What does Money Mean to You?

[Julia]

Following some of the comments on a previous thread regarding desirability of high yield stocks as opposed to those held for growth, I thought it would be interesting to look at the broader question of why we are all investing and/or trading.

Obvious answer is to make money.

But then, as I thought about how some people - probably mostly those in retirement - prefer to have high yield stocks in order to know there is sufficient income to fund everyday expenses, and others in pursuit of high growth stocks, care little for the attached dividends and franking credits, I wondered what actually having the money means to us as individuals.

e.g. is it to ensure we have a sense of security, perhaps even something as basic as knowing we will never have to rely on the meagre government pension?

is it a sense of pride in having achieved financial security?

Is it simply so that we have the freedom to do whatever we want - buy a new car when we feel like it - travel business class etc?

Is it so we can help others, either in public philanthropy, or our own families and friends when they need it?

Or is it possibly sometimes just the love of money for its own sake?
(I have known people like this - the pleasure comes from just being able to see that bottom line increase - and usually they are very frugal in their personal spending).

And for those who are still striving for that magic amount, how do you think your life will change when you achieve it? How will you feel different?

Julia

 

[Smurf1976]

It's primarily about security.

I can't ever imagine myself choosing business class travel or staying in expensive hotels. Likewise the expensive cars and designer clothes. It's just not me.

What I would like however is security. Knowing that loss of employment doesn't mean the end of the world. Knowing that if I need something then I can buy it. Knowing that if I want to do something then I can do it. But if I'm travelling then it will be economy class whether I'm worth 10K or 10 billion.

I'd also like to be in a position to donate substantial sums to worthwhile causes. Helping the disadvantaged, particularly the disabled and homeless, comes immediately to mind. Likewise there's a serious need to promote and commercialise renewable energy technologies and I'd be happy to put my money where my mouth is on that one whether I made a profit from it or not.

I do have a specific target which, if reached through profitable trading or investment, I will immediately donate a sum to charity. The sum is not huge but it will certainly be donated if the profits are made. I'll set a new target linked to a bigger donation once that's done.

As for the money itself, you can't take it with you so I'd like to do some good with it whilst I'm alive.

That said, if I became massively wealthy ($ billions) then you'll likely find me doing something big which everyone hears about. Something with a lasting impact which will still be there 100 years later. Got a few ideas...

 

[michael_selway]

Following some of the comments on a previous thread regarding desirability of high yield stocks as opposed to those held for growth, I thought it would be interesting to look at the broader question of why we are all investing and/or trading.

Obvious answer is to make money.

But then, as I thought about how some people - probably mostly those in retirement - prefer to have high yield stocks in order to know there is sufficient income to fund everyday expenses, and others in pursuit of high growth stocks, care little for the attached dividends and franking credits, I wondered what actually having the money means to us as individuals.

e.g. is it to ensure we have a sense of security, perhaps even something as basic as knowing we will never have to rely on the meagre government pension?

is it a sense of pride in having achieved financial security?

Is it simply so that we have the freedom to do whatever we want - buy a new car when we feel like it - travel business class etc?

Is it so we can help others, either in public philanthropy, or our own families and friends when they need it?

Or is it possibly sometimes just the love of money for its own sake?
(I have known people like this - the pleasure comes from just being able to see that bottom line increase - and usually they are very frugal in their personal spending).

And for those who are still striving for that magic amount, how do you think your life will change when you achieve it? How will you feel different?

Julia

Hi Since im young i honestly dont care too much about 10% dividend or 5% interest, im looking for doubling and trippling capital gains etc

i dont have much atm maybe 50000 worth if i sell everything i have and own atm. Also Income from working thats it.

So how do i be come a multi millionaire?

 

[kerosam]

As for me, money is my path to financial independence..... financial independence for me and my loved ones. In addition, it gives security so much so that I won't be at the mercy of the boss anymore. But that is not to say I don't have to work. It gives me a better peace of mind, that's all.

and once in a while go on a shopping spree.

