Friday, November 14, 2014

Pushing Past Platitudes

As a Korean, my parents responsibly drilled into me the twin virtues of working hard and saving money.  However, when I was in college, my mother pulled out a parable of two middle-class brothers in pre-war Weimar Germany that subversively undid this early conditioning.  The elder brother Gottfried did everything right. He studied hard, got a respectable job in banking, and faithfully saved his money for retirement.  His younger brother Dieter however dropped out of high school and became a good for nothing drunkard relying on the good graces of his mother and brother to keep a living.  Dieter did nothing but guzzle beer all day. He was so supremely lazy that he would not even bother to return the empty beer bottles and his entire house was piled high with decades of bottles.

Of course hyperinflation after the First War rendered the German Marks absolutely worthless. Despite the first brother's lifetime of hard work, Gottfried's savings unfairly evaporated to nothing. However the younger brother's laziness paid off as bottles were scarce and he made a fortune selling off his used beer bottles.  Dieter was able to amply repay his mother and brother in this twist.

My mother did not want me to grow up as a lazy bottle hoarding drunkard but she wanted me to reflect on the unexpected unfairness of this world.  I did study way too hard in school and I faithfully saved my money.  In our complex world of a depreciating dollar and near zero interest rates,  the twin pillars of working hard and saving are not enough to lead to financial freedom to relieve the necessity of paid work.  This is where investment and diversification should come in.  

I'm still at a crossroads as to where to put some of my money to work. Since the last two bear market crashes, I've developed a stronger loss aversion.  I started this blog to explore my options in a more structured way.  If you have advice for me or the readers,  please do not hesitate to leave feedback.