WEALTHS BEYOND MONEY™ Book Excerpts

Selected excerpts from Paul M. Heys’ book, Wealths Beyond Money: Understanding Normal Human Spending Behavior That Will Create Multiple Wealths

The following excerpts are provided as part of the WEALTHS BEYOND MONEY™ Online Reading Room. They introduce several core ideas in Paul M. Heys’ educational framework, including normal human decision-making, spending versus spilling, price versus value, risk and the many forms of wealth beyond money.

Introduction:

“We cannot solve our problems with the same thinking we used when we created them.” — Albert Einstein

In a recent survey by Bankrate.com, twenty-one percent of the respondents said they had set aside nothing for retirement, emergencies, and other financial needs. Almost half said they had set aside ten percent or less. A recent survey by the Federal Reserve reported that a shocking number of Americans (forty-six percent) said they would not have enough to cover a $400 emergency expense.

The way we spend explains the reason for these statistics. For example, spending $50 per week on snacks, gadgets, eating out, and so on, may feel satisfying. But there’s a huge downside. In thirty years, had that amount been spent differently, it’s value would have been over a half million dollars. In forty years, the number would be over $1.5 million!

This book will help you understand why you make these unfortunate decisions every day. It’s quite simple. You are normal. Just ask yourself:

“Have I ever said or done something and, moments or hours later, wondered why?”

“Have I ever slapped my forehead and exclaimed, ‘I did it again!’ (probably not out loud)?”

“Have I ever experienced ‘buyer’s remorse’ after making a decision?”

“Have I ever made a hasty decision involving money that created strife or hardship?”

If the answer is yes, then you are not alone. Reacting to something instead of reflecting on the possible consequences is what humans do. When the results are negative, the pain is real—but not always immediate. The good news is our normal responses can be changed to normal plus, especially when it comes to spending and wealth.

In this book, you will learn a lot about yourself and what it means to be normal. You’ll also learn surprising things about something we do almost every day (spend money) and the true nature of what we hope to get in return—wealth. This means not only financial wealth but also the many experiences of personal satisfaction and expression that constitute non-financial wealth.

Because this book deals with how we spend and spill our money, it will help you understand the significant difference between price and value, the nature of risk, and especially the need to pause, reflect, and take the long view rather than react to every bump in the financial road. The book will give you a practical strategy for spending that will result in substantial wealth in the long term.

My Own Story

My early career as a U.S. Air Force flight instructor, and later as an FAA-licensed instructor pilot, enabled me to help others plan their financial journey. The flight preparations and routine procedures I taught, in classrooms and cockpits, dealt with planning and rehearsing one’s actions. These lessons were comparable to the financial advice and assistance I later gave individuals and institutions as the founding director of a commercial bank and as vice president at the international investment firm Smith Barney. Both provided the necessary steps to assure a safe journey, and a safe arrival at the desired destination.

Before retiring, my principal activities centered on assisting others to make wise and informed investment decisions. I also wrote and spoke on a wide range of subjects, including financial market history, investing practices, investment performance, financial management, and financial planning. The investments I made during my active employment years have been the primary source of my post-retirement income that resulted from the application of the principles described in this book. My post-retirement work has been driven by an acute interest in how people make financial decisions. I collaborated with Ronald E. Smith, psychology professor at the University of Washington. We researched and wrote on the subject of behavioral finance and conducted workshops which were designed to enlighten the participants on how their thinking and behavior impacted the results of their financial decisions.

We focused on the pioneering work by noted psychologists Daniel Kahneman (professor emeritus at Princeton University) and Amos Tversky (former psychology professor at Stanford). Their scientific research and findings of fact led to the creation of the field of behavioral economics, also known as “behavioral finance.” Their work led to Professor Kahneman’s 2002 Nobel Prize in economics—and the basis of his bestselling 2011 book, Thinking, Fast and Slow.

This book is intended to inspire readers to become more aware of Professor Kahneman’s and others’ ground-breaking discoveries regarding people’s thinking and behavior—specifically, how thinking and behavior affect the outcome of a person’s financial decisions, and it explains why some very normal people achieve sub-optimal results, while others (referred to in this book as normal plus) are able to achieve so much more.

I don’t claim to have all the answers. However, during the span of many decades, I have had the opportunity to work personally with thousands of people as an advisor, educator, and trainer.