 

[It's Snake Pliskin]

Hi Since im young i honestly dont care too much about 10% dividend or 5% interest, im looking for doubling and trippling capital gains etc

i dont have much atm maybe 50000 worth if i sell everything i have and own atm. Also Income from working thats it.

So how do i be come a multi millionaire?

In answer to your question, change your mindset.

Income from working? Or income from your money working?

Keep working, but use it to leverage yourself to the next level. Trade with other people`s money? Sounds good to me - only if one knows what one is doing, though.

There are endless opportunities for becoming rich in this day and age that are not explored.

 

[It's Snake Pliskin]

Julia,

Another philosophical thread of yours! Thanks!

Money to me is freedom!
Freedom to do what I can afford to do. If income exceeds my expenses then I`m happy.

I value first class travel - no more **** breath next to or behind me. Maybe I can actually have a sleep on long flights. (I don`t do it regularly, but have done it and will from now on)
I value having my castle in the future.
I value being able to give to people who need or who deserve.(our medical system is third world - really it is terrible in the country) But why should I do what my taxes should be doing? Governments have stuffed up big time and we are all paying while they get their cushy pensions and world travel.

If any one hates money it means they don`t have any.

Snake

 

[yogi-in-oz]

21012006

Hi Julia,

A good thread you have going here for some weekend contemplation.

Started this reply and lost it as ASF decided to eliminate it
during its compilation, for no apparent reason ..... lol

..... so, let's try again.

------

It seems you may have already been researching these
personal issues about trading or dealing with others in a
similar vein ..... yes???

Using your own post as a guide in quotes, though not in the
same order, here's some additional thoughts to keep the
thread alive.

"Is it simply so that we have the freedom to do whatever we
want - buy a new car when we feel like it - travel business
class etc?"

"... is it a sense of pride in having achieved financial security?"

These two motivating factors, may well be tarred to the same
brush, even though they may appear to be different, at
various stages in our lives.

In the primary years of our lives, when our bodies will cope
with the use and abuse of honest and hard work, we may well
feel that we deserve the rewards of the high life .....

.... party on, spend-it-while-you've-got-it, you-only-live-once
and you-can't-take-it-with-you ..... you have earned your
money and you are prepared to legitimately enchange it fairly,
for any goods and service, that you may choose .... that's
great, you have made a FAIR EXCHANGE and your money
goes around the world to be used over and over again, by
others ..... everybody is happy.

-------

"... is it to ensure we have a sense of security, perhaps even
something as basic as knowing we will never have to rely on
the meagre government pension?"

Unfortunately, this can be a real motivator, due to
occupational pressures in our society today.


For example, the ogre of age discrimination is alive and well,
forcing some middle-aged people into feeling that they MUST
trade the markets to maintain a reasonable lifestyle.

Such pressure, starts early in our working lives, as
governments legislate, that we must contribute to
(underperforming) superannuation funds.

..... NOT EVERYBODY is meant to be trading in the markets ... !~!

Sitting in front of a computer all day may pay the bills, but is
it really EASY living and is it really FUN ..... ???

=====

This post was lifted from another forum and it shows how
frustrating trading can be for some people, without the
natural skills set to deal with trading issues:

"Just reached my breaking point.

Sick of seeing my shares struggle for weeks to get up to a decent level and then in one day they are back to where they started. In the same instance no-name companies just keep going up and up.

Thought I had some pretty good shareholdings with G.., S.., F.. , M.., C.. but sadly mistaken.

Have never had any luck with shares - never got onto that runaway success. Always seem to buy in at the top and have to sell at the bottom.

Decided to sell today, get all my money out and enjoy life rather than checking the prices everyday and getting more and more frustrated.

C.

=====

Many people are lucky enough to be able to use their natural
skills in rewarding careers, throughout their working lives ....
they find it EASY and FUN, because they have found where
and how, they can use their natural, God-given abilities, early
in life.

Others may have natural skills, that were never tapped in
their first trade or occupation, yet they remain available to
those, who wish to capitalize on them, in later life.

Just as many were destined to be carpenters, mechanics,
electricians, IT experts in their primary occupations, then
later in life, we also have further natural skills to enjoy
another trade or occupation, often completely didconnected
from the earlier job.

