What would it take to feel wealthy?

May 14, 2019
Feeling wealthy is definitely a mindset. What it would take for you to feel wealthy and how you define it, would differ from that of another.

Recently, author Omair Ahmad, also the managing editor for South Asia at The Third Pole, stated on Twitter: My vision of wealth is that one day I will have enough that whoever comes to my door can be fed, if they want, without question of who or why.

That got me thinking. So I posed this question: Does anyone have an articulated vision of what it means to be wealthy?

Wealth Theory responded: Wealth is the freedom to pursue your passions without the burden of owing your time or money to anyone that you have not freely offered it to of your own volition.

Dr Ajay Kamath was more granular: Enough to travel wherever and whenever I want - with my wife and son. And in a position to make huge donations every year to The Rotary Foundation, my favourite charity.

This got me thinking about goals. What financial goal must I achieve to consider myself wealthy? Since I have no dependents, no debt, and I already possess a home, the only goal I have is saving for retirement. But I don't consider myself wealthy.

Coincidentally, just the day before, Morningstar’s director of personal finance, wrote about goals.

To be fair, Christine Benz has often written about the importance of quantifying and setting goals. Your investments must align themselves to the short, intermediate-term, and long-term goals. To give your portfolio direction and focus, goals must underpin all the investing you do.

However, this time, her views hit home. I reproduce a portion below.

Morningstar's director of personal finance, Christine Benz, on setting goals

Too often, investors operate with an amorphous goal of "amassing wealth" rather than thinking through the specifics of what they'd like to accomplish.

Without clearly articulated goals, it's impossible to know how much you should be saving and investing, or how long you’ll need to do so. Nor can you know whether a specific goal is even achievable alongside other goals you might set. While buying a vacation house might be part of your vision for a financially well-off you, saving for it should necessarily play second fiddle to make-or-break goals like building an emergency fund or building up your retirement nest egg.

Yet as crucial as it is to investment success or failure, goal-setting is one of those financial jobs, like saving and investing enough, that seem almost too obvious to discuss. A lot of the investing materials you encounter in books or online breeze right by goal-setting and figuring out how much to save. Instead, they go straight to more sophisticated subjects like how to set your asset allocation, taking advantage of tax-sheltered vehicles, and so on.

To help turn your financial dreams into something that you may actually be able to achieve, it's crucial to quantify them, set a timeline for them, and prioritize them, assuming you’ve articulated more goals than you can reasonably invest for at the moment. Armed with that information, you can then custom-craft your investment plan for each goal. And once you've set your baseline goals and started investing toward them, checking your progress can serve as the ultimate financial dashboard; monitoring specific investments is secondary.

Even if you already have an investment programme up and running, it’s also valuable to make sure that your plan fully reflects your current goals. Financial objectives have a way of sloshing around. Perhaps you gave your retirement savings short shrift while you powered toward a home down payment; now that you’ve signed the mortgage papers, it’s time to get back on the stick with retirement investing. Or maybe you’re doing so well on the road to retirement readiness that you can reasonably start saving for a goal that you had previously put on the back burner, such as setting aside a travel fund for yourself.

In the coming days, we shall carry articles on how to set goals along with insights from our behavioural finance team on goal setting.

Hopefully, I should soon be able to articulate a goal on what I need to achieve to feel wealthy.

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