Blog - Do Strong Investment Returns Equal Happiness?
What makes investors happy? How important are financial considerations when defining overall happiness?
The media and popular culture and literature provide mixed messages about wealth and happiness. While it is often said that money does not lead to happiness, the follow up is generally – but it’s a lot easier to be happy if you have money.
Spectrem thought it might be interesting to test that theory and to see how important financial stability is when defining happiness. As part of our monthly research with investors with over $100,000 of net worth (not including primary residence but including defined contribution and other retirement assets), Spectrem first asked investors to rate their overall level of happiness. On a 0-100 scale, investors rated themselves at a 69.63, which seems like a relatively “happy” score.
Investors were asked to define what it means to be happy. Good Health was rated as most important at 46% followed by a Pleasant Home Life at 26%. Financial Stability came in third at only 11%. This was followed by Having Children Who are Successful in School or in Their Career (9%), Successful in Career (3%), Active Social Life (3%) and Frequent Participation in Hobbies at 2%. These definitions varied by age with Good Health being much more important to older investors than younger investors. Millennials ranked Financial Stability and a Pleasant Home Life higher than older investors while GenXers were the most worried about the success of their children.
When asked to rate their overall happiness with their financial situation, investors rated it at 70.26. Happiness with their job (or previous job if retired) was 65.90. They rated their relationship with their children at 66.90, and happiness with activities outside of work at 67.77.
Although investors are pretty happy with their financial situation, Spectrem asked what could make them happier with their financial situation. More than half (52%) indicated that better investment returns would make them even happier. Nineteen percent said an increased salary would make them happier and other alternatives, such as reducing debt, scored much lower.
Investors are a demanding bunch. Even though they are all pretty happy….and even happier with their financial situation….the only thing that could make them even happier financially is greater return on investment. Pretty tough when markets continue to flirt with all-time highs.
Yes, strong investment returns will make them even happier….even though they are already pretty happy.
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