Earn money but be happy

I in a money-oriented environment such as Hong Kong, we could be spending so much time chasing the mighty dollar that we miss out on other important aspects of life, such as happiness.

According to Arun Abey, author of a new book entitled How Much is Enough?, people become preoccupied with earning and saving without stopping to think about what they needed the money for.

'Over the years I have asked thousands of people to think about one simple question: how much is enough?

'More than any other, this question gets to the heart of the balance between money and the things we want to achieve and enjoy in life,' said Mr Abey, executive chairman and co-founder of ipac, a financial planning firm that has enjoyed more than 25 years of steady growth.

Mr Abey, widely recognised as a strategic thinker whose views are often sought in the corporate world, said his book was not intended to be a one-stop investment guide, but rather a general guide about money, investment and people's attitudes towards these issues.

The book highlights real-life situations experienced by Mr Abey and his clients. The writer said his observations were based on common sense, although quite often in the quest for wealth these basic principles were overlooked.

'How we think has a huge effect on our success in life and the financial markets,' Mr Abey said. 'We are richer, live longer, and have more choices than ever, yet many of us fail to choose the things that will make us happy.

'The 21st century provides the possibility to live an authentic life, a great opportunity, but also one of the great challenges of the 21st century.'

The writer believes that people across much of the developed world may have become richer but not necessarily happier.

'We fill our homes with more and more material possessions, and look up to celebrities as if they are gods and strive to keep up with the Joneses at any cost,' he said.

Mr Abey believes the road to financial happiness covers three defining areas: finding a balance between wealth and well-being that works for the individual; staying focused on what is important, and mastering one's own mind.

Drawing on research in psychology, behavioural finance and years of practical experience, Mr Abey and co-author Andrew Ford, a marketing and communications expert, identified real values, set goals and suggested ways we can achieve them.

Mr Abey said the book, which took two years of research work, suggested that one essential factor separated those who were highly satisfied with their lives and those who felt vulnerable - a sense of being in control of their financial situation.

'The same feeling applied, whether someone was making millions of dollars or getting by on a much lower income,' said Mr Abey, who also took on the role of head of strategy for AXA after the sale of ipac to AXA Asia Pacific.

Using an anthropological analogy, Mr Abey said that many - when it came to money and investing - tended to take a herd mentality, a legacy from the days when early man lived on grasslands and depended on safety in numbers to survive.

'It has long been known that people are subject to what behavioural psychologists call behavioural heuristics - mental and behavioural shortcuts that cause us to make bad decisions.

'Examples include herding, which in investment terms often results in blinding ourselves to the true nature of an investment's risk because others are eagerly investing in the same scheme,' the writer said.

'To avoid these risks for a start, we can do some simple planning, looking within, instead of to others, and asking the right questions. Instead of asking: How much money do I need to be happy?, we can try asking: How can I be truly happy? Secondary is how much money will I need to support myself in pursuit of my true values and goals.'

Mr Abey advised individuals to construct a financial plan for themselves and not for their money.

Also, the plan should be based on goals set by the individual and not goals set by someone else.

'Those that have a financial planner should make sure he or she is not a commission salesman,' said Mr Abey who is also co-author of the international best-seller, Fortune Strategy.

Mr Abey said he believed people were likely to enjoy greater peace of mind if they drip-fed money into investment schemes so they did not have to worry about short-term ups and downs. Also, they should resist chasing fads or trying to time stock markets.

'Statistics show that even professional investors fail more times than they succeed in timing stock markets, unless they are lucky, and few people are consistently lucky,' Mr Abey said.

Investments should be structured so they can be constantly monitored, and they should be reviewed annually, the writer stressed.

Books

Book How much is enough?

Author Arun Abey and Andrew Ford

Price HK$193

Publisher A&B Publishers