Join Jane Barratt for an in-depth discussion in this video Buying options in life, part of Personal Investing Basics.
- Here's a secret about big investment companies. They're all trying to get wealthy people to move their pile of money to them. That's why most retirement ads feature a happily retired couple at their beachside home. For many people, this is just too big a conceptual leap. The ideas most associated with investing are Wealth, Retirement, Interest and when you're younger, not wealthy and maybe living paycheck to paycheck, it's hard to imagine what investing could do for you.
In this video, I'm going to explore a different idea that investing isn't all about a happy beachside retirement but instead about Buying options in life. So what does that mean? Options in life mean things to different people and they are different to goals. Your goals may be to get 8% return a year or have $500,000 in ten years. These are good specific goals but they don't take into account changes to your life along the way. Options in life are more about being able to make decisions to take you in a different direction to the one that you're on.
What if you had an opportunity to move to a different state or country or go back to school or even start your own business? These options in life may cost you in the short-term but may pay back either economically or in quality of life in the long-term. I experience the idea of buying options in life when my kids were born. With twin babies at home, a long physical recovery ahead, profound sleeplessness, the idea of going back to work was truly horrifying. And don't get me wrong, I love working and I was a sole breadwinner for our growing family but I needed and wanted to take time off work.
So when we did the math on what selling some shares would mean to our long-term portfolio versus taking the short-term benefit of spending time and getting healthy and watching the babies grow, the answer was an easy one. By the time my kids were born, I'd been investing for about eight years. I started small, made some mistakes and over time, started to prioritize putting money into investments versus just buying extra handbags and that was a big difference. Yes, selling some of your investments to explore a different option in life will make an impact on your longer term success.
But more importantly, so will Changing your spending habits and prioritizing putting money into investments. Adapting your spending habits to prioritize investing can have a giant impact on your future financial success. And for many people, step one in that equation is to save. And 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, should you truly need the money.
And what about if you have no money now? Great, now's a time to learn about investing in a truly risk-free way. Think like an investor. Look for opportunities. Be curious about what's going 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. It's a great to learn from each other, especially people who have less investing experience. Their instinct and ideas are often very different from experienced investors.
Regardless of where you are in your investment journey, think about your goals, not just in terms of a number that you need to retire or things you want to buy, but 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 waking hours dedicated to generating income for you and your family. Why not make it a priority to put your money to work for you? There are no future facts.
You don't know what's going to happen, but having a healthy approach to money and investing can help buy you better options in life.
Jane is the founder of GoldBean, an online investing platform that helps first-time and experienced investors alike take their investments into their own hands. In this course, she shares her investment strategies with you. She breaks down the market into its five basic building blocks—cash and equivalents, stocks, bonds, funds, and insurance products—and the different vehicles where you can invest these building blocks. She also covers topics such as the importance of a balanced portfolio, understanding and managing your risk, identifying value in the market, and building your "money muscles" over time. Plus, learn how to calculate the rate of return of a portfolio vs. general market performance. Last, Jane outlines the options for DIY investing, when it makes sense to work with an advisor, and how to avoid costly investment fees.
- Why should you invest?
- Understanding compound interest
- Comparing stocks, bonds, and funds
- Managing risk
- Building a portfolio
- Finding where to invest money
- Working with a financial advisor