By tapping these natural resources, many people find
themselves in ENJOYABLE secondary careers, because they
find it EASY and FUN to utilize their natural abilities.

Sometimes, they find themselves servicing niche markets,
in their own business with the POTENTIAL to earn much more
than trading in the markets.

=====

"Is it so we can help others, either in public philanthropy, or
our own families and friends when they need it?"

Now, you will remember our "high-flyer" friend above, who
was happy to spend up big to reward himself for a job well
done. It turned out well, he made a fair exchange ..... his
money for the desired goods and services and everybody was
happy ..... yes???

Well, here's a tip ...... philanthropists are NOT HAPPY with
just a FAIR EXCHANGE ..... in fact, the more they contribute
to the welfare of others, then the more MULTIPLE revenues
will come back to them, with much better returns, than the
"fair exchange high flyer."

"Or is it possibly sometimes just the love of money for its
own sake? (I have known people like this - the pleasure
comes from just being able to see that bottom line increase -
and usually they are very frugal in their personal spending)."

"And for those who are still striving for that magic amount,
how do you think your life will change when you achieve it?
How will you feel different?"

Ironically enough, the sooner that these people start down
the philanthropic road, the sooner that they will achieve
their own financial goals.

Promising God, yourself and others that you will give away
substantial amounts, after you have made millions IS NOT
how philanthropy works.

It does not matter, how much money you have, NOW is the
time to start being generous with it, if you want to reap the
incoming rewards .....

..... and our generosity should not only be measured in dollar
amounts.


Freely-given time, effort and our natural skills also give us
great personal satisfaction, as well as a BIGGER credit to our
incoming account, whether it be in the form of revenue or
services by others.

-----

So, whatever your motivation or career, if you want to make
some good investments, start being generous with your
money and other resources and you will be rewarded,
HANDSOMELY.

There must be some validity behind this theory, otherwise all
the rich people would just hoard their money, just like the
poor people !~!

Sure, charity may begin with your own family, but the best
part about this philanthropy gig is this ..... you can get
started, at anytime in your life .... young, old, rich or poor,
everybody has the natural ability to help others and benefit
from the multiple rewards, that stem from such generosity.


have a great wekend all

yogi

 

[brisvegas]

simply put "Money to me means Freedom"

freedom of choice basically . Do i have to go to work today , Do i have to live here , Do i have to buy no name brands etc etc .



.............. Pete

 

[clowboy]

Money is such an attitude thing.

The common theme in this thread seems to be freedom but yet if we were to all put a figure on "freedom" I bet everyone's figure would be different.

Once heard a story......


There was a fisherman living in a small village on the coast of ( insert some tropical place that you dream about here). He lived with his family, he had a son, daughter and his wife. Every day he went fishing from 7-12 with his best friends in the town (man did he love fishing). He would return home have lunch with his wife fillet the fish, clean the boat and take the fillets to market for selling. He would then come home to greet the kids from school and talk about there day. They would spend the rest of the day at the beach with the night finished off with a BBQ with nieghbours and friends.

His fishing business was very succsusful. He was not a wealthy man but he had everything he wanted and his family never went without.

One day a rich American business man was visting this small fishing town and noticed the fisherman's catch as he return from his fishing trip. "that's an awful lot of fish for such a short time" he said. "was it a good day today" he asked. "no said the fisherman, just a normal day".

The business man got excited and started explaining to the fisherman that he wanted him to go into business with him.

He told him that they would grow the business, he would buy more boats and they could hire the villagers to help with the catch. They would export the fish all over the world. The village would boom the fisherman would become very rich as would many of the villagers.

Then what said the fisherman???


Well then you can retire in some small coastal town and do the things you really like to do said the business man.


Like fish and enjoy good company said the fisherman.

Exactly said the businessman, exactly.

 

[johnno261]

I havent read any other posts regarding this thread, but money to me means "Freedom". To be able to quit work tomorrow and still live comfortably for some time, to be able to go down to JB and purchase a top notch PLASMA/LCD, to be able to travel anywhere in the world every year!!
The most rewarding is to be able to help others!!!!

