Let’s Agree on “How Much Is Enough”

InvestmentYou

By Alexander Green Over the last few weeks, I’ve written several columns addressing a foundational question about money: How much is enough?

There’s no shortage of opinions on the subject, as readers demonstrated with their own thoughts in my last column. (It was a smorgasbord of the practical, the political and the philosophical.)

In our increasingly competitive world, some feel that money is the way we measure our competence, our success, even our worth as individuals.

This isn’t just wrongheaded, in my view. It’s offensive. There are plenty of folks doing incredibly skilled and underpaid work as social workers, nurses, high school basketball coaches or Navy SEALs, to name just a few.

Many feel that there is a gap between how they live and the way they should be living – and that money would make up the difference.

And perhaps it would. Money is a linchpin issue in all our lives. We want and need things. It takes money to get them.

Some live openly with the accumulation of money as a primary goal. Others think it isn’t important – or shouldn’t be.

Yet millions harbor a chronic fear that they will never truly have enough – or be able to keep it.

It’s easy for those of us with money – even if we came from nothing – to forget what a struggle life can be without it.

Studies show the majority of Americans spend almost everything they make, shouldering enormous stress as they live paycheck to paycheck.

It’s not just the poor and lower middle class, by the way. A realtor friend once told me I’d be shocked to discover how many neighbors in his gated community were “just two mortgage payments from the edge.”

Money can do great things and promote important causes. But it can also dissolve business partnerships, cause friction between family and friends, and end marriages.

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Even in households where the cash flow is ample, partners often fight over how much to spend, how much to save or how to invest.

If you’re reading an investment column like this one, you almost certainly have more money than most (or soon will).

Our primary concern here, of course, is not wages or savings but wealth – and its successful management.

So let’s be clear in our terms. Wealth is not what you make. It’s what you have: stocks, bonds, cash, real estate, precious metals and other financial assets.

Most decide who is “rich” with a particular number: $1 million… or $3 million… or $20 million.

I can tell you that as a kid growing up in a middle-class household, I thought anyone with a million dollars was unspeakably rich. While that is still not an inconsequential sum, it is no longer rare.

Thanks to inflation and our society’s increasing affluence, a million-dollar net worth – total assets minus total liabilities of a million dollars or more – is now pedestrian.

Market researchers Spectrem Group counted a record 10.8 million millionaire households in the U.S. at the end of 2016. That’s 1 in 9. (And given the red-hot real estate and stock markets of the past year, …read more

Source:: Investment You