Invest in the Right Assets

Many Americans invest in assets like McMansions, fancy cars and tons of stuff around the house they really don’t need.

At least I assume they don’t need much of it or our countryside wouldn’t be peppered with storage facilities. We just completed a long trip to see you in Indy, Vera. It’s amazing how many storage facilities we saw along the way, even in communities that didn’t look particularly well off.

In any event, here’s my perspective on the subject of investments: buy assets that produce income.

For quite a long time, we’ve intentionally chosen to live in a smaller and less expensive house than we can afford. The same goes for autos. We drive a Subaru. And have only one. That’s enough; we have no need for more or for a luxury model.

I don’t want to mislead you though. It’s not that we do without. And it’s not that we don’t spend on things we don’t need. We don’t need the house or car we have. And I can be wasteful (food and wine and travel in particular). Yet, in the overall scheme of things, we’re not big spenders.

Because of that, we have far more freedom than we’d otherwise have.

That said, I realize I’m one of the lucky ones. Not everyone can make ends meet, much less buy income-producing assets. But quite a few people who could don’t.

In America, we’re bombarded with messages to buy. Indeed, we’re typically referred to as “consumers,” not “citizens.” We’re really good at consuming. We’re not so good at being citizens (witness our do-nothing Congress, our presidential campaigns, our public debt, the poor condition of much of our public infrastructure, and what has become a thoroughly dysfunctional political system).

But decisions have consequences. And falling for false promises — such as, the path to happiness lies in acquisition — has consequences.

Because of our seemingly insatiable desire to consume, we’re up to our ears in debt, both public and private. In the process, we’ve lost quite a bit of financial freedom as a country (as well as political clout), and it’s likely we’ll lose even more before this debt cycle has run its course. On an individual basis, we’ve also mortgaged quite a bit of our future, foregoing freedom for consumption and short-term gratification.

Given the choice between spending on things you really don’t need and buying assets that produce income (e.g., stocks, bonds, real estate, etc.), consider choosing the latter, Vera. You might just find discover that freedom is far more valuable than all the other stuff.

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