Talking about investing tends to bring out some strong feelings in people, often negative. “I hate it!” is a common refrain. “I don’t want to have to deal with it” is another.
Now, I’m sympathetic, as all my life I’ve found myself interested in things that the majority of people aren’t interested in. The problem is that while not everyone needs to wield an interest in math or physics (though I think it would do them some good), we all need to take an interest in investing.
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One day we’ll be old
Congratulations, we all live a long time. Or most of us on average do, at least. If you’re 30 years old today and living in a developed nation, you’re likely to live to be 80 years old. And I hope you have a long and fruitful life doing what you love and sticking it to The Man all the way to the end.
Unfortunately, someone needs to pay for you to live to be that old. But who? Here are your options as I see it:
- Your family. If you have a family, you may be fortunate enough to be able to have them take care of you in your old age. But with incomes squeezed and life being relatively difficult, that could be considered a pretty big ask. Say what you will about the breakdown of the family, it’s just not an option for everyone.
- Your job. Defined benefit pensions used to be the norm in generations past. Work for 40 years at the company, and the company will pay you to live out your retirement. This has gone away for all but a few limited situations, and frankly, I wouldn’t expect it to be there for those people either. Read about what happened at Bethlehem Steel, and you’ll never trust a pension again.
- The state. Many in power seem intent on dismantling the social safety net, as ill-conceived as that sounds to me. Nevertheless, at the time of writing, there are still some options available for the elderly and disadvantaged. None of these are luxurious benefits (at least here in America) and frankly I wouldn’t bet much on them being around forever. I’d love to be proved wrong, though.
By my eye, that leaves one person left who will pay for you to live: you.
Make a lot of money somehow
Most people do not want to (or are not able to) work an income-producing job into their 70s and 80s. So you will need to amass a pile of cash to live on for that period where you are not an income-producing member of society.
And I see two ways to do this: make a lot of money through income, or make a lot of money through investing.
The first method isn’t all that realistic. Assume a 40 year working life (age 25 to age 65) and that afterward you retire and earn nothing. Assume also that you live to be 80 years old, so you need to live for 15 years on your income. If you want to live on a modest $40,000 a year, that means that during your working life, you will need to amass $600,000 (or $15,000 a year for 40 years). And then you’d better hope that you don’t live past 80. And I’ve avoided the issue of taxes, which makes things worse.
So it seems necessary to implement some level of investment in order to ensure sufficient funds for those last 15 years and beyond.
Retirement courtesy of Coca-Cola
Let me be the first to say that this is unfair. It seems crazy to tell the general populace that their only chance of having a comfortable living in perpetuity is to become an expert at investing. Why should my ability to eat and live well be tied to buying shares in Walmart or Coca-Cola or General Electric? What in the world does one have to do with the other?
Nothing. But that is the system that we live in. And while you can stand up and protest it, one of the fundamentals of being an Unlikely Radical is that we work within the system to make it work, while making it better as we go. And so, if you want to maintain a comfortable standard of living throughout your entire life, you must be an investing expert.
(Yes, you could hire someone else to do the work for you, but that introduces plenty of other issues with some famous catastrophes and so I wouldn’t recommend that. Get an advisor, sure, and perhaps that advisor could be me, but don’t outsource your financial future to someone else who may not have your best interests in mind. You must always be in charge.)
It’s not that hard
Now, the nice thing about investing is that it doesn’t take a ton of effort, energy, or time. The best investment strategies aren’t complicated; they involve setting things up and then mostly letting them go. Thank heavens for that.
So while you may not have any natural interest in investing naturally, you will need to generate one in order to ensure your own prosperity. And while we can all agree that this sucks, getting to a certain age and not being able to afford to live a comfortable life will suck even worse.
And seriously, if you’ve got ideas on how we can decouple retirement from investing, please comment below and let’s chat.
But enough about me: Do you dislike dealing with investing?
