Tuesday, December 28, 2010

The Best Investment I made this Holiday Season.

No, I didn’t buy gold, and I didn’t buy a hot penny stock that shot up 233% in the last few months. I invested in an experience that I expect will pay dividends for years to come. It’s long been said that money can’t buy happiness, but as some recent studies have found - it depends on how you spend it!

A recent study from the Journal of Consumer Psychology found, investing in experiences is more rewarding than buying “things.” That study was mainly focused on people who spent money on activities or experiences, like going out to dinner or a movie, and those who spent money on materialistic consumption like phones, cameras or clothes. But the same holds true for stocks (To a point). I mean, investing in an appreciating asset is certainly better than sinking your money into the latest consumer electronic gadget or the new fashion of clothing, but it’s still ultimately materialistic and may not making you as happy as you think.

People invest in assets (stocks, bonds, gold, etc..) to make money. They ultimately want their money to grow, but to what end? To be happy? To be secure?

Security is important, but it does not bring happiness alone. Likewise with simply expanding your portfolio. True happiness it seems is based on what you do with that money, rather than how much of it you have. And so it is that I proclaim my best investment of 2010 to be the Christmas tree hunt with my family.

Some of my best childhood memories are from Christmas time with my family. I had a pretty normal childhood, - some ups and some downs but nothing too extreme. And nestled in the middle of those ups and downs are many happy memories of Christmas. Not just the gift getting, but the feeling of family, companionship and love.

Now as a father, I’m enjoying holiday traditions from the other angle. I’m not only building those memories for my children but for me as well, though this time around I’m the parent and not the child. My wife and I are now in our 6th year of parenting and the holiday magic has grown with each successive year.

Sure things don’t always go right. Two years ago, our truck got stuck in the mud at the Christmas tree farm and it took over an hour and much help from good Samaritans to get free. The year before that we brought our tree home only to find that the bottom branches that needed to be trimmed to fit in the stand left the bottom 3rd of the tree bare. It looked ridiculous and top-heavy. But we still talk about those years and while they were miserable experiences at the time, they brought us closer together and we can laugh about it now.

In short, doing things makes us happier than buying things.

People who spend money on experiences have less feelings of inferior social comparison - meaning that people who buy the latest “thing” may feel good until they see someone else has a newer, faster or better “thing” than they do. Experiences are personal, and so they aren’t as easy to compare and less likely to feel failed in comparison.


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