Actually both would be wrong!
This is NOT an either-or-question.
You need to get both aspects under one roof.
On the one hand you need your ego to live in this world - you could not "function" without it.
However, you should not take things (and neither yourself) too seriously.
This is the big cosmic joke: You are actually everything that is, but at the same time live as a separate, individual self through which IT/the Tao/the cosmos/God/[please fill in your favourite expression that like the others won't be able to describe the mystery anyway] realises itself.
How funny, tragic, awesome, ordinary and extraordinary that is!
In any case the first thing you must do is to fully accept yourself. And from that basis you can try to change your "little self" - but from a state of acceptance!
If you completely gave up your ego you'd become a robot.
However, at the same time you need to realise you are much more, and that all of this is just a great show - in fact the biggest and grandest show of all.
You are stuck in this "dream" - so make the best out of it for yourself and everyone else. But at the same time you should act with the knowledge that it is in fact a "dream".
Yes, there is birth and death - but no, actually there is not.
You must know that in the long run happiness (not the superficial one, but more a constant state of being) can only come from within - never from outside factors.
Because you cannot control those outside factors. If your hapiness depends on money, power, fame or recognition by others, etc. disappointment is to be expected.
If your happiness comes from within, from a contentment with what is, being happy and grateful for the mere fact of being alive, everywhere is your home and "true happiness" can settle.
This is not a one-time-thing - it is a constant practice.
Timo, you and Ben are just doing such a much better job today than me at explaining all this stuff! Lovely!