Why Should I Invest?
In life, there are only TWO ways you can live:
- You work for money
OR - You have your money work for you
Our whole lives, we've been taught to work for money; go to school, find a job, get paid a decent salary, do good work, get promoted, and continue this cycle of slowly climbing up the ladder. We're taught to give up power, run the rat race, and exchange most of our life for money, all while smiling and feeling content.
We're taught to be a slave to money. But the dirty little secret we're not taught is that there is a way out. If you want to be your money's master, not its slave, you should start investing now.
Have Your Money Work for You
Let's say you've just turned 20 and after working odd jobs, you were able to save $5,000. You also recently read an interesting post from YourAverageInvestor that explained the power of compounding investments. So you put it in a Roth IRA, close your eyes, and forget about it. Given the historical average annual return of 10% and an average U.S. inflation of 2%, your $5,000 would grow to roughly $160,000 by the time you roughly retire at 65.
This is an example of money working for you. You did nothing but close your eyes, and yet your money hustled, worked hard, and grew for you; all while you did nothing.
The way I see it, investing is an art – its the art of having your money work for you. The more you master that art, the more you'll reap the benefits. You owe it to yourself to learn and invest, because you've worked hard and your money should work even harder for you.
Work Smarter, Not Harder
Turning $5,000 into $160,000 is pretty awesome, but what I love most about that story is that you did absolutely NO WORK to earn it. Think about it. Other than the work it takes to open a Roth IRA account, you didn't have to spend any time, mental capacity, or effort. Sure, you had to wait many years for your investment to work it's magic, but using the 2020 Bureau of Labor Statistics (BLS) reported median U.S. salary of $51,168, you would have had to work 8 hours a day for 261 days a year for 3 long years to achieve that $155,000 growth. By instead working smarter, you achieved 3 years of work without actually "working".
Now I don't want to downplay the importance of hard work, because that's probably what got you the $5,000 to begin with; however, there is only a finite 24 hours in a day for you to put in effort. The successful and the ultra successful work equally hard, but the key factor in explaining the difference between them is how smart they work. By making wiser decisions in where to put their time and money, the ultra successful are often able to make more money with less time. By choosing to invest your $5,000, you made the wiser decision to be your money's employer, it's master, and have your money work off the clock for you.
Working smarter is making more money with less time
There are many easily accessible investment vehicles such as the aforementioned Roth IRA, that allow us to earn more money with less time, but the unfortunate truth is that many of us, myself included, fall victim to a common psychological trap that prevents us from taking the first step forward.
Avoid the Psychological Trap
I used to work a 9-to-5 job earning a good salary, left it to pursue a full time MBA for 2 years, and graduated looking to transition out into a new role in business. Unfortunately things didn't work out right away and I was jobless for more than half a year. Without a 9-to-5 job, just waiting on recruiters to get back to me, I felt like a boat adrift in the ocean, completely lost, questioning my decisions.
"Work hard and save. Work hard and save." I was raised, like many people, by that mantra. Study hard in school so that I could achieve the end goal; landing a good-paying secure job. But after landing said job, working the same hours at the same job for a few years, I became conditioned. Conditioned to associate my job as the main definition of my income and my wealth. Herein lies the psychological trap.
Your job is NOT your financial identity
Being jobless, I felt I had no financial identity; and therefore no other strong way to earn income to reach my financial goals. When I was working and I needed more money for the year, that meant I just needed to chase a higher bonus. Need more money still, then I needed to work harder for a promotion. Still unsatisfied, that just means I needed to look for a better 9-to-5 job. Never once did I really actively consider other avenues for building my wealth.
Because the average person spends majority of their day at their job, it's easy to get confined into thinking your job is the key to your financial goals. It's easy to lie to ourselves and say that we don't have time, energy, or need to try to learn more about investing when our job deserves our full attention. I'm not saying a job isn't important, but we sink so much into it, that we often lose sight of the other existing opportunities that make up our financial identity.
Through my journey I discovered that my job alone is not the only way to achieve my financial goals, nor is it the best option. You'll discover that investing is both emotionally liberating and financially rewarding. Investing will allow you to broaden your assets; to not have your entire financial identity tied down to a single job.
Join Our Journey
I'm just like you, I'm just YourAverageInvestor. The world of investing is massive and all of us, myself included, are on a journey to increase our financial literacy, achieve our financial goals, and master the art of investing. That's why I want you to join OUR journey.
Just remember – Avoid the psychological trap and start working smarter not harder so you can make your money work for you. No matter your financial goal, you deserve to be your money's master, not its slave.
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