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The best things in life aren’t things

Posted on: December 09, 2016 | Author: Cory Boddy, CFA, CFP, Director and Investment Counselor, ATB Investment Management Inc.

At the risk of sounding like a snake oil salesman, or having this article dismissed with diet fads and self-help guides, I would like to share the secret(s) to happiness. Before I solve one of life’s great mysteries, let’s begin with why this topic deserves our attention.

We aren't as happy as we should be

In 2008, an ambitious study performed by Boston College had very wealthy people–those with fortunes in excess of $25 million–speak candidly about their lives and how happy they were. The results gave us a surprising understanding that wealthy individuals worry almost as much about money as poor people do.

Wealthy people tend to experience a unique set of challenges that detract from their overall level of happiness, including a sense of isolation and a fear for their children’s safety and well-being1. It seems that when one challenge disappears (how do I put food on the table?) another one emerges (what colour should I paint my panic room?). Money is unable to patch over all the holes that lead to unhappiness.

Can money buy happiness?

Earlier in my career, I felt that “making it big” meant finally being able to afford a new car a few steps up from my Honda Civic. While I now drive a Toyota Highlander, for about six years I was the proud owner of an Audi A4 Avant. My colleagues would tease me that it was an overpriced station wagon, but to me it was a luxury sports car (with ample room for two car seats, I might add). I loved everything about it.

I remember taking it to work for the first time: walking up to the LED headlights that looked like they were winking, then sitting behind the beautifully crafted console of shimmering digital lights and pulling it into drive. The whole experience put a smile on my face, and for many weeks the daily commute to and from work was a highlight of my day. As the weeks turned into months, however, the happiness created by my new car slowly eroded away. The commute was just a commute, and the car was just a car.

What I experienced is what psychologists refer to as “hedonic adaptation”, a phenomenon in which no matter how good something makes us feel (or, for that matter, how bad), over time our emotional state drifts back to where we started.

You would expect that many things in life should lead to a permanent improvement in our well-being, yet research shows that this drift back towards emotional status quo happens regularly after significant life-changing events—marriage, job promotions, moving to a warmer climate, winning the lottery. Why this regression occurs likely comes down to two factors.

First, once you get used to the new car, new job or new climate, you tend to notice it less and less. The positive feelings we initially experience are replaced with the day-to-day mundane such as, why is the traffic going into work so incredibly slow?

Second, because we continuously shift our standards upward, once we’ve reached these new levels they are no longer high enough. Losing weight to fit into a smaller pair of jeans feels good until you realize that there is yet another pair of jeans smaller than the ones you just purchased. Nobel-prize winning economist, Daniel Kahneman, refers to this as the satisfaction treadmill. In many ways, it isn’t the level we get to but the rate of change. This will be easy to see in the following illustration.

Mary and Joe both have $4 million. Are they equally happy? If I told you that last year Mary had $10 million and Joe had $1 million, would that matter? We’ve got to keep running on the satisfaction treadmill to feel satisfied. So, to answer the question posed earlier—no, money cannot buy happiness, at least not the permanent kind.

If we can't buy happiness, where do we get it from?

At the core of happiness are the relationships we develop with other people. Lasting happiness comes from successful personal relationships, helping others and spending quality time with friends and family.

Many of my clients tell me they get more out of giving than the actual gift itself. In my own small way, I know this to be true. There is more happiness gained from experiences than through possessions. Vacations are better than a new car (especially an over-priced luxury station wagon), and a fun evening out with good friends will likely fill you up more and for longer than say, a new pair of shoes.

Good health matters a lot too, but surprisingly, healthy individuals imagine that many illnesses would be “worse than death” and yet for people who have those illnesses, they are no less happy and, in many instances, are experiencing a renewed zest for life, saying they “wouldn’t change a thing”.

Fulfillment in life requires continuous energy, and like the relationships in our lives, it shouldn’t be taken for granted.

Future withdrawals from your portfolio...if required

My colleagues and I remind our clients that their investment portfolios are there to serve a purpose. And while part of me might be thinking, “keep your money with us and let it grow”, a bigger part of me is excited to see how my clients will use their resources in their pursuit of happiness and a life worth living. As you do this, just remember that the best things in life aren’t things.


1 Boston College. (2007, November). Boston College launches first national survey to focus on joys and dilemmas of ultra-wealthy [Press release].

This article was first published in Navigate, an ATB Investor Services publication that provides valuable insights for wealthy and institutional investors. To read the full issue, click here.

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