Most people I encountered had achieved some level of success in their lives. Some were probably smarter than others. Some were likely better informed, and some were undoubtedly luckier than others. Most considered themselves to be good thinkers and thought of themselves as capable decision makers. They tended to be confident that their choices were likely to meet with success. In spite of their many differences, they were essentially all quite normal.

Occasionally I would encounter a person who differed from most of these other normal people. They tended to possess a great understanding of certain concepts and were content to be less knowledgeable (often ignorant) of many other areas. They were more inclined to acknowledge what they did not know, and often preferred to remain that way; choosing instead to rely on others who possessed the knowledge they lacked. They seemed to exhibit an inner confidence (about themselves and their surroundings) and tended to rely on many of the lessons of history to support their inner confidence.

The characteristic of people in this small segment of the much larger group of normal people, I came to describe as normal plus. They consistently made financial decisions that produced optimal (significantly better) results as compared with the sub-optimal results achieved by normal people.

The primary goal of this book is, therefore, to help the reader transition from “normal” to normal plus.

It’s Never Too Late

Two of the most common responses I hear when speaking on this subject are along these lines:

“That sounds great. Maybe I’ll do something about it someday.”

“That sounds great, but I’ve waited too long. It’s too late for me to change.”

Both responses are completely normal and incorrect—simultaneously! As you will discover, our natural first reaction to an unfamiliar concept is to avoid it and continue doing familiar things, even if we know or suspect the negative results. Likewise, regret over past decisions can prevent us from slowing down and reflecting on the possibilities.

Fortunately, it is never too late to apply these principles, and break through the normal, very human habits that prevent us from “spending our way to wealth.” No matter what your situation may be, it is very possible to expand your comfort zone and look at spending and wealth in an entirely new way. Through this book, it would be my great honor to guide you in that journey.

Paul

Chapter 1: On Being Normal

“Is being normal, being ordinary, really such a bad thing?Is it something inferior? Or, in truth, isn’t everybody normal?” — Ichiro Kishimi

For most of us, life involves routine. There are high and low points, but a large portion of everyday life is familiar, ordinary, often habitual. In other words, it is normal.

As humans, we exhibit similar, predictable responses to everyday situations. These can be correct and beneficial. Driving a car (after we’ve learned how) or looking both ways before crossing the street are good examples. We do these things automatically, without giving it much conscious thought. It is what normal people do. Regrettably, we all too often exhibit similar, predictable responses to everyday situations that have very costly consequences, depriving us of future wealth.

To gauge how normal you are, take a few moments to answer these five questions. Try to answer quickly, without checking the correct answers (in the back of the book) before finishing all five. Write down your answers if you wish.

1. The total cost of a bat and a ball is $1.10. The bat costs one dollar more than the ball. How much does the ball cost?

2. Mary’s father has five daughters. The names of the first four daughters are: Nana, Nene, Nini, and Nono. What's the name of the fifth daughter?

3. You are a participant in a race on a straight track. You overtake the second person. What position are you in?

4. You overtake the last person in the same race. What position are you in?

5. A person who cannot speak goes into a shop to buy a toothbrush. By imitating the action of brushing his teeth, he successfully expresses his need to the shopkeeper and makes the purchase. Then, a person who is blind comes into the same shop to buy a pair of protective sunglasses. How does she indicate to the shopkeeper what she wants to buy?

After you finish, check your answers against those printed at the back of the book. If you’re like many, you gave answers that instinctively felt true but were in fact incorrect. (You may also find that if you did not answer quickly—contrary to instructions—you probably had more answers correct.) Don’t be frustrated. Giving intuitive-but- wrong answers just means you’re normal. It also means you’re a perfect fit for this book!

Being Normal with Money

Being normal, and responding normally, does not guarantee being right. The easy, intuitive answer can often be the wrong one—based on popular ideas, like the (mostly) ancient belief in a flat earth, or more subtle factors. As humans, we see patterns where none exist, and assign causes to events we don’t fully understand. As H. L. Mencken once said, “There is always a well-known solution to every human problem—neat, plausible, and wrong.”

Being intuitive-but-wrong is especially true when it comes to money. Ordinary spending choices can have negative consequences—some- times even dangerous ones. The problem is we make these choices automatically, from unconscious habit. We believe in the value of what we get in return for our spending, but we fail to recognize what we will likely forfeit in the long term.

Acting against our own financial interest does not mean we are unintelligent or irrational. It just means we are normal: thinking and responding Reactively rather than Reflectively. (More on that in Chapter 2.) We are certainly not alone. To quote the fictional pop philosopher, Walt Kelly’s Pogo, “We have met the enemy, and he is us.”

