Reader Poll: What would make you feel richer? Posted on April 21, 2011 by Adrian What would make you feel richer? More Income? More Net Worth? View Results Loading ... Feel free to also leave a comment explaining your answer; the more the merrier 🙂 Be Sociable, Share! Tweet Related
I voted for more net worth, but if there had been a “it doesn’t matter” choice, I would have voted for that instead.
Net worth is only useful to the extent that it can be used for something – i.e. spent. If you want your net worth to last indefinitely, then you can only spend that portion of the return on your investments that is left after reinvesting enough to at least match inflation. Whether that return is in the form of dividends, rent, interest, capital gains, business profits or lottery winnings, conceptually it is all income. So you need net worth to generate the income, but it is the income (broadly and loosely defined) which enables you to spend freely in pursuit of your life’s purpose with the knowledge that you are not spending at a rate that will eventually deplete the real value of your capital.
Of course, if income means income from employment, then I’ll take the net worth any day.
“ff income means income from employment, then I’ll take the net worth any day.”
@ TraineeInvestor – Yes, for the purposes of this poll, I mean ‘active’ income e.g. from employment. Thanks for highlighting that!
I wish you had a box that read “Bernanke keeling over, the USD gaining 30% and the AUD declining 40%”- I would have easily have voted for that one!
Pingback: What would make you feel richer?- 7million7years