 

[Stan 101]

Hi Julia, I've thought about it for a short time and the most correct answer for me is that it gives me choices.


cheers,

 

[GreatPig]

I'm with those who say financial freedom & independence and security for the future, although even with sufficient money that's not guaranteed if the world degenerates to the point that money becomes worthless.

Plus I think it's a challenge. Given that something like 95% of traders supposedly lose money, being able to consistently make it will be an achievement.

Regarding capital growth vs income, my investment portfolio is primarily focused on capital growth and my trading business on income (primarily through gains though). While there's a bull market, I see capital growth as a better prospect than dividend yield.

Ultimately, if I want to survive on my investments alone, I'll need income to live off and capital gain to keep my capital base ahead of inflation. That's what I'm aiming for overall.

Cheers,
GP

 

[grumpee boi]

I think that on the whole money does mean freedom to most people. As was said before it means freedom of choice to me. The choices I would like to make are to be able to do all the things that I really enjoy and then some. First and foremost would be to spend time with my two girls and still have time for my wife and I by ourselves. I am fortunate in that I work from home so I do probably spend much more time with my family than most. I am also lucky to have a frugal wife so our pleasures come by very cheaply so we don't actually need a lot of money to be rich.

Adam

 

[Jay-684]

The one thing I never want to experience in life is to not be able to provide for myself and my family (I'm 21, so dont have a family just yet! )

So first and foremost money to me is the ability to provide the basics in life, so basically security.

I would also like to be financially independent sometime in the next 30 years, so before I'm 50. I would like to choose when I work and what I do, rather than working tirelessly for someone else to only make their wallets fatter.

A question was asked between my friends the other day of "How much money would you want to feel comfortable you'd never have to work again?"

I think $2 million in assets is probably where I'd begin to feel comfortable.

 

[Julia]

Thank you to everyone who has responded to my question with such thoughtful replies.

Time for me to make my own contribution:

I may well be the only person on this forum who has ever attempted to sustain life on a government benefit. A number of years ago, after leaving a marriage which had become violent, and being grateful to still be alive, I had no home, no money and no job. My career had been tied in with my husband's medical practice and therefore ceased to exist. My contributions to the marital home were inaccessible at that stage, as were the combined finances. I had no choice but to access a government benefit until I had retrained sufficiently to change careers and begin to build up some assets again. This was one of the most humbling times of my life. The experience is why these days (when I can easily live off the income my capital generates) I willingly volunteer my time to assist people who are in that invidious position of trying to make ends meet on a government benefit.

So in answer to my own original question: What money means to me is obviously a sense of security, as many have said, and having choices as pointed out by Stan 101.

When I go shopping or am thinking about what to buy when having friends in for a meal, I can so well recall how awful it was to go to the supermarket and have to walk away from what I would simply like to eat. Perhaps this sounds a little overstated? It is not. I saw a middle aged bloke last week who on the dole gets just over $400 per fortnight. His rent is $300 per fortnight.
That leaves $50 per week for food, car expenses, medical expenses and anything else. Clearly it is just not possible.

I was fortunate in being able to access further study and thus qualify myself for a new career in my 30's and thus gradually build up funds for my own home and then investment property and then shares. Many people are precluded from this by their various disadvantaged circumstances.

So, all up, I guess I would say having enough money means to me never forgetting what it was like to be temporarily poor and having compassion for many people who find themselves in that position without the capacity to change anything.

On a lighter note, I have to recognise with a sense of irony, that when I was struggling I used to think "when I have plenty of money I will travel often (business or first class, of course) and stay in the best hotels. Now that I can afford to do that, I just enjoy staying home more than anything!!!
Clowboy has alluded to this philosophy in his lovely story about the fisherman.
This could open up a whole new thread on perceptions/desires, fulfillment.

Julia

 

[clowboy]

Thats the thing about money,

those that have it can choose to go without it for a while but those without it can't choose to have it for a while.

 

[money tree]

"yield" doesnt mean just dividends. It can include franking credits, options, tax deductions, interest etc.

