Thinking about the future can bring with it a mixed bag of emotions. Everything — from joys to inevitable hiccups and the need to plan along the way — can be overwhelming. To truly succeed, the concept of investing needs a makeover. There are so many people today who have the will to invest or the means to invest — or both — and don’t invest for the simple reason that they don’t think it’s for them.
When you’re younger, not wealthy, and maybe living paycheck to paycheck, it’s hard to imagine what investing could do for you. The images portrayed on TV of happily retired couples at their beachside homes is just too far a conceptual leap for many to make.
I believe, however, that investing isn’t all about a happy beachside retirement, but instead about “buying options in life.”
What exactly does that mean? Options in life can mean different things to different people and these are separate from goals.
While your goals may be to “achieve 8 percent a year return on investments” or “have $500,000 in 15 years,” that take into account changes in your life along the way, options in life are more about being able to make decisions that take you in a different direction than the one you’re headed in.
What if you have an opportunity to move to a different state, or country? Or go back to school, or start your own business? Taking advantage of these options may cost you in the short term, but may pay off either economically or in quality of life in the long term.
I experienced this concept of buying options in life when my kids were born. With twin babies at home, a long physical recovery ahead, and profound sleeplessness, the idea of going back to work was truly horrifying. And don’t get me wrong, I love working and was the sole breadwinner for our growing family — but I needed and wanted to take more time than the pitifully short U.S. maternity leave allows.
So I did the math on what selling some shares would mean for our long-term portfolio versus taking the short-term benefit of spending time getting healthy and watching my babies grow. The answer was an easy one.
By the time my kids were born, I had been investing for about eight years. I had started small, made some mistakes, and over time, started to prioritize putting money into investments instead of buying extra stuff. And that was the big difference.
Sure, selling some of your investments to explore a different option in life will make an impact on your longer-term success, but more importantly, changing your spending habits and prioritizing putting money into investments can also do so.
Adapting your spending habits to prioritize investing can have a profound impact on your financial future. And for many people, step one in that equation is to save.
Instead of keeping cash in a bank account, put that money to work. Depending on your risk profile, you have a range of options like stocks, bonds, or funds that are highly liquid. Most can be sold within a day and the money put to work immediately.
What if you have no money now? That’s great. Now is the time to learn about investing, in a truly risk-free way. You should think like an investor. Look for opportunities; be curious about what’s going on in the economy and with companies you like. The best way to do this is to set up a virtual portfolio. It’s even more interesting when you do this with friends, family, or colleagues.
This is also a great way to learn from each other, especially people who have less investing experience — their instincts and ideas are often very different than that of experienced investors.
Regardless of where you are on your investment journey, think about your goals not just in terms of a numbers that you need to retire, or things that you want to buy — but also about creating a way for you to buy options in your life.
A last thought to leave you with. You work so hard to earn your money. You go to school, you compete for jobs, you jostle for raises, and you spend a large portion of your daily hours dedicated to generating income for you and your family. There are no future guarantees — you don’t know what is going to happen. But instead of feeling that mixed bag of emotions about the future, take a healthy approach to money, spending, and investing, and you can buy yourself better options in life.
Jane Barratt is a member of the DailyWorth Connect program. Read more about the program here.