You might have noticed that in recent weeks the sharemarket has taken something of a battering. This happens from time to time, and the more mature one becomes, the more it feels like we’ve seen all of this before. It’s still a bit unpleasant, though, to see prices of the shares you and your adviser so carefully picked falling just like all the others.
The price of everything and the value of fun
MY FINANCIAL adviser rang me this week. We haven’t been together long – only since, you might recall, I dumped my previous money man when he turned up to a meeting at the farmhouse in a new Lamborghini.
My new adviser is somewhat more conservative. She drives something dull and Japanese (at least, that’s what she turns up to the meetings in; she could drive anything at all on the weekends, for all I know), but she understands my love for cars and was a willing accomplice in August this year when I turned my attention to a second-hand Ferrari. A Ferrari F12tdf, in yellow, to be precise.
Just a quick update: the purchase didn’t go ahead. Not because we couldn’t raise the funds, but because a more pressing, short-term issue raised its head, which I won’t bore you with here (there’s plenty of other things I can bore you with instead). And as it turns out, I’m glad it didn’t happen.
‘For me, and I imagine for many readers of Madam Wheels, ‘living well’ means being able to own and drive great cars and actually having some fun.’
But when I picked up the phone my adviser seemed remarkably upbeat. She wasn’t encouraging me to sell, and she wasn’t encouraging me to buy more. She was checking in, as the young people say, to answer any questions and to offer her professional judgement on any thoughts I might have. In other words, she was doing the job of a true adviser, rather than that of a salesperson.
This is a refreshing change. I well remember Lamborghini Boy calling me during the week of a market rout some years ago to encourage me to tip more money into my share portfolio. Thinking he could press my buttons by talking to me about cars (not an unreasonable assumption) he asked: If that car you have your eye on falls 15 per cent in price, would you be more inclined to buy it, or would you wait until it was expensive again and then buy it?
‘I do not rely on my cars to satisfy my financial needs, I need them to satisfy my hedonistic tendencies.’
It’s a superficially attractive concept – but he was a superficially attractive man, but it took me time to work that out. If the value of my investments fell – if I sold some, or if the market fell – then he got paid less. So he didn’t ever want me to sell, and from time to time he’d be wanting me to buy more, to top-up my portfolio, so he didn’t lose income. He hated it when I bought another car, because he hadn’t worked out how he could charge me a fee based on the value of a McLaren.
I pay my new adviser a monthly retainer, and she doesn’t care if my money is tied up in the sharemarket or in a new Ferrari. If I’m happy, if I’m solvent and if I’m going to be able to continue to live comfortably for the foreseeable future (and pay her monthly retainer), her job is done and all is well between us.
My new adviser has given me a fresh perspective. Investing doesn’t have to be just about accumulating more and more; it must be about something significantly more holistic: living well. For me, and I imagine for many readers of Madam Wheels, “living well” means being able to own and drive great cars and actually having some fun.
What my cars will be worth in five or 10 or 15 years’ time or longer is anyone’s guess, and really not important. I do not rely on them to satisfy my financial needs, I need them to satisfy my hedonistic tendencies. It’s a mistake to confuse those needs, and it’s a mistake to let one completely overwhelm the other.
So yes, while it’s obviously better to buy something for the best price you can, the reason you’re buying it is also important. If I could not buy a car unless I could be sure I could later sell it for more than I paid, I might not buy it in case it’s worth less when I need it most. But while it’s in my garage its value is apparent whenever I need it. How do you put a price on that?
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