Disclaimer: The following recommendations are solely the opinion of the author who assumes no reponsibility for the damage that might be incurred by the reader's personal lifestyle in the event that they are followed.
One of the features of the local socioscape of the Iberian Appalachia in which the current writer resides is a far-from-unique octogenarian who lives huddled below the 11th century castle walls in the old, and presumably poor, part of town - and there is nothing about his personal aspect that would cause an observer to doubt what general level in the human hierarchy he might occupy. Frequently seen toothlessly and happily driving his combination roto-tiller/transport (a mula mecánica like the one seen on the left) to his tomato patch to put in a few hours of measuredly-paced work punctuated by the smoking of cigarettes, were one to ask him as to his economic means, he would immediately classify himself as gente pobre. Po folk. The actual fact that the gentleman is a dollar millionaire does not, in any way, impinge on this self-assessment.
To clarify, the two-and-a-half acre garden parcel he is heading off to poke around in could likely command 250,000 euros - even in today's meagre times. The five ancient houses he owns in town maybe the same again, summed together. Add the 1,300 olive trees he has, spread about in various small groves accumulated over the years, and one easily comes up with a net worth of something north of 1,300,000 Washington pesos, this failing to include probably not inconsiderable savings. Interesting then it would be to make a calculation of his yearly income. A ball park guess would come up with 7,000 dollars of pension, 18,000 from his olives, 6,000 in subsidies and 10,000 from the tomatoes, onions and peppers - 41,000 bucks, or 3 percent of his patrimony. The reader might compare this with a statistic that was reported to us a few years ago. The average American earning 100,000 dollars a year had a net worth of a quarter million. Perhaps members of this latter group would care to know his investment strategy...
It begins, correctly, with a coherent philosophy. Despite the fact that this humble olive grower, vegetable farmer and landowner has no formal education (and is very possibly illiterate, things being as they were in this country when he was a child), he knows in his bones that Einstein's observation concerning time is true - that it cannot move backwards. This is to say that any attempt to pay for present consumption with future earnings is contrary to the natural order of things and hence doomed to failure. On the other hand, his respect for the laws of physics makes him well aware that the current existence of weath in his custody is only a temporary condition - not because it will be spent but, because as it moves unidirectionally into the future, it will become his children's. Simply put, the patrimony is of his family and, properly and morally managed, it grows.
Secondly, our millionaire knows what money is - paper accompanied by a promise. He also knows what wealth is - land (although with a bit more education he would include an asset like gold in the formula). This comes from having had the good fortune to have been brought up in a country that funded its ambitions and presumptions to international power through the debasement of its currency over two and a half centuries, in the process making the most prized skills those involved in the manipulation of accounting entries rather than others that actually increase patrimony. In this regard, he never sells a piece of property, unless the money is earmarked to making off with a better one, already available.
Third, he likes his life as it is (which, dare we say, is a problematic issue in some ostensibly wealthy parts of the world). He does not want to retire and move to Marbella. He has no desire to visit the pyramids or Niagara Falls and he cannot fully imagine life without a daily trip down to commune with his onions. Not being able too see many ways in which his life could be much improved gives him one huge advantage over our U.S. upper decile earner. It allows him to be insufferably and irremediably cheap. 'Luxuries' in his life probably run the full gamut from his mula mecánica to a television. And his caprichos might reach the level of having a couple of beers in the Bar Julián. But, then again, why would he trade the future to improve that which cannot be made better?
The mere existence of this piece, posted over the internet, should make it clear to the reader that the current writer does not live his life exactly in this manner. In place of the mula, he and his soon-to-be spouse move themselves about in a seventeen year old Land Rover, a Piaggio 50 c.c. scooter or an, until recently, brand new Honda Civic (140 hp and gasoline, eh!) and admits that it would be less than desireable to suddenly revert into this character after a lifetime of pretensions to being knowledgeable, cultured and cosmopolitan. But the irony of the fact that a guy who was born in an economic condition worse than the lowest of the low from The Grapes of Wrath has managed, without changing his style of life (or investment strategy) more than minimally, to leapfrog the lower echelons of the American wealthy cannot escape our attention.
Pepe's Investment Philosophy
1). Time cannot move backwards.
2). What you think is yours is only entrusted to you.
3). Money is a promise extracted from the future.
4). Be cheap. Like your life.