Financial Paradox

Money isn't valuable in the way you think it is

A 4K (not really) visualization of a financial existential crisis.

Good afternoon investors 👋,

Money is ranked up there with oxygen in terms of importance to our lives. Some could argue it’s even more important, as it’s not worth living if you don’t have money. Others could say you frankly can’t even live if you don’t have money. That’s the world we live in though, whether fortunate or unfortunate.

Growing up, my parents used to always say that money won’t make you happy, or that money isn’t everything. More often to me than my brothers, because I was very interested in the concept of money and always brought it up. Still am. In fact, they still say these one-off phrases to me.

However, is it true? Does money really not make you happy? If so, what is the road to the pursuit of happiness without the involvement of money, in a world where dollar signs are basically synonymous with living?

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Money... it’s not everything, right?

Like all people, I once somehow manufactured and overcame an existential crisis. Not a normal existential crisis, of course, because I’m not normal. I’m talking about an existential crisis surrounding money and how it affects life.

After a few weeks, it left me with an epiphany. I thought, “Well, money might not be everything like my parents say. Yet, what it allows you to do, the freedom it provides to you… that seems like everything, right?”

Right?

We’re all investing our hard-earned dollars today to eventually snowball an investment portfolio over decades, turning our dollars into a bigger portfolio to withdraw from once we reach a certain age. It’s a slow, steady, but effective strategy to both grow and preserve our wealth from the inflationary deterioration our money goes through every year. The end goal for most, being financial freedom. The ability to travel where you want, when you want, and to buy anything you’ve ever wanted, when you want.

I spent a while thinking about this. I came to a realization that that definition… all it is, is retirement with a pension. Working your whole life, collecting and saving a big fund of money, until withdrawing 4% each year (or otherwise) from that fund of money to live your life of financial freedom. A concept I’ve always detested. Because usually, by the time you withdraw this money, you’re approaching your late 60s, early 70s; the years when your health and energy levels start to decline. Usually, that’s not the optimal stage of life to begin your newfound life of financial freedom.

My epiphany

Your house isn’t an asset, that $100 bill in your wallet isn’t an asset. It’s a made-up construct by us… by humans. Our entire financial system isn’t even real, and the money that comes out of it is just as fake. We created the value we perceive when we think of money. We, as humans — the only conscious beings that we know of in our infinitely expanding universe — created financial systems to bolster easy trade between each other on earth. We created money to allow us to give meaning to life other than just living. Back in caveman times, so to speak, all we cared about was finding food and surviving. It’s miles different nowadays, isn’t it? (Or I guess kilometres… Canadian.) We’re born, raised, sent to school, then college or university, and then we join a workforce where we earn dollars — money — every day until we eventually retire once that workplace doesn’t need us anymore.

Then we die.

Put bluntly.

Money is why we all have jobs. It’s why we can simply walk into a grocery store and buy a head of lettuce instead of having to farm our own vegetables or search the wilderness for wild berries. It’s why we live in amazingly structured homes instead of a cave carved in the side of a mountain, and how you’re even reading this post. Someone built your home with the incentive of money. Developers are actively being paid money to create and update Substack and the email app you’re reading this on.

Everything around you — everything you eat, drink, the car you drive, the house you live in, the phone or device you’re using to read this, the toilet you clog after eating Taco Bell — it’s all here thanks to our financial system and the worldwide belief in the value of money. Our world is run by money. Our earth has become synonymous with dollar signs on a screen.

We are, on the daily, just exchanging numbers with dollar signs on a screen for… things. Crazy times, right? We, as humans, did all of this. We created this thing called money and now use it to power our world, to feed our children, and to fight wars between each other. Money constructs buildings, paves our roads, and manufactures our cars and devices. It’s absolutely incredible when you think about it. We’re all a part of this system too, because we all have a job working for a company that, in part, powers the world.

Ever since I was a kid, I’ve always hated the idea of a script for life. I’m not usually a contrarian on sound concepts of life, but this idea… I just hated it.

The idea that you spend your entire childhood in school, to eventually spend another four years (at the minimum) in another school you need to pay for, only to work for someone else for the rest of your life trying to pay off the debt you incurred at that four-year paid-for school, until finally being able to do what you want, when you want, at age 65. That’s if you even have the energy. It just seemed so saddening. But being the finance-interested person, or the science-interested kid, or the law-interested kid as I was — you had to play by this script to be what you wanted. Being a banker requires a degree, being a scientist requires a degree, same for being a lawyer. For things to play out according to your interests, you have to follow this script for life.

