminists have changed their world, in human relationships it is still up to the man to 'be a good provider', the first question a female is likely to ask a male is 'what do you do' which is shorthand for 'how much do you make'....so for me personally the answer is 'no money, no honey'. I learned this the hard way........ As an aside, ethical investing will be a huge sector going forward what with solar panels, wind farms etc going to receive massive funding in future, any investor in green investments is really going to make a lot of money. A question to Yvette, is nuclear power generation an ethical investment?
Comment by Chris. Fulker on 24 September 2007:
I'm afraid this woman is showing early signs of a rare disease - LouDobbsianism. Not to say that her heart is not in the right place; the answer given was excellent. But we can see the view being expressed that the system is somehow skewed against the common people because their lives are not getting better; if we just tinker with the system, it can be made "fair" or "fair-er". The existence of inequality in the world ("unfairness") is anathema to most people, and it rankles them. Even though capitalism, such as we have, is a naturally-developed and THE original system of trade and exchange, it is widely believed to benefit some "unfairly" - to the detriment of the majority who sweat more and work 8-hour days and five-day weeks. Making money without labour becomes almost unethical, unpatriotic. Thus, the desire to retreat into the burning house, to live in a world where everyone gives and loves his neighbour - naturally -, to pass more laws and regulations, to punish greed and to rein in anything seen as 'undeserved'...
Comment by nic meredith on 25 September 2007:
Voltaire said........ "lucky is the man who is not the hammer or the anvil in life!"
Comment by Matt Hern on 25 September 2007:
Yvette, there is much written about wealth creation motivated by other than greed. In fact, I always tell my advice clients that it is not about the money you need but what you want to do with it. Here are two other thoughts that may be of use...
Check out John De Martini's book "How to make one hell of a profit and still get to heaven."
Also, since you have an interest in philanthropy you may be interested in the quote used by many wealth creation speakers: "The best way to help the poor is to not be one of them." The wealthier you become the more you can give.
Cheers,
Matt
The Financial Futurist
Comment by TJ on 26 September 2007:
You have published an interesting question from reader Y.B.
I don’t usually participate in blogs with anonymous people of unascertainable credibility, but Y.B. seems to represent a significant body of opinion. Unfortunately it is very misguided.
I am a septuagenarian retired banker, investing at present for my financial survival.
From the day we are born there are goals we must reach. Before I was born, my father in 1929 had a modest job earning $2.00 per week (Australian) and he was in love.
He felt it would be wrong to ask a girl to marry him if he couldn’t provide a roof over her head, or if he was pretending to the world to have substance he didn’t really have (i.e. if he had debt over his head). He supplemented his income by running a couple of cows on the town common (Queensland country town) and selling the calves. He lived at home and saved hard and with some weekend jobs had the price of the house (400 pounds) within five years. Remember, no sex in that time, no contraceptives, but good self discipline and morals.
I was fortunate to be born into this environment, and in a small country town. (No anonymity for anyone – everyone knew everyone else’s strengths and weaknesses and the miscreant had few friends).
So today, without embracing the more extreme philosophies of people like Ayn Rand, we should nonetheless live with respect for ourselves, for society at large, and for our own material wellbeing. We should not believe we have some right to borrow other people’s money. Debt is fine if we acquire appreciating assets, and also shelter for our families if we can be sure that we have the ability to service that debt, but never for depreciating liabilities. (Yes, a car loan is OK if it is necessary to get to work).
We have no right at all to have sex outside marriage, ever, (marriage is an undertaking for the benefit of society at large – randy males or females rutting at will are a repugnant threat to social stability, and most of the world’s problems are caused by unrestrained copulation – think AIDS in Africa and water shortages everywhere). When we marry we must first have either the means in hand to meet all the obligations of family (shelter, clothing, children’s education and health including major trauma at any time of life), or the physical and educational assets (and insurance) to ensure we will not falter and become burdens to family, friends and society.
We must have at the end of our lives, in practical terms, a home, vehicle and a minimum of $600,000.00. Until we have that goal in sight, we should waste nothing on indulgences. Along the way we should if possible assist our progeny to get on the way to achieving the same critical mass.
When all this is under control, then life can be lived a little, but hopefully without burning up the environment we are going to leave to our progeny (by travel and conspicuous consumption). If anyone thinks this will bring a mean and miserable life, then they have no idea of the satisfaction that achievement brings, and have little concept of how earnest life really has to be. One result of a life this disciplined would be an elimination of poverty entirely – the impecunious would not have children and would be hopefully rewarded by government for abstaining, and reviled by society if they did not abstain.
Finally, until the necessary critical mass is achieved, personal investment can only be for maximising material benefit. We just have to let the “market” take care of ethical perspectives, as it will. There are technologies almost market-ready to streamline solar power production, to store power generated by wind, to give us hot-rock energy, to sequester CO2 from coal consumption, and return flow to our rivers etc. etc.. And governments, under electoral pressure, can provide incentives.