More Versus Just Enough
We live in a society where more is better. Bigger house, better house, nicer car, nice clothes, more stuff in general. This includes bigger portfolio values, higher returns or chasing yields. This mentality that has run amok the last thirty years has finally caught up with us. The global deleveraging is going to take a while to filter and we’ve gone through three bubbles in the last decade due to greed.
There’s nothing wrong about wanting more. Elements of this keep us motivated and allow us to strive to improve. If a person is doing all the right things financially and life puts them ahead of the game, they have options. Sure the person could expand on their goals and continue to work, take the same level of risk in their portfolio, expand on their planned expenditures and continue to save or save more.
But there’s a cost to all of this. You can continue to strive for more, but the risk can remain the same or increase because of it. Or you may be sacrificing your current lifestyle only to end up with more money than you will ever really need. Equal time should be given to just enough. If you are ahead of the game, there is also nothing wrong with retiring sooner, paring down debt, saving less, spending more or taking less risk in their investment strategy. Many of these choices lead to less material wealth, but a lot less risk is involved. Not having to worry or being able to sleep at night does have its virtues. If you can afford to make these choices, they should be considered.
This is where financial planning has its value. It can help draw the line between more and just enough and giving you the option to continue to have more or decide that you have enough. Unfortunately most people let their investments and underlying investment performance dictate their goals when in reality it should be the other way around. I suspect that many people were ahead of the game before the tech bubble burst or before the financial crisis of 2008 began, but they didn’t realize it. Hindsight is always 20/20, but I’m sure that if many people knew the level of risk they were talking in their lives, they would have done something about it.