News » Why Invest in the first place

May 21, 2018

Imagine being able to do what you want, with whom you want, wherever and whenever you want. Having your finances in order gives you the option to work because you love it, not because you’re forced to. Reaching a position where you have consistent surplus income provides you with the option of giving back sooner. Investing allows this to happen as the ultimate goal of investors is to build enough of an income to provide them the lifestyle/options they want in life.

There are three scenarios that most fit into for people building from a baseline of $0: living week to week (The Spender), saving a surplus without investing (The Saver) and saving to invest (The Investor). All three scenarios require these individuals to work for at least a decade. The Investor is the only one with the chance of significantly supplementing their income with portfolio income. The saver will have a lump sum sitting in a cash account, barely appreciating above inflation and the spender is stuck in his/her job to maintain his/her lifestyle.

Fast forward 20 years and there is a mountainous gap between the wealth and options of all three people. The Investor (providing they don’t take unnecessary risks) will have the most wealth and options, followed by The Saver who will at least have a nest egg ready for that rainy day and the last individual is The Spender who is still in the rat race, wondering what happened all these years. The sad thing is, The Saver and Spender typically stay ignorant of the opportunities they’ve left on the table.

Far too many individuals leave their finances alone until they are in their 50s, not knowing that multiple windows of opportunity have shut one by one. By starting as early as possible, one can create enough momentum to never have to worry about money by the time one reaches their 50s.

Which person would you rather be?