I have every possession I want. I have friends with a lot more possessions but in some cases I think the possessions possess them, rather than the other way around
– Warren Buffett
I was reading a blog post today about an interview Warren Buffett did in 2012, in which he discussed some of his “rules for living” and making investment decisions. His rules are very interesting, and you can read the entire list HERE.
However, the rule that most interested me was Buffett’s take on possessions:
Keep a low overhead. “I have every possession I want. I have friends with a lot more possessions but in some cases I think the possessions possess them rather than the other way around. ”My brother is looking for a house to buy and I told him “the more expensive the house, the more expensive the stuff.” More square feet means more roofing shingles, a larger HVAC system, and more paint for the walls. A smaller house means less overhead and more flexibility.
Burton Malkiel told this story about when Jack Bogle met Buffett. “When Jack Bogle first met Warren Buffett they were at a hotel together and Jack recognized Warren, went up and introduced himself, and he said to Warren, ‘you know the thing I really like about you is you have rumpled suits just the same as I do’ and Jack and Warren have become very good friends.”
And it’s not just money. Marc Andreessen pointed out that the biggest cost isn’t money, it’s time and the missed opportunity to do something else. Buffett – apparently – avoids that.
I found this kind of funny, that one of the richest men in the history of the world thinks that possessions can be overrated. I found it particularly insightful that Buffett identified that “possessions can possess you”, and can create overhead, hassle, and complexity in life. I have always found it interesting that very often as people get older and retire, and have all the wealth they need, they always seem to want to “downsize”, and to “simplify their lives” by selling or giving away a lot of their possessions. They can have any possessions they want, but instead they want to get rid of the “stuff” in their lives and focus on what really matters.
This reality reminds me again of my belief that material possessions really only represent a certain kind of “wealth”, and that in fact they are probably the least important aspect of one’s wealth. The real “possessions” that matter are the things that can’t be counted in dollars. Our real wealth is represented by our human, intellectual, and social assets. It is our relationships with the friends and family we love. It is our health and sense of personal well-being. It is our experiences and our time. It is our intellect, education and creativity, and our sense of purpose. These are the possessions that matter. These are our “Genuine Wealth”, and the best investments we will ever make.