My job title contains the word “wealth”, so it won’t surprise anyone that I spend a lot of time thinking about what wealth is or what it means. For everyone else though, they probably don’t consider this concept beyond abstraction. That’s why this recent article from the New York Times is so good – it uses data to point out some counter-intuitive truths about money and wealth.
Some key messages I found salient:
- The majority of the wealthiest people in the US are business owners in low-competition industries. This stands in contrast to the popular conception that the 1% are mainly high knowledge jobs like surgeons, lawyers, executives, and so on.
- Money is not a reliable path to happiness, but people with more money do tend to be slightly happier on average than people with less money. Many people are aware that people tend to see far less of an increase in happiness after making above $75,000 (USD) per year. The increase to happiness doesn’t go away above this income, but the compounded effects scale down considerably.
- A material change in happiness kicks in when people’s net worth rises above $8 million, though that boost is less than half of the happiness that comes from marriage.
- “People are consistently happier when they are out in nature, particularly near a body of water, particularly when the scenery is beautiful.” As one who lives in Victoria, BC, surrounded by beautiful ocean and beautiful scenery, I’d say this is definitely consistent with my views.
What do we take from this? Money is both as important and less important than we think. If we want to move up Maslow’s Hierarchy toward Self-Actualization, the importance of money is undeniable – we need its influence to help ensure our Safety and our Physiological Needs. However, if we want to achieve Self-Actualization, viewing money as the end goal will almost certainly accomplish very little.
This material contains the current opinions of the author and such opinions are subject to change without notice. This material is distributed for informational purposes only. Nicola Wealth is registered as a Portfolio Manager, Exempt Market Dealer and Investment Fund Manager with the required securities commissions.