One of our clients recently told me they had moved to a new home. Their entire move took 3.5 hours because they had downsized to a flat and radically reduced their possessions a few years before. We joked that it did not measure up to most people’s picture of a wealthy family’s move, even though they are a retired couple.
If you tune into your mind’s eye, what picture of wealth do you see? Whether you aspire to wealth or already consider yourself wealthy, what picture do you hold of yourself as a wealthy person? What do you look like as a wealthy person? What does your life look like? How much stuff do you have?
Growing up, my picture of wealth was shaped by wealthy farmers buying expensive cars after good seasons or women wearing the latest fashion. Later, it was influenced by my friends’ wealthy parents living in beautiful, modern homes. Of course, compared to the average South African we were wealthy. But, in my mind, we did not own quite enough to signal wealth.
Visible ownership of possessions is one way people signal wealth, whether they mean it or not. For a long time, ‘plentiful possessions’ defined my picture of wealth.
We see the same phenomena in investment portfolios. When we analyse portfolios, we often find a myriad of products or complex tax structures assembled over the years. When looking at these portfolios, we often ask how they make the owners feel. Often, the answer is that the complexity adds to their anxiety.
Every possession you accumulate brings with it the potential of insurance, maintenance, costs, taxes, and eventual disposal.
The complexity of owning many possessions, whether tangible or intangible, can become so time-consuming that it devours the lives of wealthy people. They often don’t get to live the life they had imagined when they were building towards that wealth. Even if complex ownership is what they want, they often discover that it doesn’t satisfy them.
My clients’ decision to simplify and focus on the quality of their lives, instead of the quantity of their possessions, was precipitated by a near-death experience. After recovering from a lengthy illness - one they did not anticipate he would survive - their perspective on wealth changed. Having each other, experiencing the exhilaration of exercise, enjoying a satisfying meal with wine, and appreciating exciting, shared experiences became more important than possessions.
It's why we encourage simplicity in our clients’ lives and portfolios. We do not discourage spending money on possessions or believe that investments should always be simple. Rather, we believe that portfolios should be robust, but elegantly simplistic like your life can be. It’s about finding the delicate balance between owning what gives you pleasure and creating a simplified life space that is fulfilling and joyful.