Becoming Normal PLUS

As this book will show, being normal is not sufficient when it comes to spending and wealth. Instead, we hope the reader will come to under- stand the importance of becoming normal plus. The book will provide the reader with the information, insights, and incentive to adopt a spending philosophy comparable to that of Warren Buffett and other widely recognized, financially successful individuals.

Anyone who studies the thinking and behavioral characteristics of such financial decision makers will discover striking similarities. Most possess a high level of self-awareness. Most tend to possess core competencies and tend to be steadfast in their adherence to essential disciplines. Most also have the ability to take a long-term approach and not be unduly worried about short-term noise. While outwardly quite normal, they are what is described in this book as normal plus. They subscribe to a core philosophy that separates them from most normal people. It is a philosophy this book describes as Investorship—a new word that describes a worthy and desirable financial spending practice. It’s a philosophy that has enabled countless people to literally spend their way to wealth.

The Investorship spending philosophy is free to anyone with the intellectual and emotional resources to understand its importance and adopt it. Hopefully, that will be you.

This book is about spending and investing, and how normal human behavior can help or hinder our success in accumulating wealth. These ideas have been advanced by Nobel laureate Daniel Kahneman and others under the impressive heading of behavioral finance.

There are other books—long ones—on this subject. However, they are written for advanced readers. This book is intended for existing investors and non-investors—younger adults and others who avoid financial planning as too complicated or scary, as well as older adults who feel it’s now too late to start investing. It is also aimed at those who are already investing to a small degree—perhaps through a 401(k) or similar program—but who are unhappy or frustrated in their progress towards greater wealth.

Most of all, the book is intended for those who believe investing is too arcane for them, when it is actually something a financial newcomer can master. My goal is to help you understand the consequences of spending and investment decisions—whether they be the small, incremental ones, or the large major ones. By slowing down and reflecting on these consequences, rather than acting reactively or “intuitively,” you will be on a path to spending your way to wealth.

American consumers (people like us) are among the greatest financial spenders in the world. Certainly, we are among the most practiced. We spend more frequently, on more things, in larger amounts and in

greater quantities than almost anyone else on earth. Regrettably, most of this spending is at the expense of spending on our future financial security. Since this problem tends not to manifest itself immediately, the magnitude of the problem increases each year until, it ultimately may be unmanageable.

The purpose of this book is to help the reader understand the problems that arise out of spending unchecked by reflection on long-term con- sequences, and to modify their spending practices in ways that make their future spending the cause of financial wealth.

This book is not intended to deprive us of the pleasure and satisfaction of spending. Rather, its purpose is to alert us to the forfeiture of enormous future financial wealth that is the likely consequence of the way we often spend—unconsciously mis-allocating our dollars. In point- ing out this forfeiture, the book also shows the magnitude of potential, future financial wealth that will result from a revised allocation of our spending dollars.

Chapter 6: Wealth and Reward

“Too many people spend money they haven’t earned, to buy things they don’t want, to impress people that they don’t like.”

—Will Rogers

In Dubai, United Arab Emirates, a curious fad has emerged. In exclusive restaurants, you can order almost any kind of food or drink with a spectacular added ingredient: gold. On burgers and fries, entrées, desserts, and on cappuccinos or non-alcoholic beverages, flakes, coatings, or infusions of pure gold are liberally applied and presumably consumed. Eating gold purportedly does no harm, but it does provide a display of conspicuous consumption—literally. (It also gives an odd new meaning to the saying, “put your money where your mouth is.”)

This odd practice has spread to other parts of the world. It may say something about modern society, but it also begs the question at the heart of this book. What is wealth, why do we want it, how do we get it, and how do we retain it?

What Is Wealth?

Wealth signifies an abundance of something of value. But the word itself conjures a wide range of emotions and mental images. It comes from the Middle English “welthe” or “weolthe,” meaning happiness or prosperity. Today, it can express negatives like social inequality and conspicuous consumption. It also has positive associations like comfort, security, and well-being. In general, we want to have it, but many of us don’t have a clear definition of what wealth actually is. Neither do the gold-eaters in Dubai or those who envy or resent them.

Wealth, or prosperity, is about more than money or the things we buy with it. To be wealthy includes higher aspirations like generosity, social connection, exploration, and self-expression. Good health, personal satisfaction, and good memories are also essential to the concept of prosperity. And wealth is also associated with your reputation or position of influence. But money is still essential. Financial wealth— the subject of this book—is fundamental to attaining many of the things we associate with being wealthy.

