Opportunities not Costs
Vol #36 - April 30th, 2021
Even for a guy who grew up with four different AOL screen names, it’s easy to get head faked on Twitter.
There are a lot of strong opinions out there, and engagement algorithms are keyed to make sure you see them. As only extremely online people can do, there are also parodies of strong opinions that are their own strong opinion.
What makes this such a good and engaging parody, is that I strongly agree with the first sentence. It’s really important to have long term goals! Helping people use options and build robust, productive portfolios is what I endeavor to do every day at Harvested Financial.
The meat of the tweet is where the dig comes in. Sure paying bills and grinding out a job can feel like you’re letting life slip by, but the moments where you pet your dog and go on vacation are the small and large joys that make life worth living.
I strongly believe that money is for funding goals. Wealth is not having an alarm clock - except to catch a plane. It’s being able to spend the most precious resource of time with the people you enjoy, doing the activities you love most. Those ten years slipping by, will likely bring some of your fondest memories.
If you ask a computer how to achieve wealth, you’ll get an answer that looks like this tweet. It will have you trading your $5 latte for $0.50 bean water and skipping nights out because you already paid for Netflix.
On the flip side, the best way to build any kind of wealth is through some sacrifice today. Saving part of your income to make future investments is how you can ensure that tomorrow looks just as good - if not better than - today. Saving money is how we transport our labor today into future enjoyment tomorrow.
Long term goals are important to keep in mind. If you don’t have a path or vision, it’s easy to get lost. Goals serve as a rubric to steady our short term desires in pursuit of what really matters. And sometimes what matters is here and now.
Every day we’re tempted by decisions and choices that will have subtle unknown effects on our future. How much will leather seats improve my commute? Should I wait for a market pullback to buy more shares?
Economists would call this some kind of opportunity cost optimization function, but both of those questions only have right answers. If it leads to sustainable joy, it’s probably a good decision.
Observed in a cold, hyper rational academic light of homo-economicus, any excess spending today is a cost. Costs aren’t all bad though, they bring many positive benefits and externalities.
It’s not because you’ve got to spend money to make money (sort of true), but you’ve got to spend money to make money worth it. Keeping your eye on the prize helps achieve goals. But opportunities today shouldn't be thought of as sunk costs. They can just as easily be the experiences that pay future dividends.