401k

Today I did the twice-yearly task of evaluating my 401k and rebalancing it. I love the fact that I can push money around from one fund to another, analyze the relative performance of my investments against each other and against other funds, and generally feel like the master of my own destiny.

I have a website that shows me a number that supposedly represents money that I own. I copy all the performance data into Excel, make little charts that show me which funds are the best, am I beating the average of all of them, where am I underperforming. I get to nudge and prod these numbers into growing like some delicate bansai tree.

Perhaps not the best analogy. Ann and I had a bansai tree once as a gift and we killed it in a week. But you get my point.

Living in Europe one of the major differences that you experience is the attitude that people have about their retirement. Most Europeans, even the British I think, believe that it is the responsibility of the government to provide them with a livable income and free health care during their retirement. Most Americans I know shudder at the idea of depending on the government to provide for them in their old age.

Having grown up within the American framework, I find the idea of being personally responsible for your own financial well-being highly desirable. I don’t have any problem with the idea of having to save my own money, invest it myself. I can live with knowing that there is no safety net should I make some huge catastrophic mistake with my savings. That’s the deal and everyone knows it.

On the other hand, I realize that I am in an extremely privileged position. I CAN afford to save. I probably will make enough money over the course of a lifetime to save enough to live comfortably in my old age (which everyone keeps telling me won’t be that long because of my M&M’s and french fries with a Coke diet, which I guess means that I can spend more per year than if I was vegan…). I plan on only having one or two children, and won’t have to worry too much about the choice between mortgage payments and new shoes for the kids. So it’s easy for me to accept this kind of a deal.

In Europe though, the entire system is different. There is an entirely different relationship that people have with their governments. People rely on government institutions for the most basic needs: money to pay for a roof over their heads and food, and health care.

In their defense, I will say that my dealings with the Dutch bureaucracy have by and large been very positive. They are well organized, efficient, cheap, and some of the most customer-oriented institutions I have set foot inside of in the Netherlands. Since the state has so many of these institutions, and employs so many people, and the services they provide are so vital to the functioning of daily life, working as a civil servant has a much different (and much more positive) connotation here than in the US.

Just illustrates that there are some real differences in the models of existence that people in different countries can have, even when they are about as close together (economically and historically) as you can get in the world.

I celebrate this diversity by rebalancing my 401k and feeling superior to my Dutch colleagues in that I am the master of my own financial destiny. They feel superior to me because they know that I suck at math, am financially irresponsible, and that they don’t have to worry about pie charts on websites.

We’ll check back in thirty years and see then. I’ll either have a dried up husk of a bansai, or a redwood in my bank account.

Pray for rain.