A paper gain is an, “Unrealized capital gain (loss) on securities held in a portfolio based on a comparison of current market price to original cost.”
For example, if you bought a share of stock for $20 and it rose to $25, you’ll have $5 in paper gains. If you sell your share of stock for $25, you’ll have $5 in actual capital gains. (In layman’s terms, you’ll have made $5 pre-tax. Congratulations!)
The key: In order for a paper gain to turn into an actual gain, you need to sell your share of stock. In order to sell your share of stock, you have to be willing to cede ownership of it; if the share increases in value, you won’t be able to sell it.
Let’s say the share goes up to $30 tomorrow; you won’t be able to sell it for $30, since you sold it for $25 the day before.
If you keep holding stock in a good company, it’ll probably keep increasing in value. However, you’ll never see the actual money in your bank account; you’ll want to keep holding it. You’ll never be able to spend the money either; it’s locked up in the stock.
Tons of paper gains, very few capital gains.
There’s a similar principle that applies to being happy:
You can keep spending your time and energy, instrumentalizing it for the future (see time orientation). You can keep doing things that make you money, that you may or may not enjoy. You’ll continue deferring your happiness in the future, in order to accumulate more money and resources today (and more capital to invest for gains tomorrow).
You can also keep people pleasing, procrastinating on your dreams because you’re unwilling to compromise, or putting what you think other people think is important ahead of what you actually want to do.
For example, you can choose to buy property at an inflated price because all your friends are homeowners. You can choose to keep the job you hate because if you gave it up you wouldn’t be able to afford to maintain relationships with some of your friends (a topic discussed here!).
You can choose to perpetually put off a vacation or travel plan because you can’t afford to do it in style yet, or because you’re unwilling to be flexible with the destination. You can prospect a lucrative side hustle that everyone else seems to be building towards, or you can choose something that you’re actually excited about (and you don’t plan on making a dime from).
Or, you can start spending some of your time and energy in a mood and circumstance doing things that actually make you happy. You can also spend your time and energy (and money) learning to be happy in any circumstance. Just flip all of the stuff from before:
You choose to rent and find a job or field of work you actually like. You can choose to take a leap of faith, and let the people who actually want to spend time with you do it even if you can’t keep up with their lifestyle. You can choose to hostel it or travel somewhere closer to home. You can choose to write a blog every day while everyone else writes on social media and blogging is so 2007 (ahem).
It takes time and energy to do all this. There’s no such thing as a decision without tradeoffs.
It’ll be worth it though. It could feel scary and stupid, and you’ll start to feel alive again. Your soul will feel rich.
While other people and markets may reward you for paper happiness, the real reward is when you realize your happiness. Don’t keep your happiness on paper.