What a great question! After all, words such as “investments” “asset allocations” “risk tolerance” and “portfolio diversification” are almost reserved for retirement, no?
Yes and No.
We live in very interesting time where we’re witnessing an upward trend in not just investing for retirement but also investing for shorter tangible goals such as purchasing a car or investing for a down payment on a home. I think this is interesting because it takes an abstract & complex concept of investing and applies parameters to achieve a feasible goal.
Lets think about it for a minute—when thinking about investing for retirement purposes a veil of fear undoubtedly follows our reasoning and choices due to the fact that we don’t always know what our retirement life could look like. We are inundated with complex questions like how long do we plan on living? And whether we plan to outlive our money or should our money outlive us. Perhaps it’s these fears that prevent us in not taking an active approach.
On the contrary, we are more open to the idea of investing for a short-term goal because there is a tangible reward at the end of our investing journey.
So, again, investing is not just reserved for retirement.
Now, focusing back to the question at hand—why invest early and often?
Here’s the cliff notes version of it:
–Reconnect with your old dreams and passions
–Financial comfort
–Adoption of a different lifestyle
–Ability to retire debts
–Leave the job that limits or insults our values
–Escape the world of compromise AKA the rat race
–Live life on your terms
You’ll notice that for any of the above to be true you need a pretty good nest egg. Starting your investment journey early and committing to it is a surefire way of achieving your goals.
You may say that’s all great and all but I can always get a higher paying job later and throw in a chunk of money to make up for the lost time. Sure, you could do that but here’s the kicker—the stock market growth is not linear, it’s exponential! The money invested today will exponentially grow because the economic growth is also exponential.
When it comes down to it—you have to know your “WHY”. It may not be obvious now and that’s okay but by giving yourself a head start today will likely put you in a better position tomorrow to think about the life you want to lead 10 years down the road.
We all want different things out of life and my “why” is having the option to live life on my own terms, that is, life is too short to wait to retire at 65.
Think about this for a minute: if someone thrusts a gun to your face and demands “give me your money or give up your life” what will you do? You’ll likely hand over your money, right? This threat works very effectively because we value our life more than we value money.
Similarly, life has a funny way of putting us in a comparable situation over a period of our lifetime. We’re so hyped up about making a living and “going for the gold” that after the end of the workday going for the sofa and reaching for the TV remote is as good as it gets.
Whether we love our jobs or whether can’t tolerate them—one thing is indisputable—whatever job we commit to it tends to dominate our waking hours and if by chance any time is left over after our 9-to-5 job we bucket that time as our “life”.
There’s a bigger and a more enjoyable arena of life waiting for us out there—the one beyond the 9-to-5 till you’re 65 kind of life. If you play your cards correctly you likely don’t have to choose between sacrificing your time and your money. You can have both.
So, when life throws you a curveball with “your money or your life” you can proudly say, “no thanks, I’ll have both.”