by in Finanzas 06/04/2017

“I´ve been rich and I´ve been poor. Being rich is better.” (Sophie Tucker)

This witty phrase by Sophie Tucker, a twentieth century American singer and actress sums up in a very clear way the essence of the value of financial independence. It is quite true that it could be possible to fill out pages and pages listing all the things that money can´t bring you. In fact, the most important and valuable things in our lives cannot be gotten simply with cash. However, Sophie, an Ukrainian emigree who became famous by singing risqué vaudeville songs, was able to summarize in a wise way the truth of money: it is true that it is better to be rich than to be poor.

Exactly what is being rich or poor in financial terms is a complicated issue that is not simple to determine as people´s poverty and wealth are intimately linked to the surroundings they live in. Thus, it is not the same to be poor in Somalia as in Norway. Doubtlessly, it is probably better to be rich in Somalia than to be poor.

Why financial independence is important

Financial independence is one of the ways in which people can increase their degree of personal freedom. Freedom is essentially the ability to make choices and, therefore, the greater amount of financial independence, the greater amount of freedom. We don´t mean political freedom, but rather the freedom we vote for every day in the biggest democracy that ever existed, that is, the marketplace. The more money you have, the more you can vote every day through your purchase and sale choices.

If you have a mortgage that will take you 30 years to pay off and a family to take care of, it is more than likely that you will not be able to afford the luxury of, for instance,  not having to work for a year. It is also more than likely that you might have to put up with a boss you can´t stand without any possibility of avoiding bothersome authority. Every four years you will nominally vote as a free person but in fact be voting as a slave.

If, on the other hand, you don´t have a mortgage but you do have a family  and have assets valued at, say, € 200.000  you may have few doubts about  getting rid of your boss and searching for another job or even setting up your own business. You could even not vote because you don´t feel like doing that on a Sunday. However, there is no doubt that you would be a freer person than the one with the mortage in the other example.

This is why financial independence is so important. Financial independence increases our freedom in a tangible way that is clearly perceived by the person benefiting from it. As opposed to the statements made by politicians about freedom which bolster people´s hearts at the same time as it empties their pockets, financial independence bolsters your pocket, even though this may be less poetic than the catch phrases of patriots, both the professional kind and amateurs, this sort of freedom will make you feel a comfortable sensation of security and self reliance. Beneficial colateral effects also increase your personal responsibility and lessen your innate tendency to seek out others that are guilty of causing your problems and wise political masters to solve them.

Choose not be poor

The fact that you are poor is something that is beneficial for a lot more people than you might imagine. Politicians, for instance. In this way they will always be ready to help you in exchange for your vote. Some will even want you to love them. However, not being poor benefits a lot more people: all those people who, in exchange for your money, can offer you an asset or a service you may need or want.

The first step to quitting being a nominally free slave is to build up your own patrimony that will enable you to defend yourself from the voraciousness of those who govern us and the uncertainty of the future. This patrimony will not make you happier nor will it solve your problems, but it will eliminate obstacles in your path in the important search for happiness.

Don´t ever forget that money is not an end in itself. It is merely a medium, an instrument, a tool. Don´t let others condemn you to the paternalistic servitude of the State. Take care of your own affairs and don´t leave them in the hands of incompetent political instances, these issues are no more than a personal and individual responsibility. Remember the famous saying by  Mark Twain Don´t go around saying the world owes you a living. The world owes you nothing. It was here before you came around.”

Making money in the stock exchange is simple but not easy

The incredibly hard thing to do is to make a lot of money and very quickly. Fortunately for all of us, to simply obtain double or triple the amount that public debt or national revenue offers you, is something almost anyone can do.

As cash money, due to its taxable nature, is only worth what the bosses of the E.C.B. and the FED say it is worth, make no mistake in knowing that shares of a company selling the products and services we use every day, constitute a way that is a much safer, more efficient and more profitable way of creating a patrimony than any other.

However, it is important that you know how and which way to go about it. It is important to have certain financial know-how. You won´t need to be a doctor in economics. In fact, most economists are terrible investors and it is better  not to take them seriously. Buy their books, read them and then ignore them. What is indispensable on the other hand, is to know a few very simple basic things. The power of capitalization and compound interest for instance.

Yet above and beyond this is knowing how to behave. The behavior of a passive investor is ruled by a basic principle: not doing anything most of the time. A corollary of this general principle is: doing the same thing every time you need to do something. Basic tools are discipline and patience. Technical simplicity and emotional commitment.

So, feel encouraged, because little by little, in Quiet Investment we will deal with these general issues and other, more specific ones, which we hope will be useful for you as a source of inspiration in your task of improving your financial independence and thus, increase your personal freedom.

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