There are people in this country that make 401(k) investments by bringing up a comparative chart of the last year, three-year, five-year, and ten-year performance, and then making automatic paycheck contributions based on what had been the hottest performers over that period of time. If you don’t enjoy spending a lot of time thinking about investing, it has a certain intuitive appeal: Why not go with the five letters that can report 10% annual returns from 2004-2014 rather than the five letters attached to a 3% annual return?
You may have noticed that on the right bar of the site, I have added a link to Dr. Thomas Stanley’s excellent book “The Millionaire Next Door” (full disclosure: if you click on the book and purchase it, I receive a commission). But even if you don’t buy it, it’s cool if you go to the library and check it out, as the important thing is that you read it.
It really becomes apparent that there is a difference between being rich and appearing rich. This whole image that being affluent is about spending money recklessly and only buying high-end ridiculous consumer goods is completely out of line with the reality of those who build a net worth that exceeds the $1,000,000 mark (my side commentary: I find it nuts that being financially independent is often associated with expensive homes, cars, schools, etc. when I see the benefits of financial independence being that you can spend money on the little things without thinking twice about it—you can go to Subway and get whatever sandwich you damn well please, without worrying about whether it’s on the $5 menu).