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It’s Not About How Much You Make – It’s How Much You Save!

7 years ago

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“If you know how to spend less than you get, you have the philosopher’s stone.” – Benjamin Franklin

To me, happiness in life is the freedom to do the things that you enjoy, whether it be the type of work you perform, pursuit of personal interests, or spending quality time with the people you love. Financial health – just like physical health – is freedom.

My favorite part of investing is that anyone, and I truly mean anyone, can do it. There are no barriers based on profession, gender, social status, race, age, or even education. If a man or woman can spend one dollar less than he/she makes each month, and then religiously invests that dollar, he/she will be on their path to financial freedom. It is that simple. The problem is that very few people adopt that habit. And the craziest part is that many of the people that don’t, are the same people that we often view as the most financially secure. I like to use athletes, musicians and other highly paid entertainers as a good example of this. While many athletes and celebrities are making seven and eight figure salaries, they can (and do) end up broke or unable to maintain their exuberant lifestyles. One in six NFL players are bankrupt within 10 years of retirement. How does this happen? Well, these supposedly “rich” people spend a dollar more than they make. The result? Instead of finding freedom, they become imprisoned by debt and obligations that they cannot meet.

This outcome is not limited to the famous. I see it across all professions and walks of life. Everywhere you look you can find people spending or “financing” more than they make. This can be very self-destructive and inevitably result in unhappiness. Each time we are tempted to take on a new debt, or buy the latest “it” item, we must stop and remember the time-tested wisdom of Benjamin Franklin. Would you rather appear rich or be happy? I’ll take happy every time.

-Chadd Mason, CEO

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Disclaimers

January 17, 2024

This material is prepared by Cabana LLC, dba Cabana Asset Management and/or its affiliates (together “Cabana”) for informational purposes only and is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. This material may only be distributed in its original format and may not be altered or reproduced without the prior written consent of Cabana. The opinions expressed reflect the judgement of the author, are as of the date of its publication and may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and nonproprietary sources deemed by Cabana to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by Cabana, its officers, employees or agents.  

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Commonly used index/benchmark definitions:  

All indices and categories are unmanaged and an individual cannot invest directly in an index or category. Index returns do not include fees or expenses. Benchmark indices will likely materially differ from Cabana’s portfolio strategies. Detailed information as to how the returns are calculated can be obtained online from the following link: https://thecabanagroup.com/disclaimers/performance-reporting-methodology/. 

Morningstar’s Moderate Target Risk index  follows a moderate equity risk preference and is based on well-established asset allocation methodology from Ibbotson Associates, a Morningstar company.  

Morningstar’s Tactical Allocation category includes portfolios that seek to provide capital appreciation and income by actively shifting allocations across investments. These portfolios have material shifts across equity regions, and bond sectors on a frequent basis. 

The S&P 500 Index is a market-capitalization weighted stock market index of 500 widely held large-cap stocks often used as a proxy for the U.S. stock market.  

The Russell 2000 and 3000 indices are market-capitalization weighted stock market indices that include, respectively, 2000 and 3000 of the most widely-held stocks and are often used as proxies for the U.S. stock market. 

The Nasdaq Composite Index is a market-weight capitalization index that covers more than 3,000 stocks listed on the Nasdaq Stock Market. What is the Nasdaq Composite, and What Companies are in It? | Nasdaq