Of course, some intangible forms of wealth are attainable without the use of money, or without large amounts of it. A Buddhist monk or other unworldly person can be said to have great spiritual wealth. True practitioners of simple lifestyles also experience a measure of wealth unknown to conspicuous consumers. However, even these wise or fortunate individuals have needs that must be met by the use of money. At the end of the day, our “net worth” as humans still involves a curious collection of needs, admirable qualities, and life experiences. Attain- ing most of these requires a sufficient quantity of spendable wealth.

Who Is Wealthy?

Mere financial capital does not make a person wealthy. A useful way to understand true wealth is to look at those who really have it—and those who only think they do. We’ll start with the latter.

One example is a lottery winner who has received an unexpected (and wildly unlikely) influx of cash. All too often, he or she begins spend- ing that money on expensive things that make them more conspicuous to those around them—creating an illusion of wealth. In their minds, other perceptions are paramount. The combination of conspicuous consumption, and even acts of fraud to help maintain that conspicuous consumption, too often results in total loss of the money and can lead to moral and legal jeopardy. Another example, convicted Tyco CEO Dennis Koslowski, infamously spent $6,000 on a shower curtain, $2,000 on a trash can, and over $2 million on his wife’s birthday party. The only way to sustain such extravagant spending involved widespread accounting fraud that eventually alerted the SEC and led to fines, restitution, and a prison term.

The lottery winner who loses everything, and the CEO who commits fraud to sustain their conspicuous consumption, do so because they lack non-monetary capital. Such capital includes qualities such as motivation, an appropriate level of knowledge and understanding, wisdom, and discipline. Those possessing these qualities are often known for their long-term vision and creativity, their ability to see things in context, and their patience in the face of adversity. As a general rule of wealth, those who develop sufficient levels of non-monetary capital tend to be successful in generating and sustaining greater financial capital.

This doesn’t mean those lacking these qualities are unintelligent. It simply means that their unconscious bias towards conspicuous consumption has precluded a more thoughtful, System 2 approach to spending and meeting genuine needs over time.

Fortunately, there are also examples of those who possess significant non-monetary capital and are consequently financially wealthy. Businessman-entrepreneur Warren Buffett has shown great capacity for long-term thinking, weighing consequences, and deferring short-term gratification. The “big picture” quality of his prosperity includes the fact that he famously strives to give much of it away—often through the philanthropic efforts of others who possess significant non-monetary capital.

Such qualities are attainable by everyone. But that poses a quandary. Even when we know that wealth is about more than just money, we still need to spend it throughout our lives. Monetary wealth—the means to higher, more aspirational goals—is the very thing we always seem to lack in sufficient quantity. Or at least we think we lack it. Our normal, Reactive, often unconscious perceptions may be preventing a more thoughtful view of our actual wealth potential. Even with such a striking example of future accumulated wealth, it’s hard for many to see beyond the immediate need—consumption— and adopt practices that result in greater monetary wealth over time. Our understanding of wealth is limited by our tendency to view things in the short term. We see present-day examples of conspicuous consumption on the street, in the media, and in the unending stream of ads. These reinforce a notion of wealth based on things that do not retain value. We cannot see the future—no one can. As a result, the potential for predictable, sustainable wealth seems less real.

This takes us back to the previous discussion of what is normal. As with other matters, we tend to favor our intuitive, Reactive (System 1) feelings about wealth over our Reflective (System 2) ability to pause, reflect, and reason about it.

How We Feel About Wealth

We unconsciously measure wealth by the thing money proverbially can’t buy: happiness. We gauge it by our health, our pleasant memories, our cherished possessions, and our personal relationships. As we discussed in the previous chapter, those things can be perfectly valid needs. But they are ends or goals, not the means of meeting those needs. With barter long out of fashion, money is the only practical way to reliably measure our present or potential future wealth.

But it’s not that simple. When it comes to making decisions affecting wealth, our human, subjective perceptions have enormous influence. Kahneman himself demonstrated this in his Nobel prize-winning work on prospect theory. We are prone to making wealth decisions based on preconceptions of immediate emotional impact—regardless of the actual, provable outcome.

We tend to over-rely on subjective feelings when it comes to wealth. Mere changes or fluctuations in wealth seem more important than its long-term value. This can be the case even when the subjective experience is unfounded or misleading. We are emotionally averse to loss, even when that loss is demonstrably a short-term phenomenon. We are also remarkably sensitive to relative changes in wealth. Losing or gaining $100 seems way more important when starting with $200 than it does when starting with $2,000.

