Money can buy many things that give happiness in life. But, once you cross a moderate standard of living, more money leads mostly to temporary increases in happiness until you get used to the new normal (e.g. new car, private jet).
One thing that can stick is the ability to stop worrying about money. This happens when you save money, and have enough available for surprise needs, beyond the routine expenses, such as a major repair or unexpected health care expenses.
The key factor that makes this work is the extra unused money. $1M invested in Quality Asset Management’s portfolio Long-Term Component is likely to provide perpetual annual income of $40k, growing with inflation. Any unexpected expenses up to this amount can be handled with great piece of mind.
The ultimate worry-free life (financially) is reached when your investments can cover all of your ongoing + unexpected expenses perpetually (e.g., $5M providing $150k for routine expenses + $50k for surprise expenses, at 4% annual withdrawals). At that point, you can avoid worrying about money, and feel the lasting happiness.
The good news is that you don’t need to wait for decades to reach the ultimate goal, to start reaping the benefits. With every bit of increased savings (relative to spending), you get reduced stress and increased happiness.
Disclosures Including Backtested Performance Data