Which would you rather have? Income or assets?
This question intrigues me. It intrigues me because my opinion changed.
During my working career, I always felt assets were the key to financial success. More sounded like a good thing. I could invest, and over the long term, the asset growth afforded by time would prove beneficial.
And as I look at it now, in those days assets were more important.
When I finally started to save and invest, I put much effort into growing my assets.
That’s not to say I did not prize income. Having income from a job always seemed to increase as time went by. New job, new salary was the norm. The ability to afford what I needed gave emotional stability. I knew I was lucky.
But the thrust of my income went towards buying assets: namely, investing in stocks. After paying my expenses, my energy and thinking went towards investing.
That was Then, This is Now
As I moved to retirement, my orientation changed. Income became a primary focus. In my view, income is what a retiree wants and needs.
As my needs changed, so my perceptions of my needs change.
Of course, it could be argued that assets produce income. This is often and usually true, and has been true in my case. But this is not always true. As an example let’s look at one of the most successful and famous companies in existence. Berkshire Hathaway.
If you had bought Berkshire Hathaway “A shares” (BRK-A) at an original price about $19, and held them until today, you would be very rich but you would have received little to no income. That is because it has only once paid a dividend in its history, according to Wikipedia.
And so, should you be in need of income, you would need to sell. Or borrow with shares as collateral.
Selling one share would net you about $603,000.00 as of this writing. That is certainly nothing to sneeze at. You would need to factor in your capital gains tax. Long term capital gains for sure.
Back on Earth
For better or worse, I do not own any BRK-A shares.
As a retiree, I am grateful for the assets I do own. These day, it is income that has my attention.
To some degree, that is why I do not focus on the overall “dollar value” of the stock I own. Prices go up and price go down So What?
While I mostly reinvest dividends, it is the ability of these dividends to cover my expenses that is my primary interest. I no longer need to “save for the future,” because my future is today. My future is now.
Where are you in the income to assets spectrum? Let me know here.
Illustrated is a 1557 broadside by Raphael Hofhalter regarding Northern Lights over the St. Marx Hospital as seen in Vienna, Austria. Courtesy e-manuscripta, a collection of Swiss libraries.
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