It goes (and I don’t mean to be rudely blunt or morbid here) like this:

Birth, school, school again, job, retire, die.

So, what am I trying to say? That time is our most valuable asset.

Time… our most valuable asset.

I’m sure you’ve heard the phrase, ‘life is short.’

Life is obviously not, in fact, short since the average human lives until around 85 years old — a number that will eventually increase as medicine improves. Yet, we all seem to somewhat believe that phrase. Is it because we spend our whole lives working and time goes by so quickly? Is it that our perception of time is flawed? I don’t know.

What I do know is that time is precious. Time is the only asset that without question, is worth every dollar spent on trying to improve its longevity. We need years to grow our investments, we work by the hour, and we’re paid weekly. All of that involves time. We can’t throw time into a TFSA and watch it grow at 10% annually over the next century.

You can always make more money, but you can’t make more time.

Therefore, by investing all of our money and working hard to create a massive portfolio, it seems we’re disallowing ourselves from enjoying life to its fullest while we still have the time to enjoy it. We need to prepare for the future and invest, absolutely. I, for one, hope to build generational wealth. But we also need to leave some money on the table to actually enjoy life. It’s best to enjoy the time we have while we have it. Enjoying time — life — to its fullest requires money to be spent. Life comes with inevitability, and time is merely a suspension of that inevitability.

Inevitability… living a life of happiness.

Family, friends, relationships—these are the things that make time feel obsolete. Life ends. That’s inevitable.

But how you spend the time you’re alive is what brings happiness while you’re here. Money runs our world. The benefit of that is you can do a lot of things by having a lot of money. Having a lot of money allows compound interest to work even faster. It lets you buy back some of your limited time through outsourcing. It means you can travel often and go on vacations with your family. It means you can buy whatever you’ve always wanted without worrying about overdraft in your chequing account.

Therefore, since money can buy so many things that bring enjoyment, having more money, by definition, makes you happy. I’m not referring to a sports car or some material possession when I say ‘things,’ but the ability to go on many vacations and travel often with friends and family. Or just being able to eat at nicer restaurants or drink a better glass of wine at Thanksgiving than usual. The option alone for all of those things generates happiness.

That brings us back to the question that sparked this entire newsletter issue: Is money everything, and will having a lot of it make you happy?

The truth is, yes, in our world, money is everything. Those who think otherwise are ignorant to their surroundings. Business is all around us, and dollar signs are breaking through our atmosphere… quite literally. Soon enough, there will be dollar signs on Mars. Money is incredibly important to all of us. As for happiness, I believe yes as well. However, beyond my own opinion, I can’t answer that second question. Happiness is obviously a subjective topic, so I’ll leave that up for discussion.

… But the truth is, for most of us, since we exchange our time working for someone else our whole lives, we won’t end up making a lot of money (whatever ‘a lot of money’ entails). That’s what the data says at least. Investing won’t bridge that gap. Investing won’t make you rich. It’s just a way to preserve and grow already existing wealth.

Working for someone for a single stream of income won’t make you rich. You need diversification of income, or else you can’t take risks to grow your total income. Same way you shouldn’t go all-in on a single stock, only the risk aspect is backwards. In investing, diversification helps reduce risk, but having multiple streams of income allows you to take more risks that could lead to higher rewards.

Without risk, there’s no reward, and your entire financial position is dependent on an employer. When you’re younger you can usually take on added risk regardless, but beyond your younger ages, having multiple income streams helps buffer total risk so you can take chances. Younger people can take chances without a buffer because they have time to recover from any mistakes made throughout their lives. The sad part is, many younger people don’t take risks and follow the script of life, which is why there’s such a large wealth gap in our world. Those who do take risks are often rewarded accordingly with due effort. Those who don’t, are upset that those who did take risks are rewarded.

Anyways, that’s it. This is the financial paradox and how I overcame my financial existential crisis and what I learned from it. I’ll keep diversifying my income, finding more and more ways to make money, and invest a reasonable amount to preserve and grow that made-income. Then, I’ll enjoy life with the remainder of the money I don’t invest. That’s the plan.

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Thanks for reading. Happy investing.

☕️ - Jacob xx