Investment Moats Making Great Non-Financial Decisions to Fund | SGX Market Updates
Investment Moats
Making Great Non-Financial Decisions to Fund a Good Life
PWL Capital’s Portfolio Manager, YouTuber and host of the Rational Reminder Podcast Ben Felix decide to dig up the research on the non-financial decisions that deserve our consideration when we make financial decisions.
“Financial decisions are never objectively good or bad; each decision should be considered for its utilitarian, emotional, and expressive benefits, and its impact on a good life. There is a lot more to a good life than wealth accumulation and risk-adjusted returns.”
Ben Felix
Ben took the evidence-based approach by going through research papers to find out what the research says about making more happy and satisfying decisions in life. I must say, we should be aware of more of these stuff.
However, there are benefits to knowing what is backed by research and also a little about why we are generally more (or less) satisfied by these decisions. It is also beneficial to read all of these in one glance and revisit them once in a while.
If you wish to zoom in on the Dos and Don’ts, go to the conclusion of this article (which is like the summary of the summary)
Circumstances and Adaption
We would think stable circumstances such as our health, and excess income above what we need for our essential expenses, wealth, geographic location, house size, physical appearances, gender, and age will affect our happiness and life satisfaction.
They affect less because we quickly adapt to the changes in these things and it affects our happiness and satisfaction less.
Some of this stuff does require a large amount of spending that you need years to build up but you might eventually be less satisfied.
Overestimating Our Happiness if We Achieve/Get ________________________ in the Future
We often overestimate the enduring impact of future events on ourselves.
This is because:
1. Didn’t realize that other unrelated events that will affect our thoughts.
2. We quickly adapt to changes and become less sensitive.
3. End of history illusion: We tend to believe that we recently become the person we will remain for the rest of our lives despite the reality that you from yesterday is different from you today.
It will be better to spend our time minute-to-minute rather than striving to achieve a perfectly imagined future.
Income Satiation Points
Money can increase positive emotion, decrease negative emotion, and increase positive life evaluation, but up to a certain satiation point.
There is an income satiation point. 2018 paper puts the global satiation point at US$60k and North America at $65k. Beyond this income, the sample did not experience more happiness.
Experienced unhappiness stops decreasing at US$75k globally and $95k in North America (Your pay can go down but cannot go down beyond a certain point).
For those who reflect upon whether they are happy (reflective happiness), the satiation points are US$95k globally, and $105k in North America.
In some North American places, life reflection went down as their income increased. The speculation is that higher income means more demands on their time, which limit the time for positive experiences like hobbies and spending time with others.
Acquiring more money is associated with hedonic rewards similar to illicit drugs. The initial experience is exhilarating but the exhilaration fades as it becomes a stable circumstance.
Questions to reflect:
1. How would your life change if you earned an extra $1,000 per month? What would you spend it on?
2. Would you work an extra 3 hours per day to earn more money?
3. How much would you need to be paid to give up your favourite leisure activity?
Renting vs. Buying a Home
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