After reading Erin’s great post a few days ago and talking about it with one of my good friends, and after a conversation I had with my fiancee, the question came up, “When is enough, enough?”
Erin and Ken both quoted Trump and Rich Dad, Full of Shit Dad as saying you need to invest to win, how much do you really need? Do you need billions? Not really. Do you need Buffett or Gates money? No. If you got rich through frugality, like most people do I think, you aren’t really interested in those shiny new cars or mansions because you realize they are just a huge waste of money for show and aren’t really necessary.
(I’d just like to drop in a note that Rich Dad, Full of Shit Dad’s point that he and Trump have ‘good debt’ is a bunch of bullshit. No debt is good debt. I don’t care if it’s a student loan, a mortgage, a lease, a car payment or owing your Uncle Ned the $20 that you borrowed to get a haircut. We need to stop categorizing debt as good or bad, it all sucks and the sooner you get out of debt, the sooner all of this money making stuff becomes a hell of a lot easier. Now, back to our story.)
The thing most people don’t understand is that being rich isn’t the goal for most people with money. Buying things isn’t the goal. I think most people with money realize that money gives you the most important thing in life, which to me is opportunity. When you have enough money that you can do anything you could dream of and be okay, you are ‘rich.’ For some people, that could be $100,000, for some it’s $2,000,000.
I have had some great opportunities this year. I’ve gone on three, month-long trips to Canada, a trip to Yosemite, a trip to Catalina Island, two trips to Disneyland, a handful of NHL hockey games and I took an 8 day bicycle ride from San Francisco to Los Angeles. Having money allowed me the opportunity to do these things because I didn’t have to worry about paying bills or losing my job while I did them.
That’s all great for now, but long-term, thinking of retirement, how much should you have banked before you can retire and not worry? $1,000,000 debt free would pull you in about $100,000 a year at 10% ($70k after taxes or so.) Will that be enough 20-30 years from now? 30 years ago you could get a house for about $40,000 that is now worth $750,000 in my area. Cars were about $4,000 vs the $20,000 they are now. Will these huge increases continue? How far could you go with $70,000 a year in 20-30 years? Probably not too far. It seems to me that the lowest goal you could really bank on might be $2,000,000 in the bank before you are completely secure.
Which brings us all the way back to the original point, which is, how much is enough? Is there a point where you stop ‘investing to win’ because you just don’t need anymore money? Or, is there a place where you start investing to give to charities like Bill Gates does? Or, do you just keep going for more and more and more because that’s the ‘game’ and the person with the most money wins?
Personally, I’d rather risk while I’m young, get enough to where I never have to worry again and then put a majority of it in no-risk CD’s and go play golf all day and not worry about my money, not worry about renters or repairs, and not worry about stocks going crazy. What’s your long-term plan?
– Invest in peace….