Making Money
Among the many investment books on the market, there was once one entitled Die Rich. For me, I should say NO THANK YOU!
I have no objection to leaving a vast estate behind me when I go, but neither do I have any objection to leaving no estate at all. One owes one's children love, and support during the early years of their life, and enough education to prepare them to make their way in the world. One does not owe them continued support after dear old Mom and Dad pass on. If money is there for them when I'm gone, that's nice. But if I have to sacrifice enjoying my own life just to leave a bundle behind, no thank you. I'll leave them the family Bible, some photographs of myself, and my very best wishes for the future.
I have no objection to leaving a vast estate behind me when I go, but neither do I have any objection to leaving no estate at all. One owes one's children love, and support during the early years of their life, and enough education to prepare them to make their way in the world. One does not owe them continued support after dear old Mom and Dad pass on. If money is there for them when I'm gone, that's nice. But if I have to sacrifice enjoying my own life just to leave a bundle behind, no thank you. I'll leave them the family Bible, some photographs of myself, and my very best wishes for the future.
Now, you may feel differently. You may have a strong desire to create a family fortune. Or your financial goal might be to accumulate enough money to be the first person on your block to buy a helicopter. Or you may want to indulge in some "rich-man's graffiti" by leaving your Alma mater a building with your name on it. Most likely, however, you want what most people want a comfortable feeling of financial serenity.
You should have a goal (even if it's only you) will know if you fail to reach them. But people without goals can never fail. A goal is a challenge. It is easier not to have one.
It is also foolish not to have one. If you have a reasonable financial goal, or even a slightly unreasonable one, you can achieve it. Keeping a financial target fixed in your mind, especially if it's part of a financial plan, will help give you the discipline you will need along the way. If you have no goal, all of your income is likely to pass through your hands as you receive it, leaving you to trust in luck for the future. Moreover, having a goal will help clarify how you should manage your finances. Otherwise, as it says in Alice in Wonderland, if you don't know where you're going, there are many ways to get there.
It is worth starting your goal in very concrete terms. If your goal is to be rich, figure out what you mean by "rich." One person's life of luxury, after all, is another person's spartan existence. If you really think about it, you'll probably decide that you don't want to be too rich. If you suddenly inherited $100 million, odds are that you would lose most of your friends. Think about it. They would be envious of you; you wouldn't know if they loved you for yourself; they couldn't afford to go out to dinner with you at your new favorite Chinese restaurant when it turns out to be in Shanghai - and your new bodyguard would probably make them nervous. Besides, simply taking care of that much money is a full-time job. No time to go fishing if you have to keep a constant eye on the London, Zurich, and Singapore stock markets, as well as your investments in Malaysia and Argentina. So what's the point?
If you think about it carefully, you may conclude that your goal is to have a net worth of, say, $1 million by the time you turn sixty-two. If you're now in your thirties or thereabouts, this is an eminently realistic ambition. Specifying exactly what you're aiming at will enable you to calculate what you need and what rate of return you need to earn to invest every year and what rate of return you need to earn on your investment. You will be able to chart your progress year by year and see when you are falling behind and when you are getting ahead.
Once you've calculated what you want and have seen what it will take to get it, you may even decide to change your goal. If reaching it requires that you invest $10,000 a year and the only way you can possibly put aside that much money is by continuing to work at a high-paying job you detest, then you probably ought to reconsider your goals. Is it worth being miserable for the next thirty years to be happy for the twenty years after that? What if you get hit by a bus the day after you retire? Maybe you should do something you like for the next thirty years, even though it means resigning yourself to a more modest way of life now and when you retire. Man does not live by bread alone, or by chocolate cake either.
You should have a goal (even if it's only you) will know if you fail to reach them. But people without goals can never fail. A goal is a challenge. It is easier not to have one.
It is also foolish not to have one. If you have a reasonable financial goal, or even a slightly unreasonable one, you can achieve it. Keeping a financial target fixed in your mind, especially if it's part of a financial plan, will help give you the discipline you will need along the way. If you have no goal, all of your income is likely to pass through your hands as you receive it, leaving you to trust in luck for the future. Moreover, having a goal will help clarify how you should manage your finances. Otherwise, as it says in Alice in Wonderland, if you don't know where you're going, there are many ways to get there.
It is worth starting your goal in very concrete terms. If your goal is to be rich, figure out what you mean by "rich." One person's life of luxury, after all, is another person's spartan existence. If you really think about it, you'll probably decide that you don't want to be too rich. If you suddenly inherited $100 million, odds are that you would lose most of your friends. Think about it. They would be envious of you; you wouldn't know if they loved you for yourself; they couldn't afford to go out to dinner with you at your new favorite Chinese restaurant when it turns out to be in Shanghai - and your new bodyguard would probably make them nervous. Besides, simply taking care of that much money is a full-time job. No time to go fishing if you have to keep a constant eye on the London, Zurich, and Singapore stock markets, as well as your investments in Malaysia and Argentina. So what's the point?
If you think about it carefully, you may conclude that your goal is to have a net worth of, say, $1 million by the time you turn sixty-two. If you're now in your thirties or thereabouts, this is an eminently realistic ambition. Specifying exactly what you're aiming at will enable you to calculate what you need and what rate of return you need to earn to invest every year and what rate of return you need to earn on your investment. You will be able to chart your progress year by year and see when you are falling behind and when you are getting ahead.
Once you've calculated what you want and have seen what it will take to get it, you may even decide to change your goal. If reaching it requires that you invest $10,000 a year and the only way you can possibly put aside that much money is by continuing to work at a high-paying job you detest, then you probably ought to reconsider your goals. Is it worth being miserable for the next thirty years to be happy for the twenty years after that? What if you get hit by a bus the day after you retire? Maybe you should do something you like for the next thirty years, even though it means resigning yourself to a more modest way of life now and when you retire. Man does not live by bread alone, or by chocolate cake either.
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