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Editor's note: This week, we're publishing a series of classic essays from Steve on how to live a rich life. Today, we conclude the series with Steve's thoughts on saving money versus spending it. This essay originally published in DailyWealth in 2008. And while iPhones have become commonplace since then, Steve's message still remains true today. (Also, the markets are closed on Monday, so we won't publish DailyWealth that day. Look for your next issue on Tuesday, January 3.)

What's the Point of Investing?

By Dr. Steve Sjuggerud
Friday, December 30, 2016

"Nice to meet you... Hang on a sec... Let me text my husband."
My wife and I stood there waiting. The girl busily tapped out a text message on her new iPhone.
She wasn't so quick with the typing, but we knew what was going on... She was just showing off that she owned a $500 cellphone – hot stuff in rural Georgia.
We saw her arrive... She drove a black Suburban of some sort, with enough chrome to make a Detroit drug dealer blush.
She and her husband were young... probably in their late twenties. He was apparently a builder in Georgia. Of course, homebuilding in Georgia died several years ago... But even though their income must be down, their spending hadn't changed.
These aren't the only people out there sporting an iPhone and a blingy black Suburban. What's going on here?
Me? I don't have an iPhone... or a blingy Suburban... But I probably have one thing these conspicuous consumers don't: The house I live in is fully paid for.
I handle my money differently. I could buy an iPhone or a Suburban tomorrow. I wouldn't need a penny of debt to do it. But I won't... Why? Because I know those things won't make me the slightest bit happier. I'd be the same dolt I was before... only I'd be $50,000 poorer!
It took me a while to get to this point in my life. But I'm glad I made it... I'm at the point where I can buy what I want. But I don't. It's an important point to reach.
I don't try to keep up with the Joneses. I'm doing the opposite, actually. I'm downsizing. I'm reducing my "stuff."
Think about this... What good is all this stuff, really? You can't take it with you when you die... Legendary newsletter writer Doug Casey says it best:
"I've never seen a hearse with luggage racks."
Doug is extremely wealthy... and has been for a while. But he doesn't drive around a decked out Suburban, chatting on an iPhone.
My friend Bob Bishop is a wealthy guy like Doug. Bob wrote the excellent Gold Mining Stock Report newsletter for a few decades. He retired a couple years ago. Bob decided to sell some of his extraordinary possessions... for no particular reason that I could see. He didn't need the money. And they weren't really taking up space. I asked him why he was selling. He said...
"After a while, you don't own your stuff... Your stuff owns you. Steve, you're young... so you're probably in the accumulation phase. Me? I've been there. Now I want to downsize and simplify. I don't need all this stuff."
Bob can buy anything he wants. But, like Doug, he doesn't drive a blingy Suburban, and I doubt he's got an iPhone. It's just stuff!
This brings me to the point of this essay... What's the point of saving money anyway? What's the point of investing?
When you get older (if you're not already older!), just what are you going to buy with that money you've saved?
Jonathan Clements gave a good answer to this in his farewell column for the Wall Street Journal in 2008. (Clements wrote more than 1,000 columns for the Wall Street Journal.)
Clements says your savings "can deliver three key benefits." Even better, he says, "You can enjoy this trio of benefits even if you don't have great wads of cash." Here's how:
1.   "If you have money, you don't have to worry about it."
2.   "Money can give you the freedom to pursue your passions."
3.   "Money can buy you time with friends and family."

When I think about it, these three things are exactly what Doug and Bob are doing with their lives. The great thing is, it doesn't (usually) take millions of dollars to spend time with friends and family or pursue your passions. You don't need a fortune to live well.
But in order to get there, the Georgia-homebuilder couple needs to skip out on "his and her" bling-mobiles.
The quicker you grasp this about saving versus spending, the quicker you'll be able to start living like Doug and Bob... even if you don't have millions of dollars in the bank.
You might think it's hard to stop buying ultimately useless stuff... You might think it's hard to stop keeping up with the Joneses.
But actually, it is quite liberating... And even better, you'll be financially free much quicker. So give it a try...
Good investing,

Further Reading:

"Make smart spending decisions," Mark Ford said in August. "Stop thinking that because you're earning more money, you should be spending more." You can own and enjoy the world's finest things for a fraction of the cost. Find out how right here: You CAN Live a Rich Life While Building Wealth.
Earlier this year, Mark shared the five biggest mistakes most ordinary investors make. Find out what you can do to avoid them right here: How to Grow Your Wealth for Decades Without a Single Losing Year.

Market Notes


Today's chart is further proof of what Porter calls "the world's greatest business"...
Regular DailyWealth readers know we often sing the praises of insurance companies. These companies collect premiums from their customers. The best-run companies enjoy premiums that exceed what they have to pay out in claims. They're able to invest all that money – called the "float."
A great example of this business model at work is W.R. Berkley (WRB). The $8 billion industry titan is better than most of its peers at collecting more than it has to pay out. And the company's founder – Bill Berkley – still owns a large stake in the firm.
As you can see below, WRB shares are in a long-term uptrend that's showing no signs of slowing down. It's easy to see why Porter says insurance companies are the only investment he hopes his kids ever make...

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