*Inspired by Bill Perkins' "Die with Zero" - A wealth management perspective*
When we think about investment returns, we typically focus on dividends, capital gains, and compound interest. But there's another type of return that Bill Perkins, author of "Die with Zero," argues may be the most valuable of all: the memory dividend.
What is a Memory Dividend?
Unlike traditional investments that may depreciate or become obsolete, experiences create memories that actually appreciate over time. That European river cruise you took at 65 becomes more precious at 75. The family ski trip when your children were teenagers grows in value as they start families of their own.
Perkins challenges the conventional wisdom of endless accumulation, suggesting that the optimal financial strategy involves strategic spending on experiences whilst you can fully enjoy them.
The Depreciation of Material Wealth vs. Appreciation of Memories
Consider two clients, both with $2 million portfolios:
**Client A** purchases a luxury car worth $150,000. Within five years, it's worth perhaps $75,000. The initial pleasure fades, and maintenance costs accumulate.
**Client B** spends $150,000 on a month-long African safari with their adult children. Twenty years later, this experience has become priceless family lore, strengthening relationships and creating stories that span generations.
The car depreciates. The memories appreciate.
We've observed this principle in action with our Wealth+ managed portfolio clients. Those who strategically allocate funds for meaningful experiences often report higher life satisfaction, even when their net worth is slightly lower than peers who hoard wealth.
Case Study: The Smith Family Approach
Our clients, the Smith family, with their $2.2 million SMSF, exemplify this balanced approach. Rather than maximising every dollar for retirement, they've allocated 5% of their portfolio annually for family experiences - from multi-generational holidays to funding their grandchildren's overseas education experiences.
The result? Stronger family bonds, shared memories, and the peace of mind that comes from knowing they've invested in relationships alongside their blue-chip portfolio.
Integrating Experience Budgeting into Your Wealth Strategy
(The 10-10-10 Rule for Experience Spending)
Before making any significant experience investment, ask:
- How will I feel about this in 10 days?
- How will I feel about this in 10 months?
- How will I feel about this in 10 years?
If the answer to the 10-year question is positive, it's likely a worthwhile memory dividend investment.
SMSF Considerations
For our SMSF clients, this might mean:
- Using transition to retirement strategies to fund experiences before full retirement
- Strategic pension phase withdrawals for once-in-a-lifetime opportunities
- Balancing growth investments with experience allocations
This doesn't mean abandoning financial prudence. The goal is finding the optimal balance between:
- Securing your financial future
- Enjoying meaningful experiences whilst healthy and able
- Creating lasting memories with loved ones
At Morgans Mona Vale, we help clients identify this sweet spot through our quarterly Wealth+ reviews, ensuring your portfolio supports both your financial security and your life experiences.
Consider these questions:
1. What experiences have you been postponing "until retirement"?
2. How might your current wealth strategy incorporate memory dividend thinking?
3. What would a 5% experience allocation look like in your portfolio?
Remember, the goal isn't to die with zero dollars - it's to die with zero regrets about the experiences you didn't have whilst you had the health, energy, and relationships to enjoy them fully.
The team at Morgans Mona Vale specialises in helping high-net-worth individuals balance financial security with meaningful life experiences.
Contact us at [email protected] or 02 9998 4200 to discuss how your wealth strategy can support both your financial goals and your life aspirations.
