A Letter from Chris Suarez
ELON MUSK VS ROBIN HOOD
Last year I decided to really begin teaching my children the difference between consuming and investing. Perhaps it was just one too many Amazon boxes that got delivered to the front door. Maybe it was all of that plastic that I was tired of recycling. Or it could have been moving the family from a 5800 square foot house to a home close to half that size that made me realize how much “stuff” a family can consume.
Truth be told, none of those were the motivating factor. The motivating factor was a purchase I made in December of 2018. Now, there’s no judgement here around what we individually decide to buy, or judgement around the reasoning or rationalizing for doing so. When I decided to purchase my new car, I had all the very good financial reasons backing me up. It had been 10 years since I purchased a vehicle. I had completely depreciated my previous business car. Tax code 179 and bonus appreciation showed up and applied to vehicles 6000 pounds or greater. There were federal tax credits for electric vehicles about to expire. You name it, I found the excuse, I mean reason, to purchase the new Tesla Model X. Did I love it? Yes. Do I still love it? Yes.
But that didn’t stop me from realizing I had made a very consumer focused decision. After all, I was that kid that grew up just wishing and hoping one day I could own a used Saab 9-5. So I clearly am not a car person, and even more clearly didn’t need to write that check for the Model X.
Now let’s make that lesson more palpable. If I had not bought the car, and instead invested the same amount of money it took to buy the car, into purchasing stock in the company that built the car, things would look a bit different. If I took the check that I handed the car salesman, and instead gave it to my stockbroker, I would have been able to own 1,818 share of Tesla at the time. The stock was trading at $66 per share the day I drove my car home in December of 2018. The good news, is that the car has retained its value fairly well. I could sell it for about 71% of it’s original cost three years later. I supposed it's losing "just" 10% of its value per year.
But if instead I had invested that money in Tesla stock, those same shares would be worth $625 each at the time of me writing this. Put simply, that investment would be worth $1,136,250. today. That’s an increase of over 800%. I decided that day to be a consumer instead of an investor. Enough said.
I could have invested that $120,000 into a company that I believed in, producing a product that I loved. Instead I spent it on the product. Instead I bought a car. Instead I chose to consume. (Now keep in mind Tesla hit $900/share earlier this year…which would have made those shares worth $1,636,200. But who’s counting).
Do I love my car that much? Well, yes, only because of the lesson it has taught me.
What lesson? There is nothing wrong with being a consumer. It often makes us feel great in the moment, and we all want to feel great in the moment. But it has taught me an incredible lesson to look at what other options I have at any moment that I am about to be a consumer. What opportunity cost could there be by spending this money? Could I invest this money for a period of time and purchase some “thing” in the future? Could that money be invested in an experience that would pay dividends over a lifetime? If I think through those options and still decide to be a consumer, or spend that money, so be it. It was a choice.
Let’s bring that back to my children. We now have an agreement in place. Anytime they wish to consume, or spend money on a product I give them a choice. If in fact I would buy that for them, instead of buying the product I give them the option to trade that “yes” into a share of stock of that same company. For example, instead of buying those Nike’s for $90 or $120, I will buy them a share of Nike stock (NKE). Instead of buying that Apple phone, I will buy them the number of shares of stock equivalent to what I would have “spent” on that phone (AAPL). Instead of buying those chips or soft drink, I will buy them a share of stock in PepsiCo (PEP). It causes that brief pause in consumerism, it creates a conversation around need vs want, and it allows education around saving, investing, and the long game.
I won’t go into detail, but my daughters have a lot fewer “things” around the house. In place of those “things” they each have a growing stock portfolio of traditionally stable companies - some blue chips, some growth stocks, many tech stocks as you can imagine. This has organically created a fairly diversified portfolio for each of them. They may have less toys than other children their age, but they could both pay for private school from their Robinhood account.
The most interesting reality is almost everything they would have spent money on while we have been playing this game would have been forgotten, thrown out, or lost by now. It has not changed their happiness. It has not changed their life experience. And for the most part, they don’t even remember asking for the “stuff”.
Now here is the real lesson in all of it. This same concept of consuming vs investing holds true in almost every area of our life.
We just need to be clear when we want to focus on investing, and when we choose to be a consumer.
TIME
It is easy to consume time. Even time allocated to “work” can easily be consumed as opposed to invested. Showing up is not enough. We can show up, put in our eight or ten hours, and not accomplish anything that will actually change our future. Are we clear about the activities in our day where we are actually investing our current time into our future wins? Often we waste our time looking for immediate gratification instead of investing our time into activities that will build our preferred future. One of my early mentors once said that we often use the expression “Time is money.” That is a myth. Instead he suggested, “time is convertible into money.” Are we spending our time, and thus our money, or are we investing our time and converting that time into future wealth? Sometimes the best choice is to be a consumer. Go ahead, spend some time watching that movie, binging your favorite show, or reading that fiction book. Remember, it feels good and we need that. Just make sure you are making a choice.
RELATIONSHIPS
It’s easy to consume in any relationship. Perhaps we all have that relationship where the other person is there to get what they can take. That isn’t always bad if you are aware of it, you enjoy the time “spent” with them, and you know that this is their intention or at least the way they operate with you. Maybe it’s a surface friendship you have that is a lot of fun to be around. Nothing wrong with that. But it also isn’t the person you go to when you need advice, help, or support. It could be a business relationship as well. Perhaps you have a partner, client, or employee that shows up when they need something, that shows up when you can help them, that shows up with problems that need solving. Well if you have what they need, you can help, and do have a solution, so be it. As long as that is your choice. True relationships take a lot of investment. True relationships require time, trust, commitment, and historical delivery of what was promised. I'd rather invest in a relationship than consume one. That is a choice.
WEALTH
I think we covered that well enough here. Consumption and investing is a choice. I don’t live a minimalist life. Amazon is still showing up to the house every week or so. Everyone knows I have a book-buying problem and a real estate-buying habit. I am definitely a consumer in those categories. However I do have a clear wealth building plan. I invest both carefully at times and with great risk at others.
What I find fascinating though is how each of these three - Time, Relationships, and Wealth - are woven together when we are willing to invest instead of consume. When we invest time into real relationships, we will find ourselves building incredible wealth - both financial wealth and the wealth we amass by living experientially with those we care deeply about.
It’s funny to think about, but Robin Hood was my favorite Disney character growing up. One of my favorite gifts I have ever received is a Robin Hood coffee cup from my daughter who saved up her money for months to buy it for me at Walt Disney World. Robin Hood’s philosophy and mission in life was to “steal from the rich and give to the poor”. Now I’m neither condoning nor approving of his activity. Yet, in a way, putting a pause on consumerism is stealing back money that ends up in the pockets of the rich, and places it in the pocket of, well, your Robinhood account.
Chris