Wealth is an objective reality governed by our subjective perceptions. We either have enough money to satisfy needs and wants or we do not, but our feelings on the matter are more complex and can affect our

actions—not always for the better.

Consume: Now or Later?

Our perceptions govern the two different modes of spending. One is for immediate consumption, on things that may be necessary or use- ful—or at least gratifying—but that will invariably decrease in value.

The other is for future consumption, on things that will likely increase in value, even though they are less likely to be noticed. They represent future wealth. A new car—something that can be seen in the present— will only depreciate. However, a portfolio—typically unseen, unless you’re prone to bragging—will likely increase in value, making it more likely that you can have that car in the future. That type of appreciating wealth is convertible into future wealth.

However, our Reactive, System 1 impulses make it difficult to choose convertible wealth over immediate consumption. We are prone to see- ing the immediate need as more pressing than the future potential, and too often sacrifice it.

Choosing to spill our wealth for short-term consumption is rooted in Reactive biases and thinking errors. One of these is cognitive ease. Consuming something immediately is a familiar activity. It’s easy, natural, and perfectly normal. So, it seems truer than something novel, hard to imagine, or requiring thought or reflection—like the abstract notion of future wealth. Advertisers and retail marketers know this well when they display candy and gossip magazines prominently at the check-out line (or perhaps more accurately, the “checked-out” line.)

This can blind us to the lost potential that spilling represents.

To justify a consume-now decision, we also tell ourselves stories that we believe to be true. This habit, called associative coherence, leads us to make unwarranted associations between events, circumstances, and occurrences. Our minds naturally draw false conclusions, such as believing that conspicuous consumption of new cars or gold-encrusted steaks is somehow proof of wealth rather than the opposite.

We also engage in substitution, answering a simpler (usually simplistic) question than the harder one actually required by the circumstances. Instead of grappling with “What will this decision mean for my financial wealth 20 years from now?” we ask, “What will my peers think about me in this new car?” Like other Reactive habits, it makes a life decision seem easier but actually does the opposite.

Inconspicuous Wealth

To offset our normal, short-term attitudes about wealth, we must learn that actual wealth is by definition inconspicuous, if not invisible to outward appearances. Wealth is a combination of:

• sound principles,
• the right ingredients, and
• sufficient time to produce the intended results.

The last point is extremely important, as we will explore later in the book. Wealth seldom if ever occurs immediately or even visibly. Pre- occupation with the outward appearance of wealth is usually an indicator of someone who possesses an oversized ego—of someone no- where near as wealthy as they hope others perceive them. In fact, the focus on outward appearance indicates the opposite of wealth.

For example, consider a soon-to-be-obsolete accessory: the wristwatch. A well-made, generic watch tells the time, and perhaps the date. On the other hand (figuratively, not literally), a Rolex “tells” something else. The price of a Rolex ranges from a few thousand dollars to over

$17,000. By spending that amount, wearers accept the notion, rein- forced by years of brand marketing, that a Rolex is evidence of great wealth, status, and success. The brand name itself is synonymous with conspicuous consumption and prestige.

Both the Rolex and a high-quality but generic watch are durable, well-designed, comfortable to wear, reasonably attractive, and of course accurate and convenient. However, the Rolex represents a spill- ing of money, as we learned in Chapter 3. The spilling is not just the enormous price differential, but the future wealth forfeited by not following Investorship principles with that money.

Ostentatious display is not only an indicator of the lack of wealth, it can also be the cause of its destruction, as in the earlier example of lottery winners and their excessive spending on luxury items. They feel wealthy in the moment because their Reactive tendencies are fully de- ployed. But too often their financial wealth—mainly things that de- cline in value—is dissipated and those same Reactive impulses prevent them from securing actual, long-term, appreciating wealth. A better model involves wealth that is inconspicuous, and even boring.

An example of inconspicuous, boring, but ultimately prolific wealth is the stock portfolio. If you make regular contributions to an index fund, almost no one will notice. Contrast that with the attention you could expect by spending the same amounts on fancier cars, prestigious watches, designer clothes, or lavish vacations. However, the portfolio typically generates actual results while the glamorous alternative does not. Even attempts to make a portfolio more exciting or brag-wor- thy—by engaging in day-to-day tinkering with individual stocks— will almost always result in lower returns, as we will see in Chapter 8.

The feelings of excitement or pride instilled by conspicuous spend- ing behavior—on luxury goods, private airplanes, or even in cocktail party bragging about your too-frequent trading—are invariably false indicators. Real wealth, fueled by your non-monetary capital, is unobtrusive but ultimately powerful and sustainable.

Wealth and Investorship

As any good vintner will tell you, good wine is the result of sound principles and practices, the right conditions and ingredients, and time. These in turn will enhance the wine’s reputation and, in the hands of competent marketers, generate more demand and a higher price.

However, the reverse is not true. A prestigious brand label may or may not represent a wine producer of the highest standards. But the brand itself—and the price of that brand—are not a guarantee of quality or value.

When asked what it takes to become an investor, the answer most people give is “money.” In fact, the real answer involves the five qualities of Investorship. Money, or financial capital (#6), is the natural outcome—not the prerequisite—of following these principles.

Motivation—the desire to achieve a specific, quantifiable, financial goal—may seem obvious, but it must be ac-
companied by the desire to do so by spend-
ing differently, on things that will increase

in value.

Knowledge & Understanding must be specific and limited to what really needs to be known. It is possible to know too much detail—about a company, for example—to the extent it will keep you from acting.

Skills are the subject of later chapters, and
are summarized in Appendix A. Such skills are not overly complicated. It is far easier to understand the mechanics of investing in the right index fund—and leave it there for the long term, with only occasional review—than it is to tinker with your portfolio on a frequent basis. As we discussed in Chapter 5, such tinkering typically leads to under-performance.

Wisdom is derived from the continuous application of Reflective, System 2-based knowledge and skills, reinforced by the steady but typically boring and inconspicuous accumulation of money.

Discipline is perhaps the most critical quality. A major component of wise spending is time—allowing long-term growth to occur without interruption. It requires discipline and patience to ignore “breaking news” of a short-term stock decline and resist the temptation to sell. This is something our Reflective reasoning understands, but which is always under siege by immediate circumstances. Sometimes, the secret lies in finding ways to short-circuit temptation.

Money, or financial capital, is the happy result of application of the previous five principles. Over time, the habits of Investorship will be- come part of our Reactive responses, enabling us to make the correct choices with less mental effort.

Laibson’s solution—mandatory restraints and related changes in the laws governing retirement accounts—are specific to one form of in- vestment. In fact, voluntary, irrevocable restraint would be a good thing, but investors should also find other ways to “lash themselves to the mast.” As we will explore, there are other, more positive ways to give investments the time they require. Besides limiting our ability to spill, we must remind ourselves of the amount of wealth already accumulated and (more importantly) the vast amount of wealth represented by the passage of time.

Lashing Yourself to the Mast

In 2013, Harvard Economics Professor David Laibson used a metaphor from Homer’s Odyssey—where Ulysses tied

himself to the mast of his boat to resist the Sirens’ tempting calls—to illustrate a significant threat to wealth. In this case, the temptation is to spend too easily what we have invested for the long term.

Laibson posed the notion that an enemy of long-term wealth building was the liquidity of today’s investments. “In the realm of retirement saving, we have

401(k)s and IRAs where the money is basically liquid,” he said, pointing out that with little or no penalty, investors could withdraw funds for

many reasons, ultimately sacrificing long-term growth.

Laibson noted that every year, over $100 billion “leaks out” from such accounts before the holders reach retirement. He proposed an alternative, giving people the option to decide

how much liquidity they want—choosing to “lash themselves to the mast” for a percentage of their accounts.

In Investorship terms, when the temptation to spend (spill) occurs, the investor has already chosen to stay with their Reflective principles and limited his or her ability to succumb to the Siren call of Reactive impulses.

The Reward

Ultimately, wealth is a reward for your labors, and an assurance that both present and future needs can be met. Money is the means of do- ing so, but money is not the sole component of wealth. Rather, our core values—our store of non-monetary capital—dictate that we broaden our notion of wealth to include intangible, sometime unglamorous goals that meet our own needs as well as those of others.

A shallow notion of wealth—the possession of highly-visible, status-oriented objects that decline in value—must be replaced by an Investorship model. This means our spending must include a large proportion of assets that increase in value. These are usually inconspicuous, if not invisible.

In today’s consumer culture, this basic concept seems strange. But in order to spend your way to wealth, you must be able to apply the same practices involved in making fine wine: sound principles, the right ingredients, and time.