Would You Rather Have a $3 Million Home or a $3 Million Portfolio?

My colleague Nick Maggiulli asked a trivial financial question the other day:

You are right of course.

Big houses, fancy cars, nice boats, fancy clothes, expensive vacations, etc., these are status symbols.

Portfolio wealth is what you don’t see – money saved, invested and not spent. I completely agree with Nick that we should celebrate people who build wealth by not showing off.

We admire billionaires and fake millionaires who make themselves rich on social media by flaunting their lavish lifestyles. Most people should look to the Millionaire Next Door types who live within their means, save money regularly and choose a normal lifestyle with a rare spillover into their priorities.

That is my American (personal finance) dream.

Nick’s thought gave me an idea.

Let’s say you’re on a game show. I would say the Price is Right, but kids today would love Mr. Beast. What if you won a prize and had to choose between a $3 million house and a $3 million portfolio?

Which one would you choose?

We polled our audience and the results were as you’d expect:

Cash gives you more flexibility and liquidity. The house comes with property taxes, insurance, maintenance and upkeep. Money is a logical choice.

I would take the house.

Amazing, isn’t it?

I’m a numbers guy. That would be an absurd decision.

Here’s my explanation – at this stage of my life, a 3 million dollar home would give me a little extra when it comes to experience and happiness.

I know as a financial person I have to tell you that the dopamine rush you get at home will wear off over time. I read all the lessons. But that has not been my experience in practice.

Our lake house has made me happier over time. More time spent with family. Most of the time we are outside. Lots of time in the water. More experience.

I don’t get joy from watching the value of my portfolio go up. Indeed, it provides a sense of comfort and safety. But the wealth poles do not bring me more happiness in my life.

Obviously, you don’t need an expensive house to create memories and experiences. I’ve just learned that turning money into something I can use over and over again brings me joy in life. Another number on the screen does not.

If you had asked me 20 years ago, my answer would have been completely different. It might be different if you ask me in 20 years.

Your preferences can and will change based on your age, circumstances, and life experience.

Sometimes they may surprise you.

Michael and I talked about this financial activity in this week’s Animal Spirits video:

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Further reading:
Best Money I Ever Made

Now here’s what I’ve been reading lately:

Books: