Invest To Live, Don’t Live To Invest!

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A few years ago, an old chap who lived not far from me died at the age of 83. And though he’d spent his later years living like a pauper, he left more than a million pounds in his will to charities. Then there was an old man in New York who recently left more than $3m to charities, despite living in apparent poverty.

And a friend of mine was surprised, when his mother died, to discover that she’d accumulated a significant sum to leave to her children despite having lived a very modest life. He was pleased in one way, but at the same time he was saddened to think of the things she could have enjoyed that he’d assumed she couldn’t afford.

People like these are often held up as perfect examples of what we could all achieve through a lifetime of careful investing. But hang on a minute…I could achieve a life of poverty and have someone else spend the proceeds of my frugality? No thanks!

Yes, there are certainly moral lessons to be learned from people like these in this greed-driven world and helping top up the coffers of hard-working charities is a laudable aim. But in my view these people are certainly not shining beacons of the best way to build up wealth.

A model investor

Warren Buffett is more my model for living a good investing life. He’s generated a substantial pile of cash for himself, and has done the same for all the investors who’ve trusted some of their money to his Berkshire Hathaway investing vehicle along the way. And while he might not live a Trump-style life of flamboyant luxury, he doesn’t actually wear cheap suits the way some people claim — he’s famously quoted as saying he just makes them look cheap.

No, Warren Buffett certainly rails against the inequities of unfair wealth distribution, but he seems to be getting what he wants from his own life while he does it.

Speaking of Donald Trump, in recent months he’s been criticised as not being as good a businessman as he makes out, with a comparison with Mr Buffett as the justification. Donald Trump would, so it’s said, be sitting on far more wealth today had he taken his inheritance and invested it all in Berkshire Hathaway stock and not spent any of it, instead of going his own way. The raw figures do seem to bear it out, but is it fair?

It really doesn’t account for the money Trump has enjoyed spending, and he’d have to have lived an even more modest life than Warren Buffett, perhaps even something close to those paupers who left the lot to the cats’ home (or whatever it was), for the comparison to be a just one.

Life is for living

Here at the Fool we consider Living Below Your Means as a key part of a successful investing strategy. But that doesn’t mean focusing on spending as little as you possibly can for your entire life. No, the key thing that a number of people fail to grasp is the Living part of it.

I’m not saying forget tomorrow and go and have a party whenever you feel like it, and I’m certainly not suggesting you forget about doing your best to provide for your old age. There’ll be precious little state pension left for those entering the workforce today, so that’s an essential. But at the same time, I won’t forget a gentleman I met a few years ago (while I was in hospital having heart surgery, as it happens), who had scrimped and saved all his life so he and his wife could spend some time travelling when they retired. But both of them came down with illnesses that meant it was too late do it.

A healthy family

So yes, spend your money carefully, invest as much as you comfortably can in an ISA every year, and provide for yourself and your family as best you can — but remember to use some of your hard-earned cash for enjoying your life while you have it to enjoy.

A healthy balance between living and investing can still see you reach millionaire status before you retire. But don't take my word for it, just get yourself a copy of The Motley Fool's 10 Steps To Making A Million In The Market report. It takes you through all you need to know, one step at a time.

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Alan Oscroft has no position in any shares mentioned. The Motley Fool UK owns shares of and has recommended Berkshire Hathaway. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.