Investing is a fairly optimistic activity. You set aside money today, with the notion that (1) it will grow into a larger sum of money, and (2) you will be able to enjoy that larger sum of money. There are plenty of people, however, who need money today. Some of what they spend it on might be frivolous, but it also might be out of necessity. Whether you are buying a nicer car, or paying medical bills to keep yourself alive, the straight up reality is that you know very well that the money you are spending today is giving you something: a nicer set of wheels, a chance at health. The future, however, is less clear. What will you want so much at age 60 that is better than age 26? What if you die before retirement age? These are not silly questions. They are fundamental to the decision-making process around money and values.
Investing is difficult because it is easy to understand what will happen today, but difficult to know what will happen in the future.
The further away a goal is, the harder it is to bring into your focus. The less you focus on something, the less likely you are to take action. The best time to invest is in your early 20’s – earlier, even, if that is possible. Since most of us make a salary that affords us the ability to set aside 5-10% toward the future, we are in our 60’s or 70’s by the time our nest egg is large enough for us to quit our day jobs, and let our investments do the working for us. Forty or 50 years is a long time to peer into the future. When I was just starting to work, retirement was nearly unimaginable. It wasn’t until I started to approach 40, that I could imagine retirement. From 25 to 35, I saw very limited growth in my portfolio. Even as a I consistently saved for the future, I saw very little benefit to the saving, because there was not much growth.
The present is, in many ways, a much more secure place to focus your energy, time, and money. The outcome is, by definition, immediate. And, of course, your money is actually worth more today than it will be in the future. Given the clarity of the presence, and the vagueness of the future, why invest at all? The answer is that you are kind to your future self, and kind to your present self.
You matter today. You also matter in the future. Making decisions today that benefit the present you is good. Making decisions that benefit the future you is even better. Imagine you are 32 today. You need to pay off your student loans, manage housing, perhaps care for a child. You need to be kind to yourself now, in the present. Now think of yourself at 62. That is probably hard to imagine. You probably won’t be exactly the same person, three decades down the road, but as you think about your future self, you know you want to be kind to yourself. You want your future self to have some opportunity to take care of medical needs, perhaps eventually stop working, not be stressed over money.
Again, as you think of your future self, you are being optimistic. You don’t know that you’ll be here in three decades. You don’t know you’ll be here tomorrow. Perhaps that is what makes saving for the future such a kind act: you are focused on creating some financial security for someone else: the you of the future, the you, you don’t know today and might never meet. Yet, because of your kindness, you set aside some money for that person.
It is much easier to think of investing as kindness to yourself in the future, than as depriving yourself today. Here are a few things you can do to be kind to yourself:
- Take some time to imagine the type of person you would like to be, and the type of life you would like to live in 20, 30, 40 years. Take a moment to be thankful for who you are today, and who you will become.
- If you have little savings, large debt, or both, decide to be kind to your future self, and start paying off debt and saving. There are a lot of excellent resources available to help you with this endeavor.
- Consider if there are some skills you would like to develop, so you can do something else in the future. Should you do some reading? Sign up for a class? Finish your degree?
- It can be hard to start investing for the future on your own, particularly when you have so little to invest at the beginning that it seems inconsequential. Esteem yourself today and tomorrow. Does your employer have any type of retirement savings account? Find out, and start using it. Can you contact a financial institution, and speak to a representative about a time-adjusted fund that will automatically allocate your money on your behalf?
- Perhaps you just received some money from a family member who has passed away. Think about being kind to yourself today (pay off debt, travel someplace you have never been), and also being kind to yourself in the future (put more of your income into a tax-free retirement account, since you have some extra cash, or invest the money you have received for retirement, or purchase stock directly).
The peculiar nature of time is that it will pass regardless of how you spend it. Consider viewing investing as kindness to yourself in the future, just as you are kind to yourself today. You may find that over time, investing isn’t so hard after all.
Photo by Chris Barbalis on Unsplash