Often times with investing, it makes you live poor and die rich. You invest what little money left over after paying taxes, buying necessities, and other perceived wants in life. Then that meagre 6% saved, the average for an American, compounds at a meagre single digit percentage. If that worked, then why is it only 6% of Americans become millionaires, and only doing so at the average age of 58? Even the ones who have a higher salary through the course of their working life still end up living poor throughout the process, just to run around with chests stuck out about how much they have in the bank account when no one gives a flying kahoot. After all, no one else is going to be able to enjoy that money anyway. In many cases, even the family did not get to use that money.

I knew of a man who retired at the age of 65 and who ended up working a standard average corporate job. Nothing to boast of, and nothing to be ashamed of. A legitimate, honest living while working hard. He invested safely and conservatively, and ended up with the net worth of $3 million US Dollars when it was all said and done. Successful financially, right? Well, let’s look at how he lived his life during those years up to the age of 65. He had a wife and multiple children. However, he never went on any vacations by plane, and only went on ones domestically while driving the family around. I guess the PV value calculator must have given him significant heartburn when seeing how much money would be spent on a vacation for 4 including travel, hotel, tourist attractions, etc. At home, when going to the washroom, the light and tv would be turned off in the living room, in order to save a few cents on the electricity bill. Wow. I must believe that his family may have resented him on multiple occasions on the stinginess displayed. They never bought anything extravagant, not that possessions necessarily make you happier. Living minimalist in everything purchased, no name brands, second hand, eating beans, cabbage, rice constantly.

To me judgingly so, he did not succeed in life. As Charlie Munger once said, if all you do in life is make lots of money, and nothing else, then it’s a failed life. At that point, the only thing he has to boast on is a $3 million-dollar net worth, which will not accompany him to the grave, or heaven, or any kind of afterlife. The majority of people during those “golden years” do not have much health or energy to be able to spend that money either, or to be able to enjoy it the same way. A backpack trip to Europe in your 20s feels different than in your 60s. 2/3 of American men are dead by the time they are age 65 anyway, so they won’t even be able to compare the difference. Even if you take the financial perspective, the new trend of FIRE, financial independence retires early, this wasn’t even taken advantage of. Surely, he could have retired at least a few years earlier and still been a multimillionaire and been able to enjoy his life.

Any charitable donations, or helping extended family in anything financially? Oh no, that would hurt the goal of getting the biggest bank account. Is there a way to use money the “right” way then? Newer studies on money suggest that the way we use it matters as much as how much of it there is. In that, buying experiences is better than buying goods. Instead of optimizing for net worth, it may be better to optimize for net life experiences. Those experiences and memories, such as of a meaningful vacation, stay with you for the rest of your life. They also trigger positive and meaningful recollections and almost a vicarious reliving of those wonderful memories each and every time when recalling the past. Whereas buying the new shiny object becomes part of a hedonic adaptation, where a temporary drug like high is achieved, but then baseline is reached again, leading to withdrawal symptoms in more extreme cases. This needs the person to continue buying more and more in order to experience those similar highs. Or I guess in the track of making money, needing to make more and more money to experience those highs, while sacrificing yourself and family to build up a bank account. Deferred gratification has shown itself to be more profitable than instant gratification, due to the increased quantity and likely quality in the future. However, the way the majority of 9-5 employees are going about it, that gratification is many times never realized at all. The majority of older folks in the “golden years” I’ve met either have no money from poor money skills, divorces, failing health, lack of interest in adventure, and thus don’t even get that envisioned payout that they were saving all those years looking for. And by the time most NPCs realize this, it is already too late as time, decades, has already passed by. On the other extreme lies the dying with zero mindset, and using the money that was hard earned while younger. That could be interesting too. But the vast majority get it wrong and then quietly regret it in old age. No wonder all the grumpy unhappy old folks running around. Certainly, an outcome I’d like to avoid.

Disclaimer

This is not Financial Advice. This article is meant only for educational and perhaps entertainment purposes.