Over the years Ive seen some instalment warrants yielding over 20%. Ive seen some that offered a risk-free overnight profit of 43%.

If you were suddenly incapacitated tomorrow, how "rich" would you really be? If you have an investment portfolio that is neutral or negative cashflow, how will you survive?

Lets say you own 8 investment properties, all cashflow negative. You have however made a $1m capital gain on them (so you spend money like a millionaire). The net cashflow every week is -$200. You also have mortgage payments (or rent) of $300 wk. Then there is living expenses of $200 wk.

You NEED $700 a week to survive. What will you do? No problem you say. Sell a property.

1. OK, so we sell a property for $300k. It was valued @ $350k but you needed a quick sale. Because the property was negatively geared, you have been claiming depreciation all these years and the written down value is actually $100k. That means you have a paper profit of $200k......which you have to pay tax on. You already made $80k this year, so you are in the top tax bracket. Even with your 50% discount, you owe $48,500 in tax. The bank takes their $100k owing. Out of the $300k, less the 13k agent fees and stamp duty, you are left with $138,500.

So theres $111,500 of your $1m that vanished into thin air. You now have $888,500. Your cashflow has improved to -$675. You take $100k and reduce some debt. This improves your property cashflow to -$80 wk. The other $38,500 is kept to live off and fund health expenses, care etc.

Still, you are sinking. Your weekly cashflow is now -$580. At this rate you will be broke within 6 months.

2. A month later, you sell a second property. This time you get a fair price. Its still the same tax year. OK, so we sell a property for $200k. Because the property was negatively geared, you have been claiming depreciation all these years and the written down value is actually $70k. That means you have a paper profit of $130k......which you have to pay tax on. Even with your 50% discount, you owe $31,525 in tax. The bank takes their $70k owing. Out of the $200k, less the 8k agent fees and stamp duty, you are left with $90,475.

So theres another $40k of your $1m that vanished into thin air. You now have $848,975. Your cashflow has improved to -$650. You take $90k and reduce some debt. This improves your property cashflow to $0 wk.

Still, you are sinking. Your weekly cashflow is now -$500. At this rate you will still be broke within 6 months.

So the cycle repeats until you are cashflow neutral. By my sums, you will need to sell 6 of the 8 properties to become cashflow neutral and pay off all debt, reducing your net worth to around $650k.

Now if you had been cashflow positive from the start, you would not have had to lose $350k in equity, would not have been forced to sell anything, and would not have to take a cut in lifestyle.

So to everyone who thinks they are "rich".....take a real hard look at yourselves.

 

[bullmarket]

Hi money tree

I think the moral behind your post is that one should plan their strategies and actively manage the nett value of their portfolio, via portfolio management software, spreadsheets or whatever.

Taking the scenario you painted where all investment properties are effectively negatively geared, then hopefully the capital appreciation of the properties has more than compensated for the negative cashflows - which is the whole concept behind negative gearing properties.

Also, in your example where one is suddenly totally incapacitated, hopefully one had taken that possible scenario into account when they had put together their investment plan and taken appropriate measures like insurances, superannuation or whatever else might be appropriate etc etc to ensure they are not financially burdened to any great extent, if at all, if the worst case scenario eventuates.

cheers

bullmarket

 

[GreatPig]

Moneytree,

Income protection insurance would help, although it can be quite expensive.

As someone planning to ultimately live off my investments (which includes the trading business), being overall cashflow positive is obviously important.

However, that could be a cashflow-negative property portfolio with sufficient income from other sources (trading and other income investments) to cover the outgoings plus living expenses.

Cheers,
GP

 

[money tree]

I had a mechanic once and we got talking.

In 1989, he was worth $3m. he owned around 25 properties. As rates went up, his cashflow got worse and worse, and he was forced to sell property after property in a sharply falling market. By the end, he had no properties and owed $1m. he declared bankruptcy.

I had not really understood the importance of cashflow until that point.

it amazes me how many people consider themselves to be financially secure.

Financial security is when you can stop working tomorrow and not suffer any loss of lifestyle or loss of net worth.