Ray Dalio oversees Bridgewater Associates, one of the largest hedge funds in the world. Dalio writes about his most fundamental life and management principles in his text titled Principles which is required reading for all employees at Bridgewater. It’s mainly a motivational and self-help text that serves to introduce new employees to the cult-like culture at Bridgewater, but Dalio also writes about his thoughts on money and success which I found extremely interesting.
Dalio, one of the richest persons in the entire world (Wikipedia says he was the 162nd richest in 2011), explains that having a lot of money isn’t as great as it would seem. Instead, the basic experiences that make someone happy like relationships, meaningful work, and good experiences aren’t “materially improved upon by having a lot of money.” Read the full passage here, which is a collection of passages that I curated from Principles:
Yes, I started Bridgewater from scratch, and now it’s a uniquely successful company and I am on the Forbes 400 list. But these results were never my goals – they were just residual outcomes – so my getting them can’t be indications of my success. And, quite frankly, I never found them very rewarding.
What I wanted was to have an interesting, diverse life filled with lots of learning – and especially meaningful work and meaningful relationships. I feel that I have gotten these in abundance and I am happy. And I feel that I got what I wanted by following the same basic approach I used as a 12-year-old caddie trying to beat the market, i.e., by 1) working for what I wanted, not for what others wanted me to do; 2) coming up with the best independent opinions I could muster to move toward my goals; 3) stress-testing my opinions by having the smartest people I could find challenge them so I could find out where I was wrong; 4) being wary about overconfidence, and good at not knowing; and 5) wrestling with reality, experiencing the results of my decisions, and reflecting on what I did to produce them so that I could improve. I believe that by following this approach I moved faster to my goals by learning a lot more than if I hadn’t followed it.
I have been very lucky because I have had the opportunity to see what it’s like to have little or no money and what it’s like to have a lot o fit. I’m lucky because people make such a big deal of it and, if I didn’t experience both, I wouldn’t be able to know how important it really is for me. I can’t comment on what having a lot of money means to others, but I do know that for me, having a lot more money isn’t a lot better than having enough to cover the basics. That’s because, for me, the best things in life – meaningful work, meaningful relationships, interesting experiences, good food, sleep, music, ideas, sex, and other basic needs and pleasures – are not, past a certain point, materially improved upon by having a lot of money. For me , money has always been very important to the point that I could have these basics covered and never very important beyond that. That doesn’t mean that I don’t think that having more is good – it’s just that I don’t think it’s a big deal. So, while I spend money on some very expensive things that cost multiple relative to the more fundamental things, these expensive things have never brought me much enjoyment relative to the much cheaper, more fundamental things. They were just like cherries on the cake. For my tastes, if I had to choose, I’d rather be a backpacker who is exploring the world with little money than a big income earner who is in a job I don’t enjoy. (Though being in a job that provides me with what I want is best of all, for me). Also, from having come from having next-to-nothing to having a lot, I have developed a strong believe that, all things being equal, offering equal opportunity is fundamental to being good, while handing out money to capable people that weakens their need to get stronger and contribute to society is bad.
Self-interest and society’s interests are generally symbiotic: more than anything else, it is pursuit of self-interest that motivates people to push themselves to do the difficult things that benefit them and that contribute to society. In return, society rewards those who give it what it wants. That is why how much money people have earned is a rough measure of how much they gave society what it wanted – not how much they desired to make money. Look at what caused people to make a lot of money and you will see that usually it is in proportion to their production of what the society wanted and largely unrelated to their desire to make money. There are many people who have made a lot of money who never made making a lot of money their primary goal. Instead, they simply engaged in the work that they were doing, produced what society wanted, and got rich doing it. And there are many people who really wanted to make a lot of money but never produced what the society wanted and they didn’t make a lot of money. In other words, there is an excellent correlation between giving society what it wants and making money, and almost no correlation between the desire to make money and how much money one makes. I know that this is true for me – i.e., I never worked to make a lot of money, and if I had I would have stopped ages ago because of the law of diminishing returns. I know that the same is true for all the successful, healthy (i.e., non-obsessed) people I know.
Read the full text of Ray Dalio’s Principles here.