Recs

1

News Flash: Money Does Buy Happiness!

How many times have you been reminded by Aunt Mabel that "money doesn't buy happiness, dear"? Well, you can finally set Aunt Mabel straight. According to researchers from Penn State and Harvard, it seems that money can buy happiness -- sort of. (Note that the best predictor of happiness, trumping money, is good physical health. But I digress.)

The findings suggest that if your household earns, say, $80,000 per year and you live in a neighborhood where incomes are in the six-figure range, you're likely to be less happy than if you lived in an area where incomes were in the $30,000 to $50,000 range. It makes some sense, if you think about it.

We humans tend to judge ourselves by the people surrounding us. If our neighbors (or coworkers or friends) generally have a higher standard of living, with fancier cars, bigger homes, more expensive outdoor grills, and so on, we may end up feeling financially inferior. If, on the other hand, we are the ones with the fancier trappings, we're likely to feel more financially successful.

Instead of becoming a consumer of Tag Heuer watches by LVMH Moet Hennessy LV (Nasdaq: LVMHY  ) or Lexus automobiles by Toyota (NYSE: TM  ) or Tiffany (NYSE: TIF  ) jewelry, you might consider investing in such companies instead. Not necessarily these companies exactly (though Tiffany, for one, is doing well) -- my point is just that instead of aiming to spend your money on higher-end items, you might deploy some of that cash into high-quality stocks. Then you can watch your investments grow instead of depreciate, which they'll have a decent chance of doing. Household name companies such as PepsiCo (NYSE: PEP  ) and Procter & Gamble (NYSE: PG  ) have been terrific long-term wealth builders. PepsiCo has advanced more than 2,000% over the past 20 years, excluding dividends. P&G has advanced more than 5,000% over the past 25 years, also excluding dividends. Both of these have averaged around 17% per year.

Approaching happiness from a wider angle is an article at the website of the Center for Independent Studies. It addressed the happiness of people in different countries and economies, explaining that, "There is an extremely strong correlation between wealth and happiness. Low-income countries report low levels of happiness, middle-income countries report middle levels and high-income countries report high levels. What the researchers say, though, is that this correlation levels off at a national income of about $10,000 a year. After $20,000 ... [British economist Richard] Layard says, 'additional income is not associated with extra happiness.'" It noted that, "Since the 1950s, income in Japan increased almost 10-fold, but the Japanese are no happier today than they were then."

One insight that rang very true to me is that hope is an important contributor to happiness. If you're in a situation or country where you have little or no hope to improve your lot, you'll be more unhappy than if you were just as poor or rich, but knew you had opportunities to get wealthier.

Fortunately, we Fools have plenty of hope. Fools can make their lives happier by building more wealth and financial comfort for themselves. Our Rule Your Retirement newsletter, for example, offers a lot of practical guidance to help you set yourself up for a comfy and enjoyable retirement, as well as specific investment recommendations. Try it for free and see for yourself.

LongtimeFoolcontributorSelena Maranjianowns shares of PepsiCo. The Motley Fool has a disclosure policy. The Fool has an ironclad disclosure policy.


Read/Post Comments (0) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

DocumentId: 496872, ~/Articles/ArticleHandler.aspx, 7/30/2014 5:34:31 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Selena Maranjian
TMFSelena

Selena Maranjian has been writing for the Fool since 1996 and covers basic investing and personal finance topics. She also prepares the Fool's syndicated newspaper column and has written or co-written a number of Fool books. For more financial and non-financial fare (as well as silly things), follow her on Twitter...

Today's Market

updated 8 hours ago Sponsored by:
DOW 16,912.11 -70.48 -0.42%
S&P 500 1,969.95 -8.96 -0.45%
NASD 4,442.70 -2.21 -0.05%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

7/29/2014 4:00 PM
PEP $90.14 Down -0.83 -0.91%
PepsiCo CAPS Rating: ****
PG $78.65 Down -0.61 -0.77%
Procter & Gamble CAPS Rating: ****
TIF $97.60 Down -0.65 -0.66%
Tiffany & Co. CAPS Rating: **
TM $120.58 Down +0.00 +0.00%
Toyota Motor Corp… CAPS Rating: ***

Advertisement