Sunday, September 14, 2014

Hedging both sides of the bet on life

We usually hedge against a long life by planning for our retirement. We save up. We make sure we have enough passive income to last 20-30 years after our retirement. But we also have to hedge against the possibility of having a short life.

Nobody knows when we're going to pass away. While it's never good to live in the present and forget about the future, it's also equally bad to concentrate solely on the future and skim on the present. I know myself  - I tend to over-worry too much. I worry whether I have enough income and enough savings to last me the next month. It took me quite a while before I can willingly spend part of my savings on myself. I've to thank my enlightened friends to knock some sense into me when I'm obsessed about savings at the neglect of my present self.

So hedge against long life. Go save up for your future self. But do hedge against the possibility of a short life - go spend time with your closed ones, spend money on things that brings you happiness. Different advice works for different people. For people who are tighter on money, advice them to spend more on themselves. It's going to be okay. For people who are looser on their money, advice them to spend less on their present and more on their future. Save up for rainy day.

In the uncertainty of the duration of your life span, we have to hedge both sides of the bet. Live for the moment. Spend impulsively. Live like there's no tomorrow. Then, like a person with split personality, save up for tomorrow. Build up a passive income stream for retirement. Delay gratification.

Is it contradictory? No, I don't think so. The two opposite poles are just swings of the same pendulum. There's no duality. The cup is empty and full at the same time. But if you can't see that the cup is empty and full simultaneously, then practice seeing it as one or the other first. For me, I see that the cup is empty first, so I save up for it. Only recently do I see that the cup is also full, so I must spend to keep it from overflowing.


Singapore Man of Leisure said...


It's heads we win; tails we win too!

Black and white are fundamentalists; grey is moderate.

la papillion said...


Haha, I think the point of hedging is not to LOSE big! ;)

Createwealth8888 said...

Fully agreed. Long and short our future. :-)

la papillion said...

Hi bro8888,


Lizardo said...

It's SPLURGE and SAVE. Never know when tomorrow may be the last day. By corollary, never know when the last day will be either.

la papillion said...

Hi Lizardo,

Yes, it's AND. Need not have to be either or :)

Anonymous said...


"Having only riches enough to be able to gratify reasonable desires, and yet make their gratifications always a novelty and a pleasure, the family occupied that just mean in life which is so rarely attained, and still more rarely enjoyed without discontent.”

Therefore even you are a millionaire now you shall live like before you are one in order you can enjoy the maximum benefits of wealth over again and again. Never, never over-indulged with your wealth.

My take:

It's definitely better to leave something behind in this world for somebody or someone. It proves you have live accordingly to the above idea. The most important is you live a "rich life" without lacking or discontentment.