What Booze Teaches Us About Money

By Brittany Lyte on 5 October 2016 0 comments

Alcohol gets a bad rap for numbing the brain. But as it turns out, there are some positive benefits to responsible indulgence in wine, beer, or whiskey, too. A couple of drinks can increase your creativity, promote better and deeper sleep, and make you feel at ease. And moderate wine consumption can reduce your risk of heart disease, heart attack, and diabetes. Now here's a benefit of alcohol consumption that you maybe haven't heard: A healthy relationship to alcohol can pave the way for improved fiscal health. Yes, we're serious. And we've got the logic to back it up. Here are a few ways in which a little booze can boost your financial literacy.

Wine Teaches Us to Develop a Knack for Value Forecasting

If you've ever been to a wine tasting, you know that the ability to sniff out the complexity of flavors before the stuff ever touches the tongue is a celebrated form of art. Likewise, the ability to forecast a stock's future value based on historical trends, an industry's present-day performance, and the current economic climate is more skill than gamble.

"Once you learn how to give wine a good sniff, you'll begin to develop the ability to isolate flavors — to notice the way they unfold and interact — and, to some degree, assign language to describe them," reads Wine Enthusiast magazine's guide to wine tasting for beginners. "This is exactly what wine professionals — those who make, sell, buy, and write about wine — are able to do."

Sounds a bit like the skills needed to succeed in playing the stock market, doesn't it? Indeed, the methods used in wine selection aren't much different from those used by skilled stock traders and investors. So the next time you go wine tasting or select a bottle of red, think about all of the subtle ways in which you're assessing a wine's taste and value, and remember to apply that same circumspection when maneuvering your personal stock trades and purchases.

Beer Teaches Us the Value of Seeing the Big Picture

It's Friday night. You get home and pour yourself a pint of beer. But no so fast! No matter how eager you are to unwind from the work week, a hasty pour is ill-advised. Pour slowly. This way, you'll avoid the foam.

Why?

Imagine for a moment that the beer in your glass is a publically traded company. For example's sake, let's call it Microsoft. Congratulations, you are officially a Microsoft shareholder. If the beer is Microsoft, then the foam on top represents all of the daily trades that cause Microsoft's stock value to fluctuate. The value of your stock is in constant flux. Up and down and up and down it goes.

As a Microsoft shareholder, you want to know how all of these trades are affecting the value of your shares, right? Not so, according to The Simple Path To Wealth author Jim Collins. When a stock price jolts up high or sinks down low, it's hard to know what to make of it. Even the top day traders struggle to make sense of it all. Is a big daily point loss indicative of real loss in company value? Or is it just a little hiccup — background noise — soon to be forgotten by month's end? Bottom line: It's hard to say.

Now, you want to make smart trades, right? So you're going to want to be able to develop some skill in assessing your stock's real value. That's where the ability to differentiate between all those little hiccups and the real ebb and flow in your stock's value are going to come in handy. If you distract yourself with the background noise — if you crowd your pint glass with foam — you're going to have a hard time zeroing in on what's really going on. And what is really going on? Well, look at your annual shareholder statements. Take a peek at the monthly ones, too. These monthly and yearly value fluctuations show real trends. Not insignificant hiccups, but trends.

Whiskey Teaches Us That the Best Things Take Time

A good whiskey takes years to mature. And, if we're talking high-end whiskey, then it's safe to bet it was left to age in a barrel for 10-20 years. Indeed, the world's oldest whiskey developed its complex, woody flavor over a period of 70 years. If the cask had been popped open and poured out sooner, it simply wouldn't have been as valuable, nor as good.

In whiskey, like in saving for retirement, patience is a virtue. So is an enduring commitment to making small, incremental steps toward a future goal — be it a good spirit or a comfortable golden years era. That's why, in many ways, it can be helpful to think of your long-haul effort to save for retirement as a journey to make a really great whiskey. Set and stick to a realistic savings goal, make smart investments, and live within your means. This stuff isn't easy, and it's certainly not always fun, but there's big payoff to be had for all your efforts. Like when you reach your 60s with a sizable nest egg to show for all your hard work. And when you reach that wonderful day, why not consider celebrating with whiskey? After all, you've earned it.

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