Money and happiness: a lesson I learnt after 30 years in wealth management

I’VE been reflecting on almost 30 years of managing other people’s money, as well as my own, and have drawn some important lessons about our relationship with money. One big lesson: More money does not always lead to happiness. It was 1999, and I was early in my career. My most unconventional client uttered these words on Dec 28, 1999: “I’ve made enough. I will stop.”

He was 64, and had always been a different kind of investor. Every morning, he would ask me to fax him a list of stocks that had made new all-time highs the previous day. He would study the list, and then pick a few of them to buy. I remember thinking that this was the opposite of what most people did; most would wait for a pull-back before buying. If the pull-back did happen, my client would instead sell and take a small loss.

It was a one-sided relationship: I learned far more about investing from watching and talking to him than he got in return. I think I was his banker because he wanted someone young, without all the preconceived notions about how one should invest, and who wouldn’t sell him the latest investment idea of the day from the banks, which he always dismissed as noise.

As I’ve grown older, I’ve thought more and more about those words he said to me. It was two years after the Asian financial crisis. Many had lost everything during the crash.

Due to his strategy of only buying at all-time highs, he sat through the crisis period mostly in cash. As markets recovered, with Hong Kong and US equities at all-time highs at the end of 1999, he had more than doubled his account size in three years, while most other Asian investors were still nursing losses.

Over the year-end dinner to review the portfolio performance, he outlined his belief that the mindless pursuit of a bigger bank account caused more unhappiness.

I thought he was crazy. Why would anyone not want more money? He talked about his many friends who were richer than he, but deeply unhappy as they kept comparing what they had with others who had more. He said he had won the financial game of life: He had enough money to last to the end of his days. Trading was stressful and a lot of hard work. He was done. We liquidated his entire portfolio the next day.

He spent the rest of his life doing what he really enjoyed – travelling the world, painting, playing the piano, and improving his golf game. On the few times we saw each other afterwards, he always ended our talks by reminding me to figure out my personal “I’ve won, I’m done” financial goal.

Twenty-five years later, I no longer think he was crazy. I think he was spot on. It took me this long to figure it out for myself; it was triggered by my father’s passing just before Covid.

My father used to say that having money gave him the freedom of time. It was a good saying, but he didn’t live it. He spent all his time going through his bank statements, with the TV always tuned to Bloomberg or CNBC. His only life goal was a bigger bank account. Watching him, I vowed that I would not fall into the same trap.

My father died a year before Covid. My net worth jumped tenfold from the inheritance, but I received no increased happiness from the jump. Instead, what I did get was a host of nagging questions I did not have before.

Do I have a responsibility with all this? Should I be diversifying more? How do I make a positive impact via my investments? How do I measure that impact? Will the relationship with my family change?

How do I protect my assets from fraud, cybercrime, unwanted public scrutiny?

Should I set up a charitable foundation? Do I want to leave a legacy?

That more money equals less happiness will seem crazy to those with modest means, who may think: “If I had one / two / 10 / (insert your own number) million dollars, I’d finally be happy.”

As my father said but did not practise, what many people really want from money is freedom – the ability to stop thinking about money.

To have all their financial needs met so that they can spend time doing the things they love. And yet, once a financial target is achieved, the goal post is moved higher. So, instead of experiencing the satisfaction of having achieved one’s financial goal, we’re on a never-ending treadmill of desire for more.

I’ve never heard anyone say: “We’ve made enough. Let’s significantly reduce our risk and live happily till the end of our days.” Every time a goal was reached, the goal post was moved higher. Ten million. Then 20, 50, 100, 300, one billion.

When the accumulated wealth becomes significant, it brings with it a host of opportunities, but also a number of new challenges most are not equipped to navigate.

Is my money working hard enough? Who are my real friends? How do I ensure my kids grow up with a sense of purpose? Is my future son/daughter-in-law marrying my child for money?

The dream itself of becoming more wealthy brings more happiness than actually achieving that goal, which is why the goal post is moved higher each time.

The solution is that once you’ve got enough to ensure your family’s necessities for the rest of your life, to actively work at being content with what you have.

This makes me sound more like a Buddhist monk than a wealth manager, but it doesn’t necessarily mean you stop investing.

It means realising that achieving your financial target isn’t going to make a difference to your happiness. It is easier said than done. I’m still working on it.

In next month’s column, I’ll tackle the second big lesson I learnt. Watch this space.

The writer is head of investments for Singapore at AlTi Tiedemann Global. The views are solely his, and do not reflect the views or positions of AlTi Tiedemann Global or its subsidiaries. This content should not be considered as financial advice.