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I once met this guy Joe who had his life so figured out that I think he was missing the point.
Joe graduated from a top college and had a cushy job in tech, so he was making good money. On top of that, he was living with his parents in San Jose and didn’t go out much, so he wasn’t spending much of anything. The guy was on pace to retire by 35.
When Joe mentioned this to me shortly after graduating, I remember feeling a bit of envy and pity for the guy. Sure, it’s better to have more savings than less, but at what cost? Joe was giving up valuable experiences and memories that he could have been making in his 20s, just so that his future kids and Uncle Sam would have more green pieces of paper to divvy up after Joe kicked the bucket.
For obvious reasons, Joe’s lifestyle never made much sense to me.
That being said, being on the other side of the spectrum didn’t appeal to me either. Spending too much money on one-off experiences like fancy dinners or expensive concerts also felt off. Sure, these purchases may bring joy in the present, but they wouldn’t provide a recurring financial return the same way that a blue-chip, dividend stock would. And getting a solid financial return on my savings was important if I ever wanted to retire comfortably or send my kids to decent colleges.
So that’s what got me thinking:
Are there goods we can buy that provide us joy in the present moment while also providing us the return on investment that a financial asset would?
These goods would basically be the equivalent of concert tickets that steadily grow in value for an indefinite period of time, even after the concerts are over.
You could also see these goods as the equivalent of a dividend stock that, every week, also provides us with a free drink ticket, redeemable at every bar.
As you might imagine, these goods are rare. Generally speaking, purchases that bring us joy now don’t give us long-term financial returns. And things that do give us long-term financial returns (i.e. stocks) aren’t tangible enough to provide us joy in the present moment. But there is an important exception:
Homes.
Lets side aside the astronomical costs of owning a home in California for a second.
At least for me, owning a home would certainly bring me a lot of joy. I’d have a basketball court and a jacuzzi in the backyard. A ping pong table in the garage. I’d be able to host a bunch of people and it’d be great fun. But on top of being able to enjoy a home, I’d also get the steady financial returns that come with owning an appreciating asset.
Essentially, homes are a unicorn asset, and they’re truly one of a kind.
Which brings me back to my old college friend Joe. To be honest, I’ve lost touch with the guy at this point, so to this day, I’m still not sure what he was saving for. But I do hope it was for a home.
Assorted Links
Cleopatra was beloved by the Egyptian people during her reign because she was the first Ptolemaic ruler to ever speak Egyptian. Being descendants of Alexander the Great’s Macedonian general, the Ptolemaic rulers had traditionally been too proud to speak Egyptian.
AOC identifies as Catholic. Here, she talks about her favorite Biblical story.
Abraham Lincoln and Dianne Feinstein get canceled, and San Francisco Mayor London Breed is not happy.
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Surprisingly Board Games hold there value very well over time. Invest in BG's to secure your financial future and present pleasures!