Die with Zero vs. The Simple Path to Wealth
Letter on using contradictory ideas to form your own perspective
Welcome to The Milan Letters. Each week, I share one quote, one reflection, and one worthwhile read on business, productivity, and living well.
Favorite quote of the week:
“The test of a first-rate intelligence is the ability to hold two opposing ideas in mind at the same time and still retain the ability to function. One should, for example, be able to see that things are hopeless yet be determined to make them otherwise.”
— F. Scott Fitzgerald
Something worth thinking about:
To form your point of view on something, start by considering the extremes.
Learning about the extreme opposites of an argument or topic creates a spectrum. If you reflect on the ends of the spectrum long enough, you’ll naturally come to your own conclusions.
For example, I wanted to figure out my thoughts about money—something we spend so much of our time earning, yet never take the time to learn about. Because of my ignorance, I resolved to spend most of Q4 last year reading finance books.
I started with The 5 Types of Wealth by Sahil Bloom, followed by The Simple Path to Wealth by JL Collins, A Random Walk Down Wall Street by Burton Malkiel, Poor Charlie’s Almanack by Peter D. Kaufman, and The Little Book of Common Sense Investing by John Bogle. Beyond the books, I watched interviews with finance guys like Mohnish Pabrai, Scott Galloway, and Morgan Housel, and lurked on the Bogleheads subreddit.
What did I take away from all of that financial consumption?
Nobody knows where the stock market will go, and trying to time it is a loser’s game. (Stock picking also appears to be a loser’s game.)
Over the long run, index funds (and eventually bonds as you get older) appear to be one of the best places to park your hard-earned cash if you want to get a return while outpacing inflation.
Once you’ve invested your money and found your preferred asset allocation (X% in domestic investments, Y% in international, Z% in bonds, etc.), keep reinvesting and resist the urge to peek. Constantly checking your portfolio can cause you to sell early, rather than letting compounding do its thing.
If you zoom out of the chart far enough, the stock market appears to have a steady (but jagged) rise upward. Through wars, pandemics, crashes, and economic uncertainty, the graph continues up and to the right. Things can change, but going as far back as we’ve had a market in the US, that’s been the pattern.
How you invest your money is a very personal decision, so knowing your risk tolerance is crucial before you start taking advice from others. A good rule of thumb, though, is to always have 6 months’ cash saved up before you start investing.
There are psychological reasons why we make bad decisions, especially with our money. It’s worth knowing them (look up The Psychology of Human Misjudgment by Charlie Munger).
JL Collins’ rules are worth living by: spend less than you earn, invest the surplus, and avoid debt.
Now, the point of this letter isn’t to give away finance tips, though you’d do well to reflect on the ones above.
The point, as I said at the start, is how I arrived at my perspective on money by seeking out opposing views on the topic.
After all that research, I jumped to the opposite end of the spectrum, reading books that run contrary to everything recommended above, like Die with Zero by Bill Perkins.
As the book’s title suggests, Perkins’ main argument is that, if you’re aiming to maximize your fulfillment in life, your goal should be to die with zero dollars in your bank account.
You read that right.
Exactly $0 at the time of your death.
There are a few supplementary points worth noting from Perkins’ book:
Your goal in life should be to maximize your experiences, not your net worth.
You can always make more money later, but you can’t get back time or your youth.
Some experiences are age-dependent. Chances are slim you’ll be running a marathon in your eighties, so if you want to run one, do it while you can.
Investing in experiences gives you a “memory dividend.” Every time you think or talk about the original experience, you benefit in the form of good feelings and moments with others. As you get older, those compounding memories will be all you have.
Money is life energy. By oversaving, you’re wasting your life energy since money represents hours of your life you spent accumulating wealth you’ll never use. Dying with zero means you spent every ounce of your life energy while you were around.
So on one end of the scale, I have Collins’ advice to live below my means and invest the savings in an index fund. On the other end of the scale, I have Perkins’ advice to invest in as many experiences as I can while I’m young (since some experiences will be closed off to me as I age due to declining energy and health).
Both arguments are compelling.
I suspect most of us probably sit too far on one end of the spectrum: we spend too much . . . we save too much . . . we wish we’d traveled more in our youth . . . we wish we’d spent our youth investing more and not frittering away our money on ephemeral experiences.
I’ve come to realize that no matter which route you take with your money, you’re bound to have some level of regret, so it’s best you choose your regret consciously, rather than living your life on autopilot.
All of this pondering leads me to my own point of view, one that prioritizes striving for equilibrium as much as possible in life, especially when it comes to money.
My mantra has always been to be ambitious without being imbalanced.
I don’t believe in single-mindedly chasing a goal while neglecting other equally important aspects of my life. I refuse to be the successful entrepreneur who lets his relationships and health deteriorate. I refuse to be the guy who hoards the money he’s spent his life earning (getting satisfaction and psychological safety from digital numbers on a screen) while never having created irreplaceable memories in the real world.
I know a guy with more money than he’ll spend in this lifetime who dreams of going to Japan. Yet the chances are slim he’ll ever go because of some internal fear around money holding him back.
I refuse to be like him.
Therefore, my view on money is now this:
The hedonic treadmill is a real thing, and if there’s any one skill worth cultivating, it’s the discipline to be able to reject the siren calls of endless wants and needs.
As the line often attributed to Albert Einstein goes, “Compound interest is the 8th wonder of the world.” You should always let a portion of your money experience such a wonder—whether in a high-yield savings account, an index fund, or another investment. Every day that passes becomes a day in your favor.
Yet life is incredibly short, and you can’t take your money with you. Aim to have experiences in life. Visit one new country a year, and if you’re lucky, two. Have moments outside your comfort zone. Try a new dish. Take your family and friends out to dinner every now and then. Give to others while you’re alive. These are equally important investments in your life.
So there you have it. That’s my new view on money—to save, invest, and spend on experiences, to varying degrees throughout the year.
There are no percentages to share here, since everyone’s financial situation is different. But as with all things, aiming for balance will always be a constant recommendation of mine, no matter what stage of your life you’re in.
Next time you’re forming your perspective on something, consider seeking out opposing views, reflecting deeply, and challenging your assumptions.
You’ll be surprised at what insights you come to, balanced insights that will be uniquely your own.
One good find worth your time:
The Simple Path to Wealth by JL Collins
If there’s one book I’d recommend on personal finance, this is it. Think of it as Atomic Habits but for your money. Even if you don’t follow every idea Collins recommends, you’ll be better off for having read it. Trust me.
Until next time,
Diego
PS. Most of this letter was edited while on a train from Prague to Vienna. Seemed fitting for a post about remembering to invest in experiences.