How much is enough

How much is enough

How much is enough

One of the recent trends I have observed in my close circles is that most discussions with old friends nowadays invariably lead to the topic of “How Much Is Enough?” 

It could be a factor of our growing age and the realization that the desire to accumulate a fortune is less exciting now than in our younger days. COVID-induced uncertainties have probably accelerated such discussions. Whatever the reasons, let’s try to answer this question via this post.

While watching a web series, ‘Scam 1992 – The Harshad Mehta Story’, I couldn’t help but wonder how a super-talented and highly ambitious person gets greedy and envious, which ultimately leads him to destroy his reputation, business, and finally himself. In the last episode of the series, Mr. Mehta was quoted as saying,  “I have realized that all I need are a few crore rupees (1 crore rupees = 133,000 dollars) to live comfortably.”.  Unfortunately,y this realization came too late for him.  Despite playing with thousands of crores during his peak, he died in very poor conditions, in jail. 

Fast forward to current times, and we continue to witness similar rags-to-riches-to-ruins stories playing out repeatedly.  Over the last 5 years in India alone, multiple-high ranking and highly reputed industrialists and bankers have lost their lifelong  reputations in trying to either illegitimately benefit themselves (families /friends) or go after mindless expansionist empires, often using dubious means. 

These individuals, highly educated from Ivy League institutes, are super talented and have already made their fortunes when they ruined their hard-earned reputations. What made them take such risks and ruin everything? Let’s go deeper. 

First, let’s answer a question about how much is enough. This is a complex topic, but for the sake of this discussion, let’s use a simplistic approach. A few financial planners I spoke to estimated that a net worth of 25 to 35 times the annual expenses plus an owned residential house to live in is good enough to sustain the current quality of life. If your kids are still dependent on you and if you have any other liabilities, then add an estimated inflation-adjusted number to the equation. For simplicity sake, let’s exaggerate this number to 50 times the annual expenses (or take any other number of your choice; it won’t change the point I am trying to make). I know that this is very personal and will change from person to person, country to country, etc.,  but let’s use this number for the sake of understanding the point I am going to make below.

Mr. Harshad Mehta and many of the other people mentioned above probably had their net worth in multiples of thousands of times their annual expenditure, they had the best of homes and addresses to live in. Many bankers who got into controversies were close to their retirement, and I am sure that they had nothing much to advance in terms of the comforts of life. Their reputation was enough for them to stay meaningfully engaged in any vocation of their choice after their retirement. Still, why did they fail to answer this basic question, ‘How much is enough?’

The answer to this question can be summed up in two simple words: greed and envy! 

 

If we go back to the web series, we may recall that after the chance encounter that Mr. Mehta had with one Mr. Ajay Kedia at a party, he was in owe (envy) of the clout enjoyed by Ajay Kedia. His envy for Kedia leads him to make many irrational choices, including buying the Lexus originally booked by Kedia. The primary trigger for his interest in the money market was the strong envy he felt towards Kedia. But given that entry into the money market was tough due to the strong hold of foreign banks, Mr. Mehta used the greed of PSU (government-owned companies) officials to gain market share. He got one success after another, leading to the compounding of his wealth. However, this virtuous circle suddenly got converted to a vicious circle when the market crashed, one thing leading to another and ultimately leading to the end of Harshad Mehta and other government officials involved in wrongdoing. 

Recently, the CEO of one of the largest private banks in India was forced to resign due to the dubious dealings of her family with an industrial group. This CEO, one of the brightest banking stars in India with an impeccable career and meteoric rise through the ranks of the bank, had everything that most can only dream of, yet lost her reputation that was built over 30 years of hard work just a couple of years before her retirement. I only hope that she and her family have answered the question, How much is enough? 

Charlie Munger once said, 

Greed and envy are the ultimate weapons of mass destruction. Time and again, we have seen this happening the world over.

How to decide, how much is enough

This is very personal, and we all have to answer it for ourselves. In his recent book, Mr. ———– gives us a few pointers. Let’s summarize them below: 

Personally to me the answer lies in the following five bullets:

  • Ability to sustain my current standard of living if I stop earning tomorrow. 
  • Ability of my family to maintain the current standard of living if I die today. 
  • Ability to afford my time independence.
  • Ability to afford my freedom of expression. 
  • Ability to hold my moral values in the most challenging situations and sleep peacefully at night.

The last three are more important to me compared to the first two. Your list could be different, after all. it’s personal. However, being aware of your list may help you stay focused on what’s important in life. Let’s start 2021 by answering this very important question for ourselves: ‘How much is enough?

Thanks for reading! 

 

Category: Personal Development
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