Why should you invest?

4
Pile of cash

Or how to wisely spend your savings

When I started working and making my first salaries, I could see money deposited on my bank account, it was growing a little bit every month which meant I could spend that money however I saw fit and that was a great, powerful feeling. For several years, I had a great time and while I tried to make reasonable decisions on what to spend my money on, I would rarely decline the opportunity to travel to other countries, try new restaurants, buy a new car and usually purchase only the best of what I needed at the time.

After a few years, I realized that even though I had this great lifestyle, I was still managing to save a little bit of money every month and that stash kept growing, slowly but surely.

I remember this moment very clearly, about 10 years ago, where I wondered “what can I do with that money? There is surely something smart to do rather than spend it all. But even if I ‘invest’ it to make more money, what use will this be for”. I then did the logical thing and googled “What can I do with 10,000$” and as you can imagine, it only suggested more ways to … just spend. Nothing really about doing anything smart with it.

I eventually somehow convinced myself that I should save as much money as possible just in case I’d like to go back to school for an MBA and 100k$ should be a reasonable goal. Turns out, that was a very powerful goal.

Only about 4 years ago, after I left my 20s for good, I realized that as you grow older, advance in your career and build a family, I gained an extra perspective on what is really important to me in life. I would like to buy a nice sporty car, I wish I would buy one of those fancy penthouse apartments or travel the world 2 months per year. But how much would that mean to me if I didn’t have to work for a living? What if I could actually invest to create a better future in which not only retirement is secured, but the need of stable job disappears, leaving an awful lot of space in my calendar?

I’ve set myself the goal to retire at 40.

I want to have a large enough stash to not have to work again. To have enough time to start my own business. Or have more time to go visit my family.

Set long-term goals

And that’s the reason why you should invest. Whatever your goal, investing is a mechanism and a discipline that will optimize and increase your wealth to allow you to reach goals that would otherwise be difficult or impossible to attain.

Some of the most important topics that I see:

  • Being able to afford good education: in some countries like the US, the average cost of sending kids to college is 30,000$ per year per child, or 240k$ for 2 kids. Being financially prepared would help.
  • Actually have a retirement you can enjoy: in most developed countries, the state coffers for retirement distributions have been broke for years and it is only a matter of time before payouts are significantly reduced. As an example, California currently has $330 billion of unfunded liabilities, mostly pensions. If you were born after 1975, don’t count on the government to provide pension. Invest and build your own.
  • Take risks and start your own business: It is always difficult to drop a paid job to start a  business, even more so when you have a family to take care of and a mortgage on your house. However, you may find it easier to do if you have an emergency stash or the ability to inject capital in your venture to kick-start it. Investing is like being the CFO in training.

Are you curious to find out how to become a millionaire only with discipline? Or calculate How much money is enough money for you and your family? What is the process of defining an investment strategy? What can you do with 10,000$, or less, to start building a future ?

I have been curious too and I’d like to invite you to come read about what I’ve found. Most of it is actually pretty simple and requires little work once the initial requirement of being curious is invested in the effort.

Looking forward to share my experience with you and hear about your feedback.

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4 COMMENTS

  1. This is very inspiring. I often find my self wondering about the same questions. There are a few questions that I would like to have answer for myself:
    What is that you would like to do with your one precious life?
    If I didn’t need the money what would I be doing?
    I am still working in having this figure it out….

    • Nina – that’s right!
      It’s about living life to the fullest and focusing on what really matters, which I believe is the freedom to be able to do what we want. We all think (sometimes dream) of what we would be doing if we didn’t need the money. I do too and I don’t know the answer.
      I guess the only way to find out is to reach financial independence!

      Nick

  2. What I would do with $10,000: buy some stocks, put it into a money market account and add more to it and buy a house at the auction to rent out or resell, pay off a chunk of my mortgage or take an awesome trip to Europe! $10,000 is definitely a good start that offers options. Welcome to the blogging world, I am new myself and found a great FI community, very inspiring.

  3. Hello Felix – thanks for stopping by and sharing your thoughts!
    From a FI perspective, I would have to invest in some stocks, but a 10000$ trip to Europe does sound very nice!
    Looking forward to read about your business adventures!

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