Investing, Life & Happiness

I love what I do but my job can often be pretty stressful and frustrating, especially in the upside-down world of central bank QE where investors have been rewarded for doing the exact opposite of what logic would dictate.  For example, I’ve been openly critical on this blog of the long-term implications and distortions that QE and zero interest rate policies are causing, and then last week this little gem hits the news: “BOJ’s Kuroda warns low rates may sow seeds of new financial crisis.”  That would be Haruhiko Kuroda, the Bank of Japan Governor that took deposit rates in Japan negative and pegged their government bond yield curve to 0%, saying that low rates may have deleterious unintended consequences…  ARE YOU KIDDING ME!?  So just raise rates.  Oh wait, they can’t do that.  That would mean the jig is up.

I love the investment markets because it’s all about strategy and positioning.  One needs to sift through the little data points and clues to try to piece together how the world is changing and what you need to do to stay one or two steps ahead.  However, this means I need to follow politics and policy makers and everyone knows how frustrating that can be.  It’s kind of like golf – you love it but it can frustrate the hell out of you if you don’t maintain the right mindset!  So I spend a lot of time reading about psychology and what makes us happy, and exercising and practicing meditation – all sorts of good stuff to prevent the frustrations of my daily work from turning me into a downer.

This is helpful not just for me personally but also in my work with my clients.  I talk with them about their goals but more importantly their values because I want to know what makes them happy.  What’s the point of all this saving and investing other than to provide you with the financial freedom to be happy?  I think the point of just about everything we do is to be happy.  Not the typical American Consumerism fake happiness, but real happiness, which I know is subjective and different for everyone.  However, plenty of psychological studies have shown why getting that new trendy gadget will not make you happy beyond the fleeting first day of excitement.

This brings up an interesting point that is a core belief of mine: Increasing happiness is more about removing than adding.  What I mean is that you’ll be much happier if you remove things that bother, annoy and distract you day after day than you will by adding some shiny new object because said object isn’t going to bring you sustained happiness.  If you notice that something continually annoys you, ask yourself how you can eliminate it from ever happening again.

What are the Big Things that Annoy you?

Does your commute annoy you?  What about your boss?  You could 1) get a new job, 2) start your own company, or 3) the ultimate solution is to retire.  Easier said than done, right?  It depends where you’re at in life.  But we can easily say that any spending today will delay retirement while any additional saving/investment today will pull forward retirement.  So buying a new car, phone, TV, etc. might make you think you’ll be happy but it doesn’t fix that nagging commute and idiot boss, and thus you’re quickly back where you started.

How to Fix it

I’ve run hundreds of variations of financial plans for people over the years and the variable of change that has the absolute largest impact on the probability of a plan’s success (defined as not running out of money) is… your lifestyle (i.e. how much you want to spend every year).  Most people think the answer would be investment returns but it’s not – it’s spending.  Your spending today affects how much you can put away toward savings.  Your spending in retirement affects how much you need to pull from your portfolio each year which determines the portfolio value needed to be able to retire.  This is why spending is the #1 determinant of when you’ll reach financial freedom.  What do married couples fight most often about?  Money.  Do you ever feel stress from your finances, bills, etc.?  Achieving financial freedom might be the greatest source of happiness, not because you’re rich and can by a bunch of “stuff” you don’t need but because you’re free – free to do what you want, when you want.  You have removed the requirement of work and all that comes with it, and that feels pretty amazing.

Completely adjusting your lifestyle and spending is a pretty major change so here are two simple things I did, and you can do today, to quickly increase happiness while you work on the bigger project of attaining financial freedom:

1. Unsubscribe from every email list you’re on.  I started doing this a little over a year ago and it’s made me a lot happier by removing an everyday frustration.  I don’t know about you but personally I hate seeing a ton of emails in my inbox.  It’s like a never ending to-do list that you have to deal with and you constantly feel like an email warrior fighting through the whole list.  In reality, it’s a giant waste of time.  “Checking” email is wildly unproductive.  I pretty much don’t want an email in my inbox unless it’s a real message from a family member, friend or client.  And have you ever noticed that you magically appear on new lists every week even though you never subscribed?  It’s ridiculous!  So I make a point to unsubscribe and spam every email that comes in.  Plus, how many email lists are you on from stores/shopping/products/marketing – a bunch of “Waste Money Here!” distractions from marketing gurus using their mind-trick wizardry to slow you from reaching retirement happiness…  Trust me, unsubscribe from all that crap.  You can thank me later.
2. (What ultimately spurred this post): Get off social media, it’s driving you insane.  I’ve read 3 interesting articles over the past few months all coming to the same conclusion that people who don’t use social media are happier than people who do.  Period.  I think I technically still have a Facebook account but other than planning a high school reunion, I pretty much haven’t logged onto Facebook in 5 years and I couldn’t be happier about it.  I hear all sorts of excuses like “I just do it to stay in touch with my friends…”  Blah, Blah… These are all excuses because people are addicted and can’t stop endlessly “checking” their phones.  All of the news feeds and endless updates, it’s all designed to create FOMO and ultimately makes you stressed.  You don’t need to take a “tech break.”  You need to retire from it.  Your happiness depends on it.

Thanks for following!

-Nick