No, We Can’t

Jonathan Clements

MOST OF US WILL never be fabulously wealthy and we’ll never earn huge incomes. Self-help authors, get-rich-quick seminars and motivational speakers might try to convince us otherwise. But if we turn to these folks for assistance, they’re the ones who typically make heaps of money—at our expense.

Such hucksterism doesn’t just carry a short-term cost, however. It also causes us to think about our lives in the wrong way, leaving us with an unwarranted sense of failure and distracting us from the right path forward.

Playing Our Cards. I bristle when I hear people say, “You can be whoever you want to be.” That simply isn’t true. In my 30s and 40s, I used to run races from one mile through to marathons. I never toed a starting line unless I felt in the best shape possible, or pretty darn close. And yet I could only run so fast. I would have loved to knock off a sub-four-minute mile. But it wasn’t in the cards. Not even close. The best I could manage was just below five.

Our physical limitations are easily enumerated. Our other limitations are harder to measure. But they’re just as real.

For instance, psychologists believe we all have a happiness set point: Some of us are simply happier than others. Think about your friends and family, and you’ll quickly realize this is true. Similarly, most of us are well aware of our more obvious individual weaknesses. I’m tone deaf, lousy at advanced math and struggle to learn foreign languages.

Fortunately, we also all have strengths. My skills include understanding financial issues and explaining them in plain English. I have been lucky: Society puts an above-average monetary value on the skills I possess.

No doubt, with more hustle, I could turn my particular set of skills into an even bigger paycheck. But there’s a limit: I’m never going to make CEO-type money. Still, I’m grateful. I live at a time when my abilities are fairly highly valued. A few hundred years ago, being able to explain complicated financial issues in plain English would likely have qualified me to dig ditches.

The bottom line: Most of us could do a better job with the hand we’ve been dealt. But we shouldn’t fool ourselves. We can’t ask for an entirely new hand.

Losing the Magic. How can we get more out of the cards we have been dealt? If we can’t have a career that earns us great gobs of money, maybe we can amass those gobs by hitting an investment home run.

I’ve seen plenty of people try to speculate their way to financial success using all kinds of dubious strategies. They day-trade stocks. They buy investments on margin. They bet everything on a few stocks or a single sector of the market. They trade options. They jump in and out of the stock market, trying to catch upswings and sidestep market declines. They hitch their fortunes to some financial guru. They use a boatload of debt to buy a fistful of rental properties.

Underpinning these strategies is the notion that there’s a single product or strategy that will answer all our financial prayers. It’s out there somewhere. We just need to find it.

But, of course, the search proves futile. There are no magical financial solutions, and yet all too many people spend their entire lives in desperate pursuit.

Finding Our Answers. The reality: We can’t be anybody we want to be and we won’t get rich overnight. The possibilities are not limitless. Our lives are not Disney movies. Except in a few rare instances—where success is often built on a modicum of talent and an excess of luck—we will not earn ridiculous amounts of money and we won’t end up fabulously wealthy.

That might sound like a downer. But in truth, it’s liberating. We can stop hankering after fat paychecks we’ll never collect and wealth we’ll never accumulate. These things were never in the cards. Maybe more important, they aren’t the right yardsticks by which to measure our lives and, if by some slim chance we achieve all that we desire, we would likely be left with a nagging sense of dissatisfaction.

What happens once we put the fanciful nonsense behind us? We free ourselves to focus on getting the most from the money we do have. We can invest to meet our goals, rather than to amass some mythical sum that we imagine will mark us as better people. We can focus on spending our existing dollars wisely, rather than constantly hankering for more. And we can devote our days to doing what we do best, rather than imagining we ought to be doing something else that might be more lucrative—but which we may not enjoy and for which we simply aren’t cut out.

Yesterday’s News

IN RECENT WEEKS, I have been leafing through—and, in most cases, tossing out—the newspaper and magazine articles I’ve written since 1982, when I started work as a 19-year-old intern at a biweekly suburban newspaper. No surprise here: Many of the articles had little or no lasting value. But in perusing my old personal finance articles, I was also struck by four thoughts:

  • For most of my career, commentators have worried that stocks are overvalued and that interest rates couldn’t fall much further. One day, I assume, they will indeed be right.
  • I would occasionally tip my hand on which market segments I thought were attractive, and my track record was no better than a coin flipper. Welcome to the dilemma faced by every personal finance writer: You know the best money advice is timeless, and yet editors demand something newsy that justifies publishing the article today.
  • Even as I grabbed news hooks, I dwelled on core financial principles in column after column. This was the stuff that was useful—but, in retrospect, I sure sounded like a broken record (and probably still do).
  • Wall Street has become far friendlier to everyday investors. In many articles from the 1980s and 1990s, my sparring partners were actively managed funds, high investment costs, and commission-collecting brokers and insurance salespeople. But those fights have been largely won. Today, the investment landscape is increasingly dominated by index funds, low expenses and fee-only advisors.

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