I’ve read countless articles on the topic of investing. In fact, every day, I receive an email from Investopedia.com, with some snapshot of financial information, ranging from how to invest in cryptocurrency, to understanding inflation. One thing I’ve learned is that the breakdown for most people, including myself, with the concept of investing is that every day you are investing your time, money, and energy. You just might not be conscious of it.
Here is the definition
Invest, verb
to put (money) to use, by purchase or expenditure, in something offering potential profitable returns, as interest, income, or appreciation in value.
to use (money), as in accumulating something
to use, give, or devote (time, talent, etc.), as for a purpose or to achieve something
What if you started evaluating your day-to-day purchases and activities from an investment perspective? You might find that investing helps you understand your own priorities and how you wish to treat yourself.
Your everyday choices are about expecting an outcome
I drink coffee every morning. I spend $7-8/pound for coffee. I bought a 10-cup coffee maker. Every other evening, I prep the coffee maker. The next day, I brew it, drink 1-2 cups, and put the rest in a large jar to keep for iced coffee in the fridge. Alternate mornings, I have iced coffee, or occasionally heat it up. This is all an investment:
- I purchased a capital item: The coffee maker ($30).
- I purchase coffee: Approximately two bags of coffee/month ($20)
- I use my time each evening: preparing the coffee, and then making and drinking it. I also have to clean and put away the coffee maker each time I use it (1 hour/week)
- I use my energy each evening: remembering to take the coffee maker out, often when I’m tired.
These may all seem like small amounts of time and small amounts of money, and perhaps on a relative scale they are. But it is still an investment. I spend $240 on ground coffee alone. I spend 52 hours/year on coffee preparation and drinking. And whatever energy I use, it is usually the very last bit I have at the end of the day.
The point is that I could spend my time, money, and energy on something else. I could read a book for 10 minutes each day – a practice I have implemented at different times, resulting in my completing several books by catching various scraps of time. Or I could drink water and do breathing exercises in the morning. I could spend $240 on running shoes, or give it to charity, or put it into my IRA, or purchase dividend-bearing stock.
My husband does not drink coffee. He has pointed out I could do other things with my time and money. I do not get headaches when I stop drinking coffee, and if I’ve had enough sleep, I don’t really need it. I just like it. I am fully aware that I have limited time, and I could use those scraps of time and dollars in other ways. I am investing in my current happiness, even though it’s possible that some other activities would make my current self happier, and almost certainly there are activities and ways to spend money that would make my future self happier.
Investing is not all about security
Most people who want you to invest your money tell you that you are investing for a secure future. I enjoy investing and money management. I want a secure future. I want to be able to live off my investments by the time I reach 60. But investing is more about your everyday current choices than your future. First, I suggest that you don’t put your security in anything that you can lose. You can lose your job, your investments, your loved ones, friends, and reputation. Don’t put your security in anything you can lose. My security comes from my faith. Even if that isn’t a source of security for you, it is wise not to hold onto money as your source of comfort.
The reason investing is difficult is that you are make choices today that don’t benefit you today. Your behavior benefits you in the future, albeit an uncertain future. You know that the cup of coffee will benefit you in the morning for certain. However, you might stop drinking coffee, and discover you are just as happy. You might invest the $240 today, and in 30 years at 7% interest, you would have $729.
(Check out www.helpfulcalculators.com/compound-interest-calculator for yourself).
The problem is that you are certain of the enjoyment you will receive today. You are less certain of the future. Who knows if you will be alive in 30 years? Perhaps it’s better to drink the coffee. And perhaps it is. That is certainly how I behave.
Investing is about evaluating how you can be kind to your future self, while still being kind to your present self. We all know the future is inherently uncertain, but we all want to be kind to ourselves. Therefore, our current behavior toward money should be one that is not only about security, but kindness to ourselves in the future.
Investing is more about present vs. future benefit
I hear frequently that women aren’t very good investors, or that they don’t know much about investing. While women are a growing share of the investment market, it is true that women tend to be much less active in financial investing than men. But women have a very good sense of what choices today will deliver particular outcomes in the future. Good investors are those who seek an outcome today, tomorrow, and in the next twenty years, and then make choices in the present that will achieve those outcomes.
Raising children is an investment. Teaching someone to read is an investment. The key to successful financial investing is to understand that there is relatively little difference between day-to-day choices regarding your time and financial investing. They are both a choice to take concrete action today, to achieve a desired outcome in the future. From this perspective, women, who comprise the majority of the child-rearing and teaching workforce, are innately good investors.
The challenge in investing is believing that it is worth giving up something that you are confident will benefit you today, for something you believe will benefit you in several years. Try this exercise out the next time you are about to make a purchase:
- What else could I do with this money today?
- What else could I do with this money tomorrow?
- What else could I do with this money over 30 years?
Come up with 2-5 options for today, tomorrow, and in 30 years. You may be surprised how many options you have for making yourself happy in different ways and in different points in time. Make a habit of thinking about how you are using your time, money, and energy. Your options for making yourself happy in the future are dependent on your choices today, you just have to start adopting an investment perspective.