Money Has No Intrinsic Value

“Money has no intrinsic value, only relative value.  Its worth is measured by the ability to exchange it for something of value to the owner.  In this light, the man who has no money and no wants is in the same position as one who has all the money in the world but cannot buy what he wants.  In both cases, money is irrelevant because it cannot accomplish its purpose.”

-Alan Gotthardt 

My industry, arguably as a result of our society, is guilty of obsessing over money.  Quantifying everything.  Building net worth.  Investing for abundance.  And we spend far too little (if any) time discussing what the money is to actually be used for. 

Around the halfway point of my career I learned that we should start talking about goals before talking about strategies.  And around the three-quarter mark realized that was even too presumptuous, and we needed to zoom farther back out and talk about values.  And so that’s where I start now.  Values lead to goals; goals lead to strategies; strategies fulfill values.  

I agree with Gotthardt - money itself (no, I’m not talking about fiat currencies) has no intrinsic value.  Its only value is its ability to be exchanged for something else we value.  

Like time, or
Generosity or
Family or
Interesting Resources 

1. Elizabeth Dunn - Happy Money: The Science of Happier Spending
I had the supreme privilege of hearing Dr. Dunn speak at the XYPN Live conference earlier this week.  Her book, Happy Money, is the single most common book I hand out to clients.  If you haven’t heard me preach her research, then take this as a nudge to perhaps give it a read.  She scientifically identifies five ways to measurably enhance the joy received by money: buy experiences, make it a treat, buy time, pay now/consume later, invest in others.  Notice a topic lacking?  Nothing pertaining with obsession over net worth statements.  

2. Dimensional Fund Advisors - Mutual Fund Landscape 2018 (video)
Over the past 10 years, only 20% of actively managed equity mutual funds have out-performed their category benchmark.  Over the past 15 years, it’s even lower - 14%.  Well no big deal, right?  Just choose those of the 20% that out-performed.  Not so easy.  Of the top 25% of performing funds, only 29% of those continued to out-perform.  So picking funds based on past performance alone only gives you the same odds of chance alone (1 in 4) of continuing that out-performance.  The whole debate of active vs passive managers will always exist, but the evidence stacks up hard against active managers who experienced success in the past continuing to do so.  

Speaking of values - one of my values is quality family time.  After getting back from the conference, my wife and I were able to take our boys to West Lampeter’s Annual Fair between the rain storms, and snapped this photo of our animal-loving 4 year old (above).  

I’ll wrap up this week asking this: do you spend more time reflecting on your own values or on your own finances?  I’m wearing my No Shame No Blame hat, because it’s a question I need to regularly ask myself. 


PS - as you read this, you may have thought of someone who could relate.  If you think they’d find this email helpful, feel free to forward it to them- and let me know if you have questions or feedback